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ISUAlum2002

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Apr 11, 2006
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Toon Town, IA
I'm guessing it's not a great rental market in M-Town, so renting it out while you go purchase another home isn't an option. I'd probably just stick it out.....unless I was really needing to move due to work or something, I'd ride it out.
 

twojman

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Jun 1, 2006
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Clive
I'm guessing it's not a great rental market in M-Town, so renting it out while you go purchase another home isn't an option. I'd probably just stick it out.....unless I was really needing to move due to work or something, I'd ride it out.
I am with this guy. Is the larger home a need or a want? Do you have enough for 20% down on a different house?
 

Clonehomer

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Apr 11, 2006
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Really the market isn't likely to get much better anytime soon, especially in Marshaltown. So if you wait it out, how long will you have to wait? And more importantly, are you getting a discount on the bigger house that you won't get when the market does improve?
 

roundball

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Dec 8, 2013
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Iowa City area
You aren't really "losing" money if you've owned since 2007, since I'm guessing you've built enough equity in that time to absorb the difference in what you bought it for and what you'll be able to sell it for.

Other things to consider: whether you can get a better interest rate now (you probably can), whether you can avoid PMI by putting 20%+ down, how long you'd plan to stay in your bigger home, etc.

Either way, if I owned a house in Marshalltown (a stagnant town at best) and was already having trouble selling it with interest rates at near-historic lows, I'd certainly be wary of buying an even larger, more expensive house.
 

chadly82

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Sep 10, 2009
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We are considering buying a larger home.

The problem is we bought at the peak of the market in 2007 and in Marshalltown values have not gone up at all. In fact many houses are selling for less than the owners paid for them, even in 2015.

Would you sell your house for less than you bought it for, not including all the upgrades you out into it? We would be looking at a straight loss of about 10k plus the "loss" of all the money we spent on upgrades, totalling about 15k. So 25k overall.

We don't need that money but I don't want to lose it either (who would?!). Would you consider selling or just hold steady?

If you don't need the money you can give it to me....I wouldn't sell but that's just me. How many other areas of your life would you take 25k and just say meh no big deal? To be honest too many people lose money in real estate by either refinancing too many times or moving too many times. Just my advice but theres no way id sell at this point!
 

cycloneworld

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Mar 20, 2006
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Urbandale, IA
You aren't really "losing" money if you've owned since 2007, since I'm guessing you've built enough equity in that time to absorb the difference in what you bought it for and what you'll be able to sell it for.

Going this route, would the loss be out of pocket or equity? I'd also ride it out unless you NEED a bigger house. It's a seller's market in the DSM metro (not sure about Marshalltown) so you'd be buying once again at a potential peak. That alone would make me wait.
 

SCNCY

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Sep 11, 2009
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La Fox, IL
If you need the space, why not just build an addition to your current house?

But like others have said, if you want to move just because you want a bigger house, I would wait until a better market.
 

clone52

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Jun 27, 2006
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If you are buying a 200K house and putting 30% down, on a 30 year fixed loan, if you get a 3.75% rate now, you'd pay about 94K interest in those 30 years. If you wait and interest rates go up, you'd pay 115K at a 4.5% rate and 130K if you get a 5% rate.
 

cycloneworld

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Basically I put down 30k when I bought a house right after college at the height of the market.

The balance of my current mortgage is about 80k. If I sell my current house I'll still walk away with 25k in my pocket after the agent commission (to help the new down payment - of which I already have about 45k set aside for).

The market here is less than what I paid for the property in 2007 so I'd be losing equity but not straight cash. If I had been renting I would have spent about $75k in the time I've lived in my house so it's not like I'm doing horribly. The one thing I learned from all this is that putting down a lot of cash really helps out the situation.

True but you are still losing $25k. Whether you have to write a check for it at closing or if you put more down.

If it were me, I'd hang on for a while longer if you don't need the bigger house immediately. Or put your house on the market now and see what it might go for.
 

IsUaClone2

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May 12, 2006
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Northville, MI
Typically my assumption is that the market moves the same on 80% of the houses in a market. The lowest and highest 10% don't react in the same time frame. I'd also assume that when you bought in 2007, the house you are considering was valued higher than it is now. Thus the gain or loss remains proportional in that if you were to have a gain on sale of your present house, the price of your new house would be larger effectively off-setting your gain. Accordingly, I'd make the move. Your present house makes a good starter home and there should always be a market for it. It sounds like the house you are considering would make a better family home and serve you better.

The real key to real estate markets is to have growing communities.
 

Rather

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Jul 21, 2014
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True but you are still losing $25k. Whether you have to write a check for it at closing or if you put more down.

If it were me, I'd hang on for a while longer if you don't need the bigger house immediately. Or put your house on the market now and see what it might go for.

The $25k is a sunk cost and shouldn't be considered at all. The things that should be considered are current/ future finances and current/future home.
 

ArgentCy

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Jan 13, 2010
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I've seen a lot of home sales in a market that is probably fairly similar to Marshalltown. The prices don't move much as there is never a time where demand outstrips the supply (ie real growth). The market has been good this year with lots of homes selling but not a real noticeable price increase. I don't know about the county but around here homes outside the city limits with larger site or acreages have held their values much better than in the city limits. Although, I believe that might have to do with 1/3 higher property taxes in the city.

Overall, I think the general real estate market could/should peak later this year as interest rates start rising. I would be leary of overleveraging your investment in a house.
 

pulse

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Mar 24, 2006
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So should we buy now with lower interest rates or wait? I don't think our current homes' value will increase much and if the market moves enough to raise my value there is no doubt the house we'd like t buy would go up as well.

Sounds like you want to move. GTFO and buy the house you want to live in.
 

Dopey

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Nov 2, 2009
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this, sounds like your mind is made up and if you feel comfortable swinging it go for it

I agree. Do what you want. Sounds like a fairly cheap house. If you would have been renting this whole time like most people right out of school, you would have "lost" a similar amount of money towards apartment payments.

A home is a place to live. Not an investment.
 

4theCYcle

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Jul 14, 2013
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Urbandale, IA
So should we buy now with lower interest rates or wait? I don't think our current homes' value will increase much and if the market moves enough to raise my value there is no doubt the house we'd like t buy would go up as well.

It's still a good time to buy even if you aren't getting full value out of the house you are selling, since interest rates are remaining low. For how long? Who knows, speculation is slight increases later this fall/winter. I'd consider going a 20 year fixed if you can sustain a higher monthly payment. That $25K that you are talking about "losing" you could gain by not having to pay as much in interest over your lifetime. I realize you wanted to keep your mortgage payment roughly the same, so it may not work, unless you put a little less down initially. I'm assuming you want to avoid PMI by putting 20% down on the house. If your credit is good, you can look at different financing options. I went with a credit union. I put 7% down. They loaned me a 13% loan at 3.75% while selling out the 80% to a bank. I don't have to pay PMI.

Another consideration, you could sell the house yourself and bypass paying 5-7% commission. List the house a little lower than comparables and you can still come out slightly ahead or alleviate some of the blow. There are websites that cater to for "sale by owner" and you can still list it on the MLS to allow agents/others to view it.
 
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