Starting to feel old...I'm considering buying a house.

[Entity]

I've read up in a bunch of the threads here, and am starting to consider taking the plunge. It's still a little ways off, but I'm reasonably sure that by mid-summer, I'll be debt-free and will be hired on in a comfortable salary range for a long-term position. I'm considering being a schoolteacher eventually, but am starting to like the idea of building equity, so that when I decide to teach, I can actually afford to live in something decent.

Mainly, though, I'm tired of having $1600/mo rent (split between myself, my g/f, and two friends) go toward rent, and basically be the equivalent of throwing it down the drain. Our current roomate situation would lend itself to having friends interested in renting out the spare bedrooms in a house, were we to buy it, so buying a house is starting to seem more and more practical.

Just considering buying a house is intimidating. Like I said, I'm starting to feel old. BTW, I'm 23.

For the usual questions, we'd be going 20% down, and would be debt free. That puts a $275k house in range, which surprised the hell out of me. This is in Seattle, one of the more expensive markets in the country.

Rob

 

[pyonir]

Hi Entity!

Good luck with the house thing.

 

[bernse]

First off - for the love of god, don't buy as much as you're qualified for. Just because you can buy that much, doesn't mean you should! Don't screw yourself incase you/your S.O. lose your/her job. I cannot over-emphasize this enough. Realistically, buy 2/3-3/4 (or less) of what your "approval" is for. As well, you'll be more at risk stretching yourself thin if you need to make another semi-major purchase, IE - New vehicle, etc, and you have to fianance.

Second - Try to buy with as few people as possible. Hopefully, just you or your spouse/fiance. If you have to get your roomates to "chip in", it might not be the best idea as you are setting yourself up for potential headaches.

Lastly, It is a better idea to buy than "blow" your money on rent. But, as a rule of thumb, only if you plan on living in the same area for >5 years and/or putting extra payments on the principal. Any less that that you may end up actually losing if you sell due to fees and such.

Good luck!

 

[Jugernot]

Heh, I'm going to buy a house as soon as I can... I'm 22 and have been planning on it since I was 20.

Jugs

 

[FoBoT]

my wife is dying to buy a house, i would be happy taking our time, like 1-2 years, she wants one in under 6 months

 

[Entity]

Originally posted by: bernse
First off - for the love of god, don't buy as much as you're qualified for. Just because you can buy that much, doesn't mean you should! Don't screw yourself incase you/your S.O. lose your/her job. I cannot over-emphasize this enough. Realistically, buy 2/3-3/4 (or less) of what your "approval" is for. As well, you'll be more at risk stretching yourself thin if you need to make another semi-major purchase, IE - New vehicle, etc, and you have to fianance.

Second - Try to buy with as few people as possible. Hopefully, just you or your spouse/fiance. If you have to get your roomates to "chip in", it might not be the best idea as you are setting yourself up for potential headaches.

Lastly, It is a better idea to buy than "blow" your money on rent. But, as a rule of thumb, only if you plan on living in the same area for >5 years and/or putting extra payments on the principal. Any less that that you may end up actually losing if you sell due to fees and such.

Good luck!

We haven't gone in to get approved for anything yet; right now, we're just tossing the idea about. It's still a ways off. Our goals are to get all debt paid off first (I have student loans that I'm taking care of, she has a small amount of credit card debt) -- at the end of the summer, this should be taken care of completely. From there, we're going to start seriously looking at it.

Reasonable houses in Seattle range from $225k on up. With our incomes, neither of us are quite sure what we'd be considered for; however, we've heard that banks often take into consideration roomates, etc., that you will have. By that, we don't mean that people will be "chipping in," but instead that the same roomates we have right now will still be paying rent (the same amount), just that it will be going toward our mortgage rather than someone else's.

I appreciate the advice. We'll definitely be in Seattle 5+ years, and we're not sure what closing costs, etc., will be, since our broker is doing everything free (well, she's actually returning everything -- commission, etc., to us). What should we expect in that realm of costs?

Rob

 

[BatmanNate]

You and me both, bud. :beer:

 

[Entity]

Originally posted by: BatmanNate
You and me both, bud. :beer:

At least you aren't looking in Seattle, are you?

Rob

 

[Isla]

Originally posted by: bernse
First off - for the love of god, don't buy as much as you're qualified for. Just because you can buy that much, doesn't mean you should! Don't screw yourself incase you/your S.O. lose your/her job. I cannot over-emphasize this enough. Realistically, buy 2/3-3/4 (or less) of what your "approval" is for. As well, you'll be more at risk stretching yourself thin if you need to make another semi-major purchase, IE - New vehicle, etc, and you have to fianance.

Second - Try to buy with as few people as possible. Hopefully, just you or your spouse/fiance. If you have to get your roomates to "chip in", it might not be the best idea as you are setting yourself up for potential headaches.

Lastly, It is a better idea to buy than "blow" your money on rent. But, as a rule of thumb, only if you plan on living in the same area for >5 years and/or putting extra payments on the principal. Any less that that you may end up actually losing if you sell due to fees and such.

Good luck!

This is excellent advice... I second it.

 

[psteng19]

Out here in a decent suburb of NY or NJ, $275,000 will get you maybe a tiny little 2 bed 1.5 bath 50 yr old ranch.
$275k in the crummy boroughs of NYC will get you a run-down 3 bed apartment/condo.

Nice houses in nice neighborhoods are easily in the $500k - $1 million+.
That's for a only a 4 bedroom colonial, 2 car garage, etc.

Housing prices have skyrocketed so much in the past 5 years that housing isn't even possible anymore.
It's ridiculous :frown:

 

[Maverick]

I'm 22 and I'd like to buy a house, I just have no money for a down payment. The rents have offered to help and I may take them up on it and pay them back later on.

If my girlfriend lived here and we got married I'm DEFINITELY going for it. Once I have her extra income to make things a little more comfortable then a house is definitely something I'm gonna go for.

 

[Yax]

Buying a house is always the better than renting.

1. Money goes into paying off the house instead of to the landlord.
2. You get some of the money back from tax deductions.
3. No landlord telling you what you can and can't do.

The one fear I hear from people about why they don't want to buy:
What if the value goes down, then I end up losing money.

That's bull since, if your home value goes down, the home value of everyone else is probably down too (unless you didn't take care of your property at all). So if you sell your home at a lost, you can buy your new home at a lost too which just means you really didn't lose anything.

For example: I knew a guy who bought his home, then sold it 5 years later at a 15% loss, he bought a bigger home. The new home was being sold to him at a 15% loss. In the end, how much did he really lose? Nothing.

But thats extreme, most of the time home values go up.

 

[jacob0401]

Geh Seattle...the housing is way too expensive, but what am I to say I live on the Plateau. I think my parents got our house for 240,000 11 years ago and now our house and land (2.1 acres) is worth like 380,000 according to the county.

Are you looking in Seattle itself or the Eastside? Anyways good luck with your house hunting!

 

[Entity]

Originally posted by: jacob0401
Geh Seattle...the housing is way too expensive, but what am I to say I live on the Plateau. I think my parents got our house for 240,000 11 years ago and now our house and land (2.1 acres) is worth like 380,000 according to the county.

Are you looking in Seattle itself or the Eastside? Anyways good luck with your house hunting!

Looking in Seattle itself. Not only do I hate the Eastside, but it's almost as expensive as Seattle anymore.

This is the range we're looking at.

Seattle housing is horrible, but I can make much better wages here than I could in the countryside, and of course, I really don't want to live anywhere else right now. Maybe Hawaii, but that's a different story.

Rob

 

[BigSmooth]

You're 23, and you can afford $55K for a downpayment?!? Get me in on whatever racket it is you're running!

 

[Entity]

Originally posted by: BigSmooth
You're 23, and you can afford $55K for a downpayment?!? Get me in on whatever racket it is you're running!

The money would be coming from family sources, and would be repaid to them at a different rate. Probably only 10-20k would come from us.

Rob

 

[BigSmooth]

Originally posted by: Entity

Originally posted by: BigSmooth
You're 23, and you can afford $55K for a downpayment?!? Get me in on whatever racket it is you're running!

The money would be coming from family sources, and would be repaid to them at a different rate. Probably only 10-20k would come from us.

Rob

Question for you, was it uncomfortable asking relatives for help in that area? Did they just offer to lend you money at some point? I'm curious because I'm in a similar situation to yours.

My parents have offered to help, but they aren't really in a position to do so (IMO). Her parents and my grandparents would probably help if we asked, but how the heck do you ask someone if you can borrow that much money?

 

[NumbaJuan]

Buy today and don?t delay! Unless you make the biggest real estate blunder of all time you will never regret your decision to buy a house.

 

[GaryShandling]

Come to london, Uk. $275,000 will get you a 1 bedroom shack in the middle of slumville.

 

[Ranger X]

I would buy a house if it wasn't for this darn economy. It's so unpredictable with downsizing and layoffs.

 

[leung324]

you will probably have to play less for your mortgage than the rent you are paying now

 

[Hector13]

Originally posted by: cheapbidder01
Buying a house is always the better than renting.

The one fear I hear from people about why they don't want to buy:
What if the value goes down, then I end up losing money.
That's bull since, if your home value goes down, the home value of everyone else is probably down too (unless you didn't take care of your property at all). So if you sell your home at a lost, you can buy your new home at a lost too which just means you really didn't lose anything.

now think if you hadn't bought that house at all (and were still renting) and then property values declined? How much did you save?

That is exactly how much your would have lost had you bought.

In reality, you can't make a blanket statement like "buying is always better than renting", because it just isn't true. There are many arguments for both sides and a lot depends on your long term plans.

 

[CPA]

Originally posted by: bernse
First off - for the love of god, don't buy as much as you're qualified for. Just because you can buy that much, doesn't mean you should! Don't screw yourself incase you/your S.O. lose your/her job. I cannot over-emphasize this enough. Realistically, buy 2/3-3/4 (or less) of what your "approval" is for. As well, you'll be more at risk stretching yourself thin if you need to make another semi-major purchase, IE - New vehicle, etc, and you have to fianance.

Good advice. When I was getting a feel for my new mortgage (second house), the broker told me I could qualify in the 600k range! :Q I would literally have to eat PB&J everyday as the mortgage payments would have been over 4K a month, not including escrows. We ended up in the 350K range with a 2300 payment/month. Much more reasonable for my income level.

 

[CPA]

Originally posted by: Entity

Originally posted by: BigSmooth
You're 23, and you can afford $55K for a downpayment?!? Get me in on whatever racket it is you're running!

The money would be coming from family sources, and would be repaid to them at a different rate. Probably only 10-20k would come from us.

Rob

Don't borrow from family. Instead put 10% down and get an 80-10-10 mortgage. No PMI that way and no pressure of paying off family.

 

[Entity]

Bump. Starting to seriously look now; had credit scores run, and were offered $270k at 5.6%. A bit high, so we're going to look for a few other lenders; any recommendations? We may see how low we can get the rate if we put 20% down, which may be reachable. Not sure.

Rob