Dear Monty: I live in the Washington, D.C., area, where home prices are always higher than in other parts of the country, and I hope to move closer to the city. I work as a freelancer and have about $150,000 saved up. I think I will have to get a modest condo if I buy now. Suppose I move farther away from the city or have a bunch of roommates or renters. Single-family homes around here are typically $600,000 to $1,000,000, and even townhouses are like $500,000.
I might find getting a mortgage hard because I’m a freelancer. I’m currently not paying rent, but I’m 39 and want to own my own place. Would it be better to get the modest condo (which I might not like) now before prices and interest rates go up? Or should I keep saving (despite my less-than-optimal yet affordable living situation) until I can afford the more expensive house? What about buying a place where I might be somewhat overextending my resources and then renting out the basement (or living in the basement and renting out the rest)? I don’t have prior experience with real estate, so I don’t have that much of a sense of how feasible or risky that would be for me….