New Car vs. House
Hello! My husband and I find ourselves in an odd situation and I'm hoping YNABers can help with advice.
We just finished saving for a down payment on a house and are ready to start looking. In the current market, I expect this will take 6 months or so to find something that we like/can get without having 100% down.
We have two cars, one of which is going to die soon. It's been dying slowly the past month, and will most likely need to be replaced in those same 6 months. We do have money for a deposit and will have a car loan for the rest. The car we will replace is not critical - we carpool to work and would be able to survive with one car for quite awhile (although it makes my husband nervous, as the car we will be using is actually older than the car we are replacing).
Should we replace the car and have the loan on our history (we are both currently debt free with excellent credit scores) for when we purchase the house, or should we purchase the house first and then get the car/loan?
TL;DR - Should we purchase a new car or a house first?
Thank you to all in advance!
Since the car is not vital to your life, I would keep the old one until it dies. Don't put any extra into it if something expensive breaks down. If it does, get rid of it. You can rent a car if you need one for short term reasons and that will be way cheaper than buying plus won't affect your credit rating.
Even though houses are expensive now, I've read they are expected to keep going up. A new car will only depreciate. Committing to a house when you can barely afford it is difficult. I had to get a second job for a while when I bought my first house. After a few years though the payments became relatively low as the cost of everything else went up. Looking back on it, I miss the time I could have spent with my family, but it set me up very well financially for the long term.
MXMOM Budget Conquistador Periwinkle Flute
All of this is so true - we find ourselves in a weird situation. There is a large part of me that understands that owning a house isn't necessarily better than renting. However, my rent just raised 20% (it hurt to actually calculate that out) in 2 years. If that is going to become the common occurrence, then no - renting is not better.
I agree that there will be a change once baby boomers downsize/die there will be a larger inventory of houses, which will cause the house I purchase now to lose value. I don't know if there is a way to play the housing market to win... It is such a long game that I don't necessarily care - maybe that is wrong as well?