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pbracing33b

Columbus: To rent or buy

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Hello Everyone,

 

I have recently gained a really good position (a life changing career). My new position is in the Short North. I currently live in the Dublin area. I'm sincerely worried about my morning commute so much so that I am willing to move to the short north. Yes I know rent is high there. But, I don't want to be late to work especially since this is a brand new job. I can literally walk a .10 of mile to my job regardless or rain, snow and etc. I can literally never be late. However I feel if I stay in the Dublin area, no matter what I do I will probably in a 3 month time frame be late at least once for unseen traffic or etc. 

 

The other option I just found out that I am pre-approved to buy a home. I personally don't like living in the city so to speak as I grew up in the country. However I do like the convenience of everything being really close. But I feel like if I buy a home, I would want to buy out in the country. But on second thought I don't like the idea but on the other hand I don't like the idea of giving lots of money to a landlord either. Whereas I could be putting that money back and paying off existing debt I have to make me even more prepared to buy a house. 

 

Right now I'm very conflicted about what to do. I thought about maybe renting for a year and letting me new bosses see me as a dependable person being on time and never late (which I never ever intend to be late and I rarely am) but because Columbus traffic is so unpredictable. I don't want to take a chance of losing an extremely good job either.

 

I know this is a personal decision, but I would like to hear thoughts of others out there.

 

Oh and for my budget I can afford to live in the short north because of my career change. But just because I can afford to live there doesn't mean I like to spend that kind of money for a living situation, I would much rather spend it on my student loans or paying off my car and any other outstanding debts I may have than giving it to a landlord. So, I'm conflicted.

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Rent the cheapest place you can close buy, get comfortable with the job and then reassess your situation in 10 months. the housing market my cool a bit from todays highs too, which would be good for you. 

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I had the same situation. What I did was rent pretty cheaply because I wanted to pay off loans to get more in savings for a bigger downpayment. I rented closer to my work for 3 years ($700 a month) in Mount Lookout and worked in EWH so short drive for me. You could still live closer by to your office I am sure and not pay as high of rent and take a bus in like Jake mentioned. It's a balancing act depending on your income or rent but if you are single and don't mind a small place starting out I would do that. It ends up worth it in the end when you have loans paid off or significantly reduced then you can upgrade your rental or buy a house if you have saved up quite a bit for a downpayment.

 

***Keep in mind too, you aren't always "throwing money to a landlord" when you rent. If you have a low downpayment on a mortgage and paying say $1400 per month, not a whole lot of that is going to go into equity. If you instead rent for $900 per month, it isn't like you are throwing away $900 in equity vs. the $1400 per month mortgage payment. You need to look into the details to see yourself, I took a lot of time to figure all this stuff out.

 

For example: $200k House, $10,000 downpayment, 5% interest, 30 Year Term:

 

Mortgage: $1400

PMI: $80

Insurance: $80

Taxes: $200

Interest: $800

 

$240 per month paid on equity.

 

So for one year you would basically be out $240*12 = $2,880 in equity, which isn't a whole lot considering vs. the common $900 a month in rent being thrown away myth.

 

If you saved up for a say $40k downpayment (20%) on the same house it would look more like this:

 

Mortgage: $1150

PMI: $0

Insurance: $80

Taxes: $200

Interest: $660

 

$210 per month in equity but your payment would be $250 less per month so you can put that in savings or add to your payments for total of $360. If this took you two years to save you would lose out in $5800 in equity but moving forward you would be saving and gaining quicker on equity / have more free money from a lower payment.

Edited by IAGuy39
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I like IAGuy39 response, it actually puts things in more of a perspective. I always forget that when you take out a loan you are hardly putting any money towards the principal. Most of it is going towards the mortgage company and I hate the PMI. I think that is the dumbest thing ever as a buyer. Why should I pay for insurance for the mortgagor? When they are taking all this money from me for interest and yet I still have to pay for the insurance. 

 

One of the multiple ways I was thinking of saving money was if I were to use my car rarely. (no gas, lower insurance and paying off my car and other loans). Which I estimate would be over a $1000 a year in savings. Then I know this is a weird one, but I for one would eat my lunch at my apt and etc. I think this would save me money as I wouldn't buy things I wouldn't need. I estimate this to be anywhere from $200-800. 

So, I think I've decided to rent for another year maybe two and try to pay down as many loans as possible. Plus, save money as I can. I realize the more you can put down the more money you can save on the back end of a loan. 

I think one of the important things for me to pay off would be my car, then I could really start saving a lot of money now just in payments but in insurance too. Plus, I still have some weird things going on my credit report, so I'm hopeful that I can get that cleaned up as well. (But this I've been told can take a really long time to correct)

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