‘The Big Move’ is a MarketWatch column that analyzes the intricacies of the real estate market, from navigation in search of a new home to applying for a mortgage.
Do you have any questions about how to buy or sell a home? Do you want to know where your next move should be? Send an email to Jacob Passy at TheBigMove@marketwatch.com.
I have lived in my home for 40 years. I live on 5.25 acres and went to town to subdivide the land into a subdivision and got it approved.
I like where I live, but the house is getting older and the children 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 received an offer for a good sum to sell my house 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. But selling my house didn’t work, so I had to move 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. Should I do this? Or just wait until more houses appear 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. Isn’t everything balanced?
It would be nice to spend money, go on vacation and not have to work so hard. But I also don’t want to be stuck in a rent paying as much as I was when I owned my house and be unhappy because I’m renting g in a place I don’t want to live.
I like my house where I live! But property taxes are very expensive, I am close to retirement and I need to sell them. I still owe money for my house and I will not pay before retirement, unless I move.
Home ownership costs are rising rapidly across the country, so you are not alone in feeling overwhelmed.
A recent study by real estate data firm Attom Data Solutions found that, for the average family, having a home was only viable in 41% of counties across the country. In other words, in the other 59% of counties in the county, the average family would need to spend more than a third of their net wages on living expenses, including mortgage payments and property taxes.
Many sellers are in exactly the same boat as you. They would sell in the blink of an eye – if they could find a home to buy. The stock of houses for sale is at a record level, and this is creating a kind of vicious cycle. Home sellers are hesitant to put their property on the market because there is hardly any guarantee that they would have a place to live after the sale is completed.
Rent may seem like a one-way ticket to the economy, but that is far from certain. You do not say where you live, but there is a good chance that it is not much cheaper to rent. In fact, rents in suburban and rural areas increased dramatically in the midst of the pandemic, as families sought more space to live outside large cities. A separate report by Attom Data Solutions found that owning a three-bedroom home (for the average price of a home) is cheaper than renting a three-bedroom home in almost two-thirds of the country.
There are other disadvantages to rent, for sure. You have no control over your future housing costs, so while you can pay your first year rent, there is nothing to stop the owner from increasing it when you renew. And when you own a home, you are building a valuable financial asset.
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A recent study found that owning a home is still more affordable than renting in almost two-thirds of the U.S., despite rising home prices.
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With rent, any money you spend does not come back to you. Even if you have lower monthly costs, a lot depends on what you do with those savings. The ideal would be to invest it or save it for a rainy day and not spend it.
You are not helpless, however. Given how low mortgage rates are still – even if they have gone up in the past few weeks – I would suggest to see if a refinance is right for you. But considering how long you’ve been at your home and the fact that you’re still working on paying off a mortgage, I’m going to assume that you refinanced a little bit recently.
You do not say what you did after going to the local government to subdivide your land, but if it is there, I would consider selling it. However, as you have a mortgage, this will not necessarily be a straightforward process.
When the land is subdivided, you need to obtain written consent from the lender or administrator of the mortgage underlying the property, said Tom Trott, branch manager at Embrace Home Loans in Maryland.
“This requirement is in most mortgages and in the standard language of Fannie Mae and Freddie Mac’s trust contract,” said Trott. To sell a portion of the property, you will need your lender’s permission. But if that is difficult to achieve, you still have options.
“Assuming they couldn’t get approval in a timely manner, another option would be to make the sale and refinance the remaining balance at the same time,” said Trott.
