Both I and my wife work and we're financially in a good place, but with both the recession and the threat of me losing my job hanging over our heads, we're starting to reconsider buying a home. This might not be the best place to ask this, but with so many people being in the same position as I am regarding our jobs, I was hoping to get some of your perspectives on this. If this is off-topic, apologies and please delete it.
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Interest rates are real high, housing prices are real high (but coming down). I would wait to see where things are heading. Housing could easily take a 20% haircut.
20% down is ideal as that is the minimum needed to avoid mortgage insurance. But unless you have a large chunk of cash on hand, it’s not likely an option. You can get a FHA mortgage with only 3% down. You will pay mortgage insurance for the life of the loan (although they may have changed that recently) as well as an up front mortgage insurance payment. You can always refinance out at a later date when you have built up 20% equity (be either paying 20% of the principle or having your property re-evaluated at a later date as part of a remortgage when it should have hopefully appreciated). This is what we did.
Have 20% down payment and 6 months of expenses in an emergency fund at minimum
Buying a house always comes with risk. Lay-offs happen all the time and could happen to you wherever you are working. Interest rates are going up but you may see a slight reduction in prices over the next couple of months as less people are buying. Personally, I’d wait until the end of the summer rush, unless you’re trying to get into a certain school district, and re-evaluate.
If you’re planning on leaving it might be better to use your vmw w2’s to qualify than using paystubs from a brand new job. Common sense would also suggest not maxing out your mortgage approval amount - no need to buy more than you need.
If your mortgage amount and your rent amount are about the same, then I’d buy. I hate paying other peoples mortgages for them. Remember other costs though like HOA fees, insurance, property tax, watershed tax, maintenance etc that come with home ownership. These can add up too.
A session with a financial planner may help.
Should I invest in egg futures?
Would it be a good idea to have a child now?
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Is this the appropriate forum to ask these questions?
Wait until interest rates are lower
So many factors to think of. Will your mortgage be less than your rent? Are you in a group like HR or IT that will be cut? If you have the down payment to buy a house, and the expenses will be less and you get the tax break, you should do it. Again, so many factors go into this decision that can’t be contemplated in this response, but with certainty you will find another job if you lose this one. It may not pay the same (it may even pay more), but regardless, you won’t be unemployed for long. Good luck.
If you go ahead and lose your job, can you rent out a room to help with expenses?
you must be a real genius to buy a house, especially a big house, right now.