“The Big Move” is a MarketWatch column that examines the ins and outs of real estate, from finding a new home to applying for a mortgage.
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 have lived in my house for 40 years. I live on 5.25 acres and have come to town to subdivide the land into a subdivision and pass it over.
I love the place where I live, but the house is getting old and the kids are gone. I am a 58 year old nurse. I pay $ 800 per month in property taxes plus my mortgage, or $ 2,500 per month.
I was offered a fair amount of money 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 the sale on my house failed, so I had to leave the house I wanted to buy.
Now there are no more houses for sale and I haven’t found anything that I like. So I should rent until I find something. Should I do this? Or just wait for other houses to come on the market and sell when I find something? I probably won’t have that much, but the houses won’t be that expensive to buy. Isn’t it all equal?
It would be nice to spend the money, go on vacation and not have to work so much. But I also don’t want to be stuck in a paying rental as much as I did when I owned my house and be miserable because I’m renting somewhere I don’t want to live.
I love my house where I live! But property taxes are just too expensive, and I’m nearing retirement and will have to sell. I still owe money on my house and won’t pay it back until retirement unless I move.
Homeownership costs are rising rapidly across the country, so you’re not the only one feeling overwhelmed.
A recent study by real estate data company Attom Data Solutions found that for the average household, owning a home was affordable in only 41% of counties nationwide. In other words, in the remaining 59% of the counties in the county, the average family is expected to spend more than a third of their take-home pay on housing costs, including mortgage payments and property taxes.
Many salespeople are in exactly the same boat as you. They would sell in no time – if they could find a house to buy. The inventory of homes for sale is at an all time high, which is sort of creating a vicious cycle. Home sellers are reluctant to put their properties on the market because there is virtually no guarantee that they will have a home once the sale is complete.
Renting might seem like a one-way ticket to savings, but that’s far from certain. You don’t say where you live, but there’s a good chance it isn’t much cheaper to rent. In fact, rents in suburban and rural areas have risen sharply amid the pandemic, as families have sought more space to live outside of major cities. A separate report from Attom Data Solutions found that owning a three-bedroom house (at the median price of the house) is cheaper than renting a three-bedroom house in almost two-thirds of the country.
There are of course other disadvantages to renting. You don’t have control over your future housing costs, so while you may be able to pay the rent in the first year, there’s nothing stopping the landlord from pushing it up when it comes time to renew. And when you own a home, you are building towards a valuable financial asset.
A recent study found that owning a home is still more affordable than renting in almost two-thirds of the United States, despite rising home prices.
With rentals, the money you spend doesn’t come back to you. Even if you have lower monthly costs, a lot depends on what you do with those savings. Ideally, you would invest it or put it away for a rainy day, and not spend it.
However, you are not helpless. Given the low mortgage rates, even though they have increased in recent weeks, I suggest you see if refinancing is right for you. But given how long you are in your house and the fact that you are still working to pay off a mortgage, I guess you’ve refinanced a bit recently.
You don’t say what you did after going to your local government to subdivide your land, but if it is there, I would consider selling it. Because you have a mortgage, however, it won’t necessarily be a straightforward process.
When the land is subdivided, you must get written consent from the lender or the mortgage manager underlying the property, said Tom Trott, branch 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,” Trott said. To sell part 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 a timely approval, then another option would be to do the sale and refinance the remaining balance at the same time,” Trott said.