Rent vs buy dilema long term - seeking impartial advice

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onthepath
Posts: 4
Joined: Tue Dec 27, 2016 3:36 pm

Rent vs buy dilema long term - seeking impartial advice

Post by onthepath » Tue Dec 27, 2016 4:23 pm

Hi I am a long time lurker on this forum and this is my first post.

My wife and myself are in our mid 30s with 3 young kids
Wife is a SAHM currently, I am a physician currently making ~400k a year (2-3 years out of fellowship)
Student loans ~160,000 at 2.65% interest rate over 7 years.
Other debt includes 2 cars loans 23k at 3.9% and 35K at 1.9%
Retirement accounts ~125k, taxable accounts ~ 110K, Roth/spousal roth ~40K, HSA ~ 6K, 529 plans ~ 12K
Emergency fund ~ 30k

Started second job recently and things are going well and we are about 6 months into a 1 year lease on a rental home currently $2800/month
The question is whether we should buy or continue to rent given our circumstances ( in a strictly long term financial sense)

Usually I would prefer to rent for a year or two but my concern is with interest rates rising and if we do stay here long term being able to get a mortgage at a reasonable interest rate.

If we did purchase the purchase price would be around 400-450K for a nice 4 bedroom in a good school district

or should we rent and after expenses save about 8-10k a month into taxable. (plus 401k and back door roth)

We are fairly comfortable in our rental but don't want to get caught with rising rent and much higher interest rates in the next few years

- onthepath.

boglerdude
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Re: Rent vs buy dilema long term - seeking impartial advice

Post by boglerdude » Wed Dec 28, 2016 2:24 am

If rates rise prices might go down. Dont get pressured into anything

stevekozak2
Posts: 40
Joined: Sun Dec 25, 2016 12:38 pm

Re: Rent vs buy dilema long term - seeking impartial advice

Post by stevekozak2 » Wed Dec 28, 2016 6:16 am

I would get the debt paid off first. With the money you make, you could get that done relatively quickly, if you buckle down. Being debt free makes sunny days a little brighter.

Rebecca_S
Posts: 172
Joined: Sat Oct 06, 2007 6:55 pm

Re: Rent vs buy dilema long term - seeking impartial advice

Post by Rebecca_S » Wed Dec 28, 2016 9:13 am

If rates go up, then often prices drop since people buy what payment they can afford. You, however, will have the ability to pay off the mortgage in just a handful of years at your current savings rate. The interest rate will matter less if you can pay off in 6-8 years rather than in 30.

orca91
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Joined: Thu Mar 03, 2016 7:17 pm

Re: Rent vs buy dilema long term - seeking impartial advice

Post by orca91 » Wed Dec 28, 2016 12:25 pm

If rates go up even 1% over the next year or two, that's still pretty reasonable. I remember thinking 6% was wonderful around 2008.

Buy when you're ready, not based on what you think interest rates will do.

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