Hoping for a reality check of our finances here as my partner and I are having debating whether to keep renting or buy. I'm currently living in a 700 sq ft apartment that's renting at well below market value for $1300/month. Utilities run ~$150-300/month (incl. common area utilities). Other expenses are about $2000/month credit card bill (all expenses are put on it except groceries and utilities). Groceries are about $400/month for us. We have to do a lot of home repairs and maintenance in our rental so we have an idea of what those things cost.
We can't stay in the $1300/month rental after this year and the rent after that will be $1800/month plus utilities for a very crappy 1 bed. I do not want to consider renting or buying a 1 bed as we need the room- the idea is to have a kid soon if we can, plus the quality of housing we live in is really poor (old apartment, lead paint peeling, no dishwasher/laundry, we do snow removal/yardwork, etc). If we rent anything less than $2400/month it'll be the same quality of apartment we have now, which I don't want long term- I've already done that enough at age 37.
The problem is despite me doing a ton of housing research showing my partner the cost of housing around here, it somehow didn't sink into him that the housing really costs as much as it does until we started going to open houses about 4 months ago. He is under the impression we'd make more renting and putting money into the stock market and I'd like Reddit's opinion.
The math: Income $100k/year (me) ; $45k/year (him); broken down it's $2360 and $1474 biweekly (I pay for all med, dental, etc) Current assets: $127k in a combo of IRAs/401k, and other liquid investments (me). He has ~$73k in total savings, IRAs/401k.
Housing: $~500k (2 bed condo in our area). You cannot buy a 1 bed condo for less than ~350k, so I realize it looks high but really isn't. The mortgage, taxes, HOA would be roughly ($2500-3000/month) If we rented it'd be $2400/month, but paying forever and with rent increases obviously. I wouldn't be shocked if our rent went up to $3000-3500/month within 10-15 years. Downpayment: $144000 (more than 20%) We plan to save for another 18 months to get this amount. At that point we should have a lot more in my retirement account- I max out my 401k and my Roth IRA, and he maxes out his Roth IRA as he has no 401k retirement account.
We'll keep the other money in the IRAs/Retirement funds. We won't be touching retirement funds for the downpayment or housing.
He is arguing with me that at this rate we'd be better off investing and renting the $2400/month apartment. I don't think his math adds up, especially projecting out to retirement time when we'd still be paying rent. He also stated we could wait years and then get a 15 year mortgage, but I don't know if we actually save given the rent. Rent increases here regularly. I also know you get deductions and such from mortgages on your taxes- we file jointly but I don't know how much that saves. However I don't want to make a dumb financial decision.
Submitted February 13, 2018 at 08:03AM by Jergens1 http://ift.tt/2BrvWaM
