Should I try to buy a house when I'm in college?

[alkemyst]

Originally posted by: AUMM

Originally posted by: alkemyst

Originally posted by: AUMM
im a college student, and i recently purchased a house. put 60 K down monthly payments are around 2000. i have 4 other roomates which covers the mortgage for me. it's somewhat of a pain having to take care of everything, but its definetely worth it for me. It's awesome having a house and of course the chicks love it my house cost 570 BTW

Who cosigned? 60k on a 570k house is like 10%...most banks aren't going to do that kind of loan for a student, yet alone someone even making 100k a year.

Not to mention at 5% you are talking a 3k payment for a 30year loan, not counting the taxes at purchase, nor the insurance and property taxes yearly....

A 500k loan on an average house should come out to at LEAST $4000 per month roughly for most once insurance and taxes are figured in.....

cosigned by my cousin, makes well over 100k a year, that and we've made other housing investments in the same city. the mortgage is actually 1800 per month. i plan on keeping it for a couple years (till i graduate) then remodeling it and making some profit

What I am thinking is it's your cousin's house...still with even 200k a year in income a $570k house even if it was his primary residence would be a stretch for any bank to do....

The only way 1800 per month is possible on a $570k house with only $60k down is if it's a balloon mortgage and you are only financing a small amount of the principle with the full amount being due on some said date (a workable scenario would be you are financing only 150k over 10 years at 5% interest, on maturity of this mortgage you'd need to finance the other $360,000 in another mortgage, pay off or proceeds from a sale of the property). Selling for a profit in a couple years when doing a balloon is almost impossible as is really using them as investment most of the time.

In a market like the 1980's with high interest rates, it was a smart move to do....you wait for the rates to drop and refinance when and if it happens.....in today's market adjustable rate mortages and balloons are not the way to go, there is way more chance that the market will go rapidly skyward than stay the same....and even if it goes down, it can't go down that much more at all....there is a limit and we are getting close to it.

 

[AUMM]

Originally posted by: alkemyst

Originally posted by: AUMM

Originally posted by: alkemyst

Originally posted by: AUMM
im a college student, and i recently purchased a house. put 60 K down monthly payments are around 2000. i have 4 other roomates which covers the mortgage for me. it's somewhat of a pain having to take care of everything, but its definetely worth it for me. It's awesome having a house and of course the chicks love it my house cost 570 BTW

Who cosigned? 60k on a 570k house is like 10%...most banks aren't going to do that kind of loan for a student, yet alone someone even making 100k a year.

Not to mention at 5% you are talking a 3k payment for a 30year loan, not counting the taxes at purchase, nor the insurance and property taxes yearly....

A 500k loan on an average house should come out to at LEAST $4000 per month roughly for most once insurance and taxes are figured in.....

cosigned by my cousin, makes well over 100k a year, that and we've made other housing investments in the same city. the mortgage is actually 1800 per month. i plan on keeping it for a couple years (till i graduate) then remodeling it and making some profit

What I am thinking is it's your cousin's house...still with even 200k a year in income a $570k house even if it was his primary residence would be a stretch for any bank to do....

The only way 1800 per month is possible on a $570k house with only $60k down is if it's a balloon mortgage and you are only financing a small amount of the principle with the full amount being due on some said date (a workable scenario would be you are financing only 150k over 10 years at 5% interest, on maturity of this mortgage you'd need to finance the other $360,000 in another mortgage, pay off or proceeds from a sale of the property). Selling for a profit in a couple years when doing a balloon is almost impossible as is really using them as investment most of the time.

In a market like the 1980's with high interest rates, it was a smart move to do....you wait for the rates to drop and refinance when and if it happens.....in today's market adjustable rate mortages and balloons are not the way to go, there is way more chance that the market will go rapidly skyward than stay the same....and even if it goes down, it can't go down that much more at all....there is a limit and we are getting close to it.

hmmm, well its not my cousins house, he actually lives about 5 blocks down the road. and i know for a fact thats how much we're paying.

 

[jagr10]

If you're relying on renters to help pay your mortgage then don't get a house just yet. Don't invest the money in stocks if they aren't doing well. You should shop around for good interest rates with that sum of money. YOu want to be in a position to be able to pay your mortgage without renters. If you have renters then great, but let's say they don't pay or they leave then you're stuck.

My other advice is maybe to only put down let's say $40,000 or $50,000 on the house. Keep the exrat $10,000-$20,000 as a security blanket. Should renters leave or not pay you have your safety net.

You're pretty smart not have spent it after having it this long. Alot of other people would have probably blown all that on useless things.

 

[alkemyst]

Yeah that's smart he didn't blow it already

At 23 I stuck $40k into my house, $10k in Home theatre (probably a poor choice) and about $10k in furniture.....then took out about $15-20k in kitchen, roof, new a/c etc as an equity line.

House was bought at $115k (1995), about 10-15k undervalue (it needed work), nice 3/2 concrete block and tile roof with 2 car garage on a nice canal....the kicker was it had a 40' government easement behind it so they could maintain the canal when needed.... you couldn't build on it, but you could do some landscaping....it gave me close to 1/2 acre. I had a large pool and still had a backyard.

Once I got done it was like a model house....all maple cabinent, maple flooring, mexican tile, rocking home theatre, etc...unfortunately my ex-wife literally lost her mind in a car accident that left her and everyone else thinking she would be crippled or dead (she broke her neck at the same location Christopher Reeves did). I let her take the house which she sold to a relative for $102k....so I am willing to bet some cash changed hands on the backend....

It's a hard call ... since you are way past beginning college life, and with the rates low now, perhaps a house would be a smart choice. It's a great investment now if done right...but alot of it is artifical inflation....my parents house was bought new in unchartered land 3 years ago, they were the 3rd house in the plat. They paid a low price of $175k or something (about 3 or 4k sq/ft), now the smallest model is selling for over $300k....they quickly sell too. That house was $106k three years ago. Now all the developments in the area have houses starting at 300k up to 1M+.....right place at the right time for my parents. That's a rarity, but it's possible.

However you also have houses I looked at buying last year that were going for about $50k for a fixer upper....small at about 1000 sq ft, no garage, no CAH, etc, but a nice area about 5-6 blocks from the intercoastal. This area had the intercoastal and 3 streets of really nice homes at $150k+ (highly variable, some were rebuilt and in the $500k+++ to over 750k range esp on the water), then a major road, then a big price drop to like the $50k fixer and $150k for a nice house with CAH and a garage......

Now the investors came in (you can check the county land sale computer to see what ppl paid)....and bought up everything....you see things like Only asking $200k and you look it up and see the previous sale about a year and a half ago was $40k in foreclosure...

To me this is artifical....since you can buy a nice home with warranty for that $200k easily....have it be larger than 1000 sq ft and also come with central air and heat (CAH)....there are literally over 20 communities going up and probably over 20,000 homes now in West Palm Beach....that's being conservative.

So now I am renting a small apartment for $500 per month 1/2 mile from the intercoastal It's really really nice, a little small though but a great layout and with the proper furniture perfect, there are only 4 units here....the kicker is the guy bought this place on the corner of a now high priced area 6 years ago for only $120k. He lives in a 1BR, I live in the other, the other 2 apts are 2BR (BedRoom).....basically he is living for free and probably still gets back 100% of the interest he is paying and more.

If you havent enjoyed college life you can partake with 60k easily (I'd do only $40k and bank the rest as untouchable insurance)....if you have then you can start building equity early.

I'd go with something you can life with now, but rent out later at college rent pricing.

 

[dirtboy]

Don't forget you're going to be the landlord to your roommates and that you have to be prepared to cover the mortgage in case they don't pay on time or don't pay for /insert excuse/ reason or another.

 

[CrazyDe1]

I guess the biggest reason I can offer for buying a house is my parents almost moved about 8 years ago into a house which at the time was 200k brand new. When we were driving around looking for houses for me we went back to that area and checked out the same house down the street and it was selling for 575k at which point my dad crapped himself. 3 BR houses there are now 300k.

I actually intended to stay at home for 3 years and save up a huge base of cash but with the way the housing market is going, pretty soon housing is going to be unaffordable anywhere within 30 minutes of where I work so I bought now. Take into account your situation and your priorities though, it's not for everyone.

 

[alkemyst]

Originally posted by: CrazyDe1
checked out the same house down the street and it was selling for 575k at which point my dad crapped himself. 3 BR houses there are now 300k.

Ok so 3BR are 300k and your dad was looking at $575k...how many BR?

I am curious and not flaming....that indeed would have caused me problems in hindsight.

 

[CrazyDe1]

Originally posted by: alkemyst

Originally posted by: CrazyDe1
checked out the same house down the street and it was selling for 575k at which point my dad crapped himself. 3 BR houses there are now 300k.

Ok so 3BR are 300k and your dad was looking at $575k...how many BR?

I am curious and not flaming....that indeed would have caused me problems in hindsight.

The house we had signed and they had built that we backed out of was worth 200k at the time and had 4 BR's and a study. 3 bedroom houses that were 150k 8 years ago are now 300-325k. The funny thing was the only reason why they didn't move was cuase my sister and I were brats and kept complaining about having to move. My dad ended up commuting an hour to work each day because of us. The thing that's even funnier is for the first 3 monthes of my job I was commuting to my job about 5 minutes from where my dad used to work so it was me doing the hour long drive everyday.

 

[Jgtdragon]

Depending which part of America you live, I am in the Bay Area, the house price here is crazy. I just bought a small house and it costed me $425k and its a consider a good deal. Its an investment, if I don't buy now, in couple years no way you can buy.

 

[TripleAAA]

Yeah, as I mentioned before, house prices in my area rose about 22% last year. There is a lot of housing and commercial developments going up and the university I go to is also expanding by adding more dorms and other buildings. It seems like it would be a good investment "right now", but who knows a year from now what will happen.

 

Wait until you're out of college and have a solid income stream.

You can't afford to keep up the house with your current income.

 

[TripleAAA]

Originally posted by: SammySon
Wait until you're out of college and have a solid income stream.

You can't afford to keep up the house with your current income.

Which is precisely why I wouldn't use all of the money as a down payment. I'd rent out a couple bedrooms to cover at least half the mortgage and use the remaining 15K or so to last me through until I get done with school. Granted, it would be tough though.

 

[CrazyDe1]

Originally posted by: TripleAAA

Originally posted by: SammySon
Wait until you're out of college and have a solid income stream.

You can't afford to keep up the house with your current income.

Which is precisely why I wouldn't use all of the money as a down payment. I'd rent out a couple bedrooms to cover at least half the mortgage and use the remaining 15K or so to last me through until I get done with school. Granted, it would be tough though.

Everyone thinks it's not wise to do this on no income but with his friends paying rent and money in the bank I think he'd be fine. That and he'd be way ahead of anyone his age financially. I mean, worst case scenario if you can't afford it you sell it at a slight loss.

My contingency situation is I have money in the bank and if not, my parents sell their house which is all paid off, we pay off my house and they move in with me for awhile until I get a job again.