When to buy a house?

[dxkj]

We're not seriously considering buying a house anytime soon, but should we be?



Currently we pay ~900 a month for utilities + rent in a 1 bedroom apartment. That ends up being about $11,000 a year. I have two part time jobs that are fairly secure, and my wife works a full time job that she will be at for at least another year. After that year she will be going to grad school. At that time we will be committed to an area for ~ 3-4 years.


I'm just trying to figure out at which point it becomes beneficial to stop renting and to start paying toward a mortgage.


Edit: Forgot to mention we both have school loans, and a car loan. (Her loans are on hold when she is back in school)

 

[MiniDoom]

Sooner the better considering rates are going up and it's always beneficial to stop renting and to start paying toward a mortgage.

 

[Scarpozzi]

You need to evaluate how long you're going to stay in one location and base it off that. When you buy a house, you pay more interest on the loan than you do on the house, so you should look at that as factor in whether or not you'll actually build equity in the home while you're there. This is where it gets tricky because you need to figure in what mortgage terms you would consider...

I just bought a house and will be closing Sept 17. I've decided to either choose a 15 or 20 year mortgage because I know I'll be here at least 5 years. I want to get some money back out of the house if I sell....I just haven't decided if I want to sell it in 5 years or keep it for an investment property.

-Scar

 

[Rob9874]

Just signed on my first home last week. Better to lock in rates before they go up too high. My home is being built, and won't be finished for 8 months, but the price has gone up $1000 in 2 weeks. I'm already making money!

 

[dafatha00]

Are your combined incomes adequate enough to be approved for a sizeable home loan? How much do you have saved up for a down? I believe it would beneficial when you have a steady stream of income and you pay down your debt enough so that it doesn't become a burden on your available amount needed for rent or a mortgage.

 

[Rob9874]

Originally posted by: Scarpozzi
You need to evaluate how long you're going to stay in one location and base it off that. When you buy a house, you pay more interest on the loan than you do on the house, so you should look at that as factor in whether or not you'll actually build equity in the home while you're there. This is where it gets tricky because you need to figure in what mortgage terms you would consider...

I just bought a house and will be closing Sept 17. I've decided to either choose a 15 or 20 year mortgage because I know I'll be here at least 5 years. I want to get some money back out of the house if I sell....I just haven't decided if I want to sell it in 5 years or keep it for an investment property.

-Scar

Bah, I've said it before and I'll say it again. Equity in a home makes no money. Any money your home makes you is based on appreciation of the value, and not how much you have in equity. Money in equity is the same as under your bed. Get an interest-only loan if you're planning to move in 5 years, and put the money you save month to month in a safe investment. Might as well put that money to use, than to waste it on home equity. You put $1000 in, you get exactly $1000 out. Let it make interest. And with an interest-only loan, you pay less because the interest rate is lower, and you get 100% of the appreciation after 5 years.

 

[Bryophyte]

Remember, when you own your home, YOU have to pay for upkeep/repairs. Factor that in. In a brand new home, it might not add up to much, but it can. I am very pro home ownership, but you have to be careful not to be financially unprepared for the hidden costs that your landlord has been covering. Broken hot water heater, frozen pipes, leak in the roof, that sort of thing.

 

[dxkj]

Originally posted by: Bryophyte
Remember, when you own your home, YOU have to pay for upkeep/repairs. Factor that in. In a brand new home, it might not add up to much, but it can. I am very pro home ownership, but you have to be careful not to be financially prepared for the hidden costs that your landlord has been covering. Broken hot water heater, frozen pipes, leak in the roof, that sort of thing.

Yeah, these are some of the things that have to be considered. I don't think we are in a position for home ownership at the moment, but it sure sucks paying $800 a month for rent and to see nothing from that

 

Originally posted by: Rob9874

Originally posted by: Scarpozzi
You need to evaluate how long you're going to stay in one location and base it off that. When you buy a house, you pay more interest on the loan than you do on the house, so you should look at that as factor in whether or not you'll actually build equity in the home while you're there. This is where it gets tricky because you need to figure in what mortgage terms you would consider...

I just bought a house and will be closing Sept 17. I've decided to either choose a 15 or 20 year mortgage because I know I'll be here at least 5 years. I want to get some money back out of the house if I sell....I just haven't decided if I want to sell it in 5 years or keep it for an investment property.

-Scar

Bah, I've said it before and I'll say it again. Equity in a home makes no money. Any money your home makes you is based on appreciation of the value, and not how much you have in equity. Money in equity is the same as under your bed. Get an interest-only loan if you're planning to move in 5 years, and put the money you save month to month in a safe investment. Might as well put that money to use, than to waste it on home equity. You put $1000 in, you get exactly $1000 out. Let it make interest. And with an interest-only loan, you pay less because the interest rate is lower, and you get 100% of the appreciation after 5 years.

You can loan more money on equity, and not on pure liquid investments. A house is a better investment than nearly any stock. Real property has a limited supply, stocks don't. But lets not get into this standard liquid investment vs real property. It's pointless and is completely utterly subjective.

The right time to buy a house is when you feel financially secure and able enough to do it. The formation of a family will also influence your decision. There are many factors involved, the only opinions you will get from this forum are a bunch of uninformed opinions about the financial benefits of ownership.
Ownership of a house goes far beyond the monetary reasons.

 

[Scarpozzi]

You're right Rob...

I guess my point was that if you try to pay a house off quicker and build equity, the way you earn more is that you've paid off more of the house and wasted less money on mortgage interest. I don't know about everyone else here, but I have trouble saving money. A house is a great opportunity to save money as long as you maintain the home and keep your insurance policies current.