Phil, please help

[iamme]

As a longtime reader and fan of Phil ;D

Don't know what is best, please help me out.

Current rent is $1350 per month

Looking to buy condo of $200,000 would like down-payment of 10 percent (that I have in savings plus I have an ef that I do not want to touch) but PMI would be approx. $80 per month. I have QDRO funds that I can withdraw the additional to make 20 percent down but then that would eat 30 percent in taxes off the top (25 fed. 5 state) plus the loss of earning opportunity. Would have to withdraw $29,000 to get $20,300. I am looking at approx. 4.50 APR taxes of $2,600 per year and condo fee of $350 per month (includes heat). So what is the best option for me over the next 7 years - I plan to only be here for that long. Also, figure $3,500 in closing costs as a ballpark. Please let me know what I am forgetting. Thanks!

[phil5185]

Agree, I would not touch the QDRO.

A couple choices - make the $20k DP, pay the $1479/m. And either pay the $80/m PMI and wait for the market to 'give' you equity - or borrow $20k and pay about $200+/m on a shortterm loan - ie, a credit union personal loan, a loan against a car, etc. Persoanlly I would pay the PMI, making the cost $1560/m. But I have also done both of the others.

The point is, we can't know which will work out best so you pick one that has an acceptable outcome to you now. The actual outcome depends on the next 2 elections, global events, etc. In fact that is why corporations have so much cash held back in their treasuries - the unknown. They cannot spend money to expand, build, hire, w/o having a way to estimate future demand for their products, future taxation, future govt regulations.

Just as you cannot estimate what a $200k condo will sell for in 7 yrs. The population keeps growing, people continue to need places to live - but will our new laws favor landlords to provide those homes as lower cost rentals? Or encourage families to buy their own homes? We've seen both extremes from govt over the past 20 yrs, hard to guess which way will gain favor 2 yrs from now.

Another variable - maybe renting at $1350/m will turn out to be the best choice over the 7 yr period (I assume the plan is to retire in 7 yrs, and move elsewhere?)

[iamme]

Thanks so much!

[tskeeter]

iamme, I took a quick look mortgage rates for a $180K mortgage and came up with these numbers.

Principal & interest $900
Property taxes 220
Homeowners Ins. 50
PMI 80
Association fees 350
Tax Deduction -130

Total $1,470

Current rent $1,350

This doesn't account for lost income from not having your down payment and closing costs to invest.

Other considerations:

[Deleted]

I think the time you are staying and the fact that you would pay more for the mortgage than the rent makes me say this is a bad move.

[iamme]

Thanks everyone!