Continue renting or buy a home
To give context, my wife and I are both 25, currently living in the Denver metro area, renting a 1 bed 1 bath apartment for $1,820 a month. (Space is tight haha).
- My income is $6,848 gross $5,088 net
- My wife's income is $5,003 gross $3,273 net
- Combined gross $11,852
- Combined net $8,362
We have zero debt
Current budget
- Utilities 150
- Insurance 327
- Internet 100
- Gas 232
- Groceries 500
- Dining Out 200
- Phone bill 120
- House supplies 120
- Other needs 320
- Gifts 100
- Wants 600 (300 each)
- Savings / investing 3773
We have 125k in savings / personal investments.
- Most of the cash is in Fidelity's FXAIX with 25k in a HYSA for an emergency fund
My employer and my personal contributions each month to my 401A are $1,301 a month
My wife's employer and her personal contributions to her 401K Roth are $375 a month
Now to the real question ... Rent or Buy
To preface, we are not looking at gated communities or high end areas, we are just looking for a decent home 3 - 4 bedroom home in a safe neighborhood in the Denver metro area.
With the current rates, and home values a $500,000 home with 20% down gets us to roughly a $3,200-$3,400 (all in) mortgage payment depending on HOA.
Of course, what we want in a home is in the 600-650k range but that puts us at $3,800-$4,400 or more a month all in.
If were being financially wise, dedicating roughly 38% - 50% or more of our net income is a no go.
We've looked at townhome's and condo's, but with the monthly HOA fees, specialty assessment's, reserves, poor market performance, ect. it doesn't seem like a wise option even if we put 70k-100k down and have a really low payment because we'd most likely have a hard time selling and be stuck with a property no one wants which has almost all of our net worth inside of it. Not to mention, we don't really want to buy either of these two options, we'd much rather buy a home.
As for renting, the current apartment we're at is very cheap, and we get what we pay for ... an old building.
We need more space and the room for children in the near future. We're currently looking at a 2 bed 2 bath apartment for $2,475 a month, Yes, it's a huge jump, and $500 - $800 away from a 500k home mortgage. The only difference is we're not in debt half a million dollars and in a home we settled for because of affordability and not what we wanted.
The reason for the price increase is because it's in an area we want to be in, and truthfully, we want something nice and that has good amenities. It's not a top of the line luxury apartment complex, but it is on the higher end.
With this apartment upgrade, were still able to sav 30k-37k a year.
Not only do I care about monthly payment, but financial freedom, stress free, happiness, ect. are all way more important than owning a home just to own a home.
The current plan is to rent for another few years, save up more, and put a whopping down payment down on a 600k - 650k home and have an affordable and comfortable payment OR even look at buying out of state where 300k - 500k can get you anything you want haha.
It may seem like we've made up our minds, and we kind of already have, but I wanted to reach out to the reddit world and hear different thought's, opinion's, and advice.
Is this a bad decision, are we making the wrong one, the right one, is there a better one? Are we missing out? Going to regret not purchasing?
Any help is much appreciated,
Thank you very much.
Feel free to ask any clarifying questions if I left anything out.