“The Big Move” is a MarketWatch column exploring the ins and outs of real estate, from looking for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Jacob Passy at TheBigMove@marketwatch.com.
I’ve lived in my house for 40 years. I live on 5.25 acres and went into town to divide the land into subdivisions and let it pass.
I love where I live, but the house is getting old and the kids are gone. I am a 58 year old nurse. I pay $ 800 a month in property taxes plus my mortgage, which together is $ 2,500 a month.
I was offered a pretty good amount to sell my home for $ 500,000 more than two years ago. I had another house that I liked and was going to buy so I wanted to sell it. But the sale of my house fell through, so I had to run away from the house I wanted to buy.
Now there are no houses for sale and I haven’t found anything I like. So I would have to rent until I find something. Do I have to do that? Or just wait for more houses to come on the market and sell when I find something? I probably won’t get that much, but the houses won’t be that expensive to buy either. Doesn’t it all work out?
It would be nice to spend money, go on vacation and not have to work so much. But I also don’t want to be stuck in a rental home that has to pay as much as I did when I owned my home and be unhappy because I’m renting in a place I don’t want to live.
I love my home where I live! But the real estate tax is just too expensive, and I’m about to retire and will have to sell. I still owe money on my home and will not pay it off before I retire unless I move.
The cost of home ownership is rising rapidly across the country, so you’re not alone in feeling burdened.
A recent study from Attom Data Solutions, which produced real estate data, found that for the average household, owning a home is affordable in only 41% of rural counties. In other words, in the other 59% of the counties in the county, the average family should spend more than a third of their net wages on housing costs, including mortgage payments and property taxes.
Many salespeople are in the exact same boat as you. They would sell in an instant – if they could find a home to buy. The stock of homes for sale is low, which creates a vicious circle. Home sellers are reluctant to market their properties because there is little guarantee that they will have a place to live after the sale.
Renting may seem like a one-way ticket to save, but that’s far from certain. You don’t say where you live, but chances are it won’t be that much cheaper to rent. In fact, rents in suburban and rural areas rose sharply during the pandemic as families sought more space to live outside of major cities. A separate report from Attom Data Solutions found that owning a three-bedroom home (at the average home price) is cheaper than renting a three-bedroom home in nearly two-thirds of the country.
There are certainly other downsides to renting. You have no control over your future living expenses, so while you may be able to afford the rent for the first year, there’s nothing stopping the landlord from jacking it up when you renew. And when you own a home, you are building a valuable financial asset.
A recent survey found that owning a home is still cheaper than renting in nearly two-thirds of the US, despite rising home prices.
With renting, all the money you spend doesn’t get back to you. Even if you have a lower monthly cost, what you do with those savings is driving a lot. Ideally, you would invest or put it away for a rainy day, and not spend it.
However, you are not helpless. Considering how low mortgage rates still are – even though they’ve gone up in recent weeks – I’d suggest seeing if refinancing was right for you. But considering how long you’ve been living in your home and the fact that you’re still in the process of paying off a mortgage, I’m assuming you’ve refinanced somewhat recently.
You don’t say what you did after going to your local government to subdivide your land, but if it’s there I would consider selling it. However, since you have a mortgage, this doesn’t necessarily have to be a straightforward process.
When land is subdivided, you must get written approval from the lender or administrator of the mortgage underlying the property, said Tom Trott, an affiliate manager at Embrace Home Loans in Maryland.
“This requirement is in most mortgages and standard language in the Fannie Mae and Freddie Mac Trust Deed,” said Trott. To sell some of the property, you will need permission from your lender. But if that’s hard to come by, you still have options.
“Assuming they couldn’t get timely approval, another option would be to refinance the sale and the remaining balance at the same time,” Trott said.
If you choose to sell, use the money wisely. Everyone wants to go on vacation and treat themselves to a night out on the town, especially in the aftermath of a protracted, stressful pandemic. But the proceeds from the sale of your land will be a lifeline for you.
