We are a family of 3. Couple with one kid (2nd grade). We have been in states for 13 years. All these years we have been renting. So far I preferred to rent. But the rents are going up. Currently, for a decent 2 bed apartment, its costing up $1500+. Currently, we are renting a condo for $1300. So we are thinking of putting that amount towards mortgage and buy a house. Its in Illinois Chicago Suburbs. As a first time home buyer, so many questions...
First up some background:-
- We both combined make close to 200K year. (My wife started working a year ago)
- No Credit Card debts ever.
- Bought a 2nd car last year for $18K (with 6K down payment and 12K loan for 2.5% interest. Paid about 6K.)
- 80K in bank for downpayment, if buying a house makes sense.
- Credit score (Equifax 766, Transunion 739, don't know the other one). Pulled in the reports. There were two late payments back in 2014 and another one in 2013. Credit history is a little over 9 years.
- My wife does not have a credit card of her own. So not much credit history.
- Monthly expenses about 2800, includes rent, school, car payment, groceries, etc.
- Considering up to $300K home, if buying a home makes sense.
With rent $1500+, would paying that amount + a few more hundreds towards mortgage makes sense? Or still good with renting? I am planning to stay longer in one place. But I understand with renting, I can move freely. But each year, rent goes up by $100 to $150.
Buying a townhome vs single family home. Any pros and cons? I am actually looking for townhome the decent one I can buy for $250K. Single family home costs a little over $300K. Not that comfortable with that amount, unless there is a clear advantage over townhome. Everyone seems to suggest single family home. I am not looking for house as an investment, but as a saving from paying rent.
Mortgage: Should I go for 5/1 ARM or 30 year fixed or? The average rate for 30 year fixed is around 3.6. With my score (as mentioned above), can I get lower than 3 on 30 year fixed? possible?
Should I put more towards downpayment or pay extra every month? Or invest those amount instead of paying towards mortgage?
I don't see much tax benefit here. 12.6K standard deductions would outweigh taxes + interest on $200K loan. Do I still benefit from buying a home vs renting?