Bignate603
Lifer
- Sep 5, 2000
- 13,897
- 1
- 0
Hahaha. Yeah. I think everyone else has covered this already.
The main problem with buying when you're really young is that you might change your priorities, including jobs. That may mean having to move. Typically, if you buy a house, you want to be in it for at least a few years or some type of longer-term deal because the costs associated with buying and selling a house are not trivial, especially with the real estate market in such uncertain times right now.
A few years ago, it was fine because you could just flip it for more money and it was no big deal. But right now, the market may be flat for 5 years. So if you buy a house for 70k, you may not get the 70k back unless you hold it for a while. No one has a crystal ball about future prices. Renting has the advantage of being able to pick up and move if you get a new job or whatever.
Now, if you're dead certain that you can afford the costs of owning and will be staying in the same spot for, let's say, 10 years, then that's different but most people at age 19 can't guarantee that.
However, it is good to start saving for a down payment so that when the time comes to settle down, you have the money and don't have to pay extra fees, like PMI.
Like everyone else has said, pay off the CC and the car loan. Then, save the rest. A house, especially a primary residence, should not be considered an investment usually. Ask all the people who bought in 2007 how that worked out.
zzuupp
Lifer
- Jul 6, 2008
- 14,866
- 2,319
- 126
It's good that you're already saving. If there are no prepayment penalties, I'd get the car loan paid off. You're paying more interest on that than you are earning in your savings account.
pay off the credit card this week.
if your going to go to college then save for that. if not then think about going to college and save for that
rent vs buying a home calculator:
http://www.nytimes.com/interactive/business/buy-rent-calculator.html
if your going to go to college then save for that. if not then think about going to college and save for that
rent vs buying a home calculator:
http://www.nytimes.com/interactive/business/buy-rent-calculator.html
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You don't need to save that much. FHA is 3.5% down. They also allow you to borrow an extra 6% to cover closing costs. The total you can borrow would be 102.5%.
So for an $85k house you would need $3k available.
So for an $85k house you would need $3k available.
It does make sense. You need a six-month, or more, emergency fund to be able to get by in case of job loss.
sdifox
No Lifer
- Sep 30, 2005
- 100,510
- 17,957
- 126
Bignate603
Lifer
- Sep 5, 2000
- 13,897
- 1
- 0
His credit card is only a few hundred bucks. There's no reason why he can't get rid of that in a few weeks.
If you can qualify for a mortage on a reasonably-priced home, it's probably the best thing you can do for establishing your long-term creditworthiness.
I think that you should use the math for a 30-year, fixed rate mortgage as the baseline for determining affordability. You've got the 20% down to avoid PMI part fingured out, which is smart (you'd probably have a difficult time qualifying nowadays without putting that much skin in the game up front anyway, but still). I'm not saying that that's the mortgage you should purchase, though it's safe and predictable... just don't allow yourself to be tricked into thinking you can afford something you can't with loan terms that aren't permanent. Probably not as much of an issue in your price range, though.
Be very cognizant of comparable real estate values near the home you choose; do your homework here. Study the neighborhood thoroughly to make sure you're not moving into an area with crime/gang/vice problems. Little things like proximity to large freeways that contribute to noise outside the home matter also.
If you purchase a pre-owned home, get an inspection done by an inspector who can trust is on your side and not the seller's. If you've never bought a home before, they're going to spot potential problems that you might miss. And some of those can be sigificant in terms of repair costs.
If the home is part of a homeowner's association or covered by a site condominium agreement, be VERY careful. Do some research on homeowner's associations to learn about some of the horror stories they are a part of. I'd avoid getting into one of these if at all possible.
Good luck...
Are you 100% sure you want to live where you are now for at least five years? Is your job/career stable?
Are you buying for a place to live long term or to prove you aren't a fuckup? Owning a house doesn't absolve you from being a fuckup nor does not owning a house mean you are a fuckup.
Somebody posted a calculator but in general there is a timeframe where buying a house is worse than renting. It depends on the area but just keep it in mind.
In your case I'd say just keep saving until you have 20% + closing costs + emergency fund. Housing sounds super cheap there so that shouldn't be too hard. In reality I'd say save for five years, see where you are and then decide but I say that because at 19 I know I didn't know exactly what I wanted.
Are you buying for a place to live long term or to prove you aren't a fuckup? Owning a house doesn't absolve you from being a fuckup nor does not owning a house mean you are a fuckup.
Somebody posted a calculator but in general there is a timeframe where buying a house is worse than renting. It depends on the area but just keep it in mind.
In your case I'd say just keep saving until you have 20% + closing costs + emergency fund. Housing sounds super cheap there so that shouldn't be too hard. In reality I'd say save for five years, see where you are and then decide but I say that because at 19 I know I didn't know exactly what I wanted.
FHA is a huge PITA. And if you look into all the "fees" associated with FHA, you'll quickly realize you need more than 3.5%
Says who? If I had the money, I would buy a second house right now. I can't think of a investment that would provide a better yield in a 5-7 year period.
Bignate603
Lifer
- Sep 5, 2000
- 13,897
- 1
- 0
Much of the benefit of having houses as investments is the ability to deduct mortgage interest on your income tax. That might be going away for second homes which would negate quite a bit of the benefit that you could get from it.
Not really. I've done all my mortgages through them. First one was under $500 out of pocket.
I bought my first house five years ago, put $30k into it, and am about to sell it for what I paid for it in the first place. Would have been better off renting.
Red Squirrel
No Lifer
Not really, with inflation and all, everything goes up unless you're talking about ghettos like Detroit but those are abnormal situations. For example my parent's house cost them maybe 80k (I forget the exact number, may have even been lower) to build 25 years ago. Now the same house would be close to 200k to build. Lot of renovations helped increase the price, along with the overall market value going up over the years.
But that said, it's not really the future value that matters, it's the fact that it's your place to live. Pick something you like, and go with it, knowing that it's yours to do what you want with... well within bylaws, but you know what I mean. The value is a nice piece of mind that if you land yourself in a really nasty financial situation such as get sued for something stupid (which happens a lot in the states) or lose your job, you can always sell.
virtuamike
Diamond Member
- Oct 13, 2000
- 7,845
- 13
- 81
No reason to carry debt if you're able to save. Pay off the cc and the car and start a Roth IRA. You're 19. Worry about a house in a few years after you have some money saved up and have a better idea of where you're going with your career/life.
Bignate603
Lifer
- Sep 5, 2000
- 13,897
- 1
- 0
You're extending your experience in one part of the world to others. I live in Phoenix and bought a house for less than 1/2 it sold for a few years ago. I'd hardly put Phoenix on par with Detroit, the economy took a hit but it's still doing ok. Phoenix isn't isolate either, there are plenty of other decent areas that saw absolutely massive declines in home values in the last few years which completely disprove your claim.
Capt Caveman
Lifer
- Jan 30, 2005
- 34,543
- 651
- 126
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