Should we sell our condo and buy now, or rent bigger and wait?

Hi Travis, If you are talking about renting a larger place as opposed to buying...will it actually be cheaper and allow you to save up all that money quickly? If not, I'd buy and take the tax benefits from home ownership and start building equity in the new place now. Building an emergency fund PLUS saving 20% sounds tough. Maybe consider purchasing with less than 20% down, saving up for emergencies and then refinancing in a few years.

Travis, you and your husband are not actually disagreeing about a house. You are disagreeing about two separate things, and once you split them apart the answer usually gets obvious. The first is reserves. That is his point, and he is right about it. The second is the down payment percentage. That one is worth less than he thinks, because 20 percent is not a permanent gate. Under the Homeowners Protection Act of 1998, private mortgage insurance has to terminate automatically once your loan hits 78 percent of the original value on the original amortization schedule, as long as you are current, and you can put in a written request to cancel it at 80 percent. So PMI is a temporary line item with a legal expiration date, not a penalty you carry for 30 years. That changes the math. Going from 10 percent down to 20 percent down does not buy you safety. It buys you a slightly smaller payment and an earlier PMI drop. Reserves buy you safety. Here is how I would frame it for the two of you. - Decide on a reserve number, not a down payment number. Six months of the full new payment (principal, interest, taxes, insurance, and any HOA) sitting liquid after you close. Add your insurance deductible in cash and roughly 1 percent of the purchase price a year for maintenance. - Fund that first. Whatever is left over goes to the down payment, and if that lands at 8 or 12 percent instead of 20, fine. - Run the rent scenario honestly. A bigger rental plus daycare, in Fargo, minus the mortgage interest and principal you are not paying, minus the equity you are not building. If the monthly gap does not clearly beat the mortgage, the plan does not work no matter how disciplined you are. One thing I would flag on selling the condo. The equity in it is already yours. Once you sell and rent, that becomes cash sitting in a checking account, and cash sitting in a checking account for two years with a toddler in it has a way of getting smaller. If you sell, that money needs to go somewhere it cannot be casually spent. And on timing, nobody can tell you where rates or Fargo prices go. What I can tell you is that daycare is a five year expense and a mortgage is a thirty year one, so stretching for a few years to get into the school district you want is a real strategy, as long as the reserve number is funded and not just planned. I am a real estate professional, not a lender or a financial advisor, so run the actual payment and PMI numbers with a loan officer before you commit to either path. I am Zoltan Peresztegi, and I work in Los Angeles and the South Bay, so Fargo is not my market, but if you want a straight-shooting local agent up there I am glad to make an introduction. Either way, feel free to reach out. Zoltan

Travis, just something to keep in mind: rent is money you don't build equity with. If you decide to rent for a while, I'd try to keep your monthly costs as low as possible so it doesn't reduce your ability to buy later. One thing I've seen happen is that people sell with the intention of renting for a year or two, but they get comfortable, time flies, and suddenly it's been three or four years. By then, home prices may have gone up, making it harder to get back into the market than if they'd stayed put or bought sooner. Best of luck with your decision! Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States