I am in process of buying house (A).
My thinking originally was we would buy a condo, put 3% down pay the PMI and get 5/1 ARM which would get me Mortgage payment ~$600 less than apartment wanted for rent if we moved to upgraded unit (which we have to do within a year or move out). Advantage was thought I could walk away saving a few dollars at expense of credit rating if housing market out here continued to plummet.
Problem with a condo is you never know what you are going to deal with as far as resident below or above you goes. My latest downstairs neighbor seems nice enough but he smokes about once an hour, his wife doesn't let him smoke inside and he has not adhered to my polite request to warn us when he is lighting up so we can close sliding glass door and windows for a few minutes.
I would rather have the brothel back downstairs than have apartment smell like cigarettes.
Townhouse has only 2 neighbors no one below so we have solved the smoke problem.
What I can't help but think is I own the downside risk of home price until down payment is exhausted and I also need price to rise 6% to break even.
Other risk is to choose 5/1 ARM at 3.375% or 30 year fixed at 4.625%.
3rd risk is that wife won't spend too much money once we are in a "home"
On positive side demon child gets to stay in same High School and would live closer to her BFF as well as my tax adjust cost of housing is fixed at ~ what I was looking at for rent in a year.