Q. My fiance and I are planning on living in Hoboken, NJ after we are married. We plan to be there for at least 5 years.
My question is, is it a good idea to buy, if we will only be there for 5 years? I have been pre-approved for a mortgage of $390,000. and we have 20% to put down. Our mortgage, tax and fees would be a few hundred dollars more that what we would have to pay in rent.
I want to make the right decision. Please help! -Linda K.
A. It is a GREAT time to buy in today's market. There are many bargains out there....and it’s a great time to get into some financing too. Not sure why you only want to be there 5 years, but it would be great if you can pick a place you see yourself in for longer than that because money is cheap to borrow today and prices are low as well.
One thing we know is that inflation is likely to come in the 3-7 year window and if you can avoid having to move and buy again at that time when interest rates are higher and real estate prices are higher, that would be ideal.
Also, if you do move in the 5 year window, I would suggest that you then take out of mortgage and stay on the same amortization level you are currently at, so if you only have 25 more years to pay on the current mortgage, when you buy the new place, plan it so that you are NOT adding 5 more years, pay that one off in 25 years or less.