Dear Liz: I am a single mom who has been renting a condo for seven years. My landlord decided to increase my rent and for two weeks I didn’t know by how much. In the meantime, I looked for a house so I would have a Plan B. I found a totally renovated foreclosure. By the time I found out what my new rental amount would be (just $46 a month more), my son and I had decided to get the house. I used my entire life’s savings of $25,000 as my down payment. Now I owe $62,000. Do you think I made the right decision to buy the house, or should I have stayed in the condo and continued renting? I am torn.
Answer: Of course you are. That’s a very common emotion after taking such a big step.
Tying up all your money in a single purchase or investment is never ideal, but what’s done is done. Focus now on rebuilding your savings (including your retirement savings) and keeping your house in good shape so that you don’t face expensive repairs down the road.
You’re unlikely to get any tax benefit from this home, given your enviably small mortgage, but you will build equity over time as you pay down the loan. You’ll quickly discover the many challenges and rewards of owning a home, which most people prefer to renting.
We also decided to buy after rent just kept going up. I used to fret if we made a smart financial decision. But after a year I love being a homeowner. I enjoy modifying my home to my tastes and I don’t have to wait for the repair man to get around to fixing something. We just get it done. And there’s much satisfaction to be had in knowing that this old little house is ours. It’s a decision I don’t regret but I was definitely stressed about it in the beginning. I feel much better knowing that our money is going towards building equity than just down the hole.
My mortgage co.kept stalling on the mid-80’s high interest loan approval because I was a “lower-income high risk female”. Once my 30 year loan finally got approved, I paid it off in 9 years via monthly principal prepayments as it saved me more than any tax advantage would have. With advancing age, I did the same when I moved into a condo. The monthly management fees are much lower than rents here, so no regrets here. Come what may, the place is mine.
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