Can Buying a House Be Frugal?

[ModernTightwad]

I'm having an internal debate about buying a house. My husband and I love small space living, and I stumbled across a house in a neighborhood we like. It's close to our friends, resources, public transportation. It is bank owned, under 800 sf (we like small space living), but a small fixer so I wouldn't be comfortable paying full asking price. However, even if we did, our payment, including taxes, homeowner's insurance, and possibly PMI would only be $50-75 more than our current rent. After crunching all of the numbers, our complete household expenses would only go up $200 a month over an above what they are (and we have that flexibility, plus a little)...and that's in a worst case scenario! So I wonder if this would really be a smart decision, or if I'm just looking at the house through first time homebuyer tax credit glasses.

Things that are stopping me:
Having never dealt with a septic system before, I have constant nightmares about it exploding and having 50 years worth of poo rain upon me.
I worry about everything breaking at the same time.
We have debt.

Things that are prompting me:
I know my septic fears are irrational and I can have the house inspected.
We have been married for five years, and I am looking for a bit of permanence; I am tired of putting major decisions on hold, and "we can't because we have debt" is almost becoming an excuse not to make grownup decisions.
We could put aside the entire tax credit into a home emergency fund or use it to pay off our remaining toxic debt.
It's the same as our rent for crying out loud!

So, I ask you wisest bread forum members.... is there ever a time where buying a house is the frugal/smart decision?

[trustno1]

Well, here is one personal opinion...

It is almost Halloween, so try this...

Go into another room and put on suit, tie and some unpolished black shoes. Make a name tag with the title "V.P" of "Spanky Banky" to pin on your coat pocket. Now come back in the room and pretend somebody just handed you the message that you just shared with us.

Now, right down your FICO score, credit history, payment history, current debt, income vs expenses, (your monthly income vs fixed monthy expenses), savings, investments, your employment history, and a copy of all three CRA's credit reports(Trans Union, Equifax, Esperian).

Now take a look at just that data. Even if it all looks "good", ask yourself if you could see yourself running a rented pump that is draining that septic well, all moved in and cozy in your new home...within the next month...before the $8000 program expires...?

just a thought...depressing...but realistic...

[ModernTightwad]

The problem is, I'm horribly efficient. The data does look good, and I have the name of a highly reputable septic guy who will do a pre-buy inspection, and would pump the septic for a very reasonable rate. Since we live in a 484 sf studio, we can move our stuff easily (in two days), and could close in as little as two weeks. So yeah, I could get it all done. I just don't know if buying itself is a smart decision, or if it's more frugal over time to buy or to rent. Oh, and I plan on retiring out of whatever house we buy; I'm not a move around sort of girl.

[trustno1]

Originally Posted by ModernTightwad

The problem is, I'm horribly efficient. The data does look good, and I have the name of a highly reputable septic guy who will do a pre-buy inspection, and would pump the septic for a very reasonable rate. Since we live in a 484 sf studio, we can move our stuff easily (in two days), and could close in as little as two weeks. So yeah, I could get it all done. I just don't know if buying itself is a smart decision, or if it's more frugal over time to buy or to rent. Oh, and I plan on retiring out of whatever house we buy; I'm not a move around sort of girl.

Wow, 484 sqft...just move into the Rental Moving Truck. Then you could tour the country, use public rest areas (no septic issues), and have a lot of fun. Oh yeah, a job, forgot about that nuisance...nevermind that idea..lol. Jus' kidd'n...

IMO, if you can pull the loan, do it. Owning is always better than renting. Anything that eliminates anyone controlling any part of your life is a good thing (in my opinion). I have already had parents once. It was fun and I loved them, but I do not want any replacements...I am a "grown-up" now (but I am not planning on growing up anytime soon, lol).

Just cover the terms of septic system functionality in the transaction and drop some subtle "innocent" sounding concerns about "inhabitability" and "liability" in a friendly...cough,cough..."Erin Brockovich-ish" cough, cough manner...during the discussions.

Did you mention if your Septic buddy owned a back-hoe you could borrow? hehe
Hey, for around $6,000 and a couple tile trips to Home Depot and you will be flushing goldfish like a champ.. Nobody has been using the term "money-pit" by any chance, have they?

If you can grab the $8,000 before the end of the deal timeframe, I would do it. Or if you miss it, see if the bank will give you the $8000 that they will probably be getting, instead of us in about a month...lol. It is such a small deal (sort of, no offense intended), that I would do it. If it was big $, I probably would not.

Seriously, (that's a stretch for me...but) I am in the same rental boat, but it is much bigger, and I have different (gold-digging ex)reasons for choosing it. I am looking right now and trying to do it snagging the $8000, since "technically stretching, er, ah speaking"...I am a first time buyer (on legal paper) too.

Hey, every home is a "nightmare" in it's own way. At least it is "your" nightmare. "It's not just a (septic) job, It's an adventure!"

Can't say more without more details, but it sounds like you are astute enough to know all of the cards being played, and will do fine. Now, jump...people are waiting in line behind you...lol

[Xin Lu]

Buying a house could definitely be cheaper if in your area rent is more than or just a little below your mortgage+tax. In fact when my parents bought their first house over 10 years ago their costs of owning were just a little above renting, and now after 10 years the rent for a similar house is more than double their mortgage. I would worry about the loan/financing aspect more than the maintenance now because if you choose to buy a house there will always be maintenance costs. Also you have to realize that you might not get this house you have your eye on. Buying a house is actually harder than just picking out the house you want and making an offer. So I would say research the process of buying a house first, and then worry about moving in and maintenance costs.

[trustno1]

Oops, just remembered...
I have a buddy who bought a house about 8yrs ago that was built in the 50's. Believe it or not...485sqft!! 2rms + small bath (large lot). His septic went south to point of using a bucket....ugh. Anyway, rented a industrial rooter machine...total was about $250 before giving up. Then he hand dug 5' deep hole to foundation access...gave up...rented a BobCat and a friend to operate it..dug up about 50 lineal ft of sewer tile line in back yard...gave up about $1200 later...Called a "pro" to "scope" the line with a camera...$200ish...Called a Pro to rooter the line to the alley and redo tiles to code...about $1300 if I remember correctly...(as expected...it was tree roots blocking line). A few misc charges for permits, inspections, etc and he was back in business.

Hope that helps. As suggested above focus on finance now, it is all that matters today.

GoodLuck