Which housing choice would you make?

[Jumpem]

$905
Coninue renting, while saving and paying off CC debt and student loans. Do this for a couple more years until I am able to buy a ~$225k house that I really like.

$1050
Buy a cheap $125k house to live in for five years or so. Keep paying off debt, and saving for that $225k house.

$1800
Just buy the house you actually like in the beginning. Wouldn't leave alot of money left over to pay off debt and buy things for the house.

 

[Tiamat]

Don't worry about the student loans as you are probably locked into a decently low rate. I would rent until the CC debt is gone.

 

[bonkers325]

rent until your CC debt and loans are paid off.

 

[Jumpem]

Originally posted by: bonkers325
rent until your CC debt and loans are paid off.

That would take probably two years to get them paid off. The combination of my gf's credit cards, furniture, and one high interest student loan come to about $15k.

Were you implying to rent until all $70k of our student loans and her car are paid off as well?

I'm really debating between the first two options. I wouldn't want to go the third and be house-poor.

 

[radioouman]

This is a tough one. I guess it sort of depends in the market in which you live. I bought a house two years ago ($149k) with the intention of living in it for a while. However, houses just like it are selling for $165k-$169k. I can't afford to move to a better house as I can barely make my monthly payments now. In some ways I wish that I would have gone for that more expensive house earlier on so that i would learn to live on less per month. On the other hand, it is just a house and I live in a nice neighborhood.

 

[meltdown75]

i'd go for the middle option, because from what info you've provided it looks like another $145 means you would be paying for your own first mortgage instead of renting. who knows, maybe some time down the road you could unload the starter home for a nice profit.

 

[sixone]

Keep renting until you're out of debt. You don't need to worry about repairs/maintenance.

 

[dud]

Wait a minute, you are leaving some important info out. Where (what city) do you live in? If you live in an area the has a relatively good real estate appreciation rate AND is not considered over-priced (as of today) then the "buy the house" option (either house) is a much better option.

In five years you could realize a substantial increase in equity (as well as your bottom line).

 

[iamwiz82]

IIRC, you make almost exactly what we do and a $225k would be way too much even with no debt. I'd stick to the rule of 1/3 of your take home, at least.

 

[meltdown75]

Originally posted by: sixone
Keep renting until you're out of debt. You don't need to worry about repairs/maintenance.

but for another $145, the OP is paying towards his own mortgage as opposed to renting.

assuming the starter home is sold in good enough condition, repairs / maint might not be too big of an issue?

i'm a little biased... i rented for about 8 years - i hated putting money in my landlord's pocket. i really enjoy the feeling of living in a house which i will own outright one day.

 

[Jumpem]

Originally posted by: dud
Wait a minute, you are leaving some important info out. Where (what city) do you live in? If you live in an area the has a relatively good real estate appreciation rate AND is not considered over-priced (as of today) then the "buy the house" option (either house) is a much better option.

In five years you could realize a substantial increase in equity (as well as your bottom line).

I live in Syracuse, NY. House prices are slowly rising, but nothing really noticeable like out in California.

Another thing to consider with the starter home is that I will lose $8k right off the bat from closing costs, fees, NY mortgage tax, and other stuff. So I would have to gain enough equity to come out ahead from that. not to mention that in the first few years of owning a house I would be paying mostly just interest.

So I'm not sure if it makes more sense to buy, and hope for the price of the house to rise and make up for that... or to keep renting and just wait several years and buy the house I want to keep long term.

 

[acemcmac]

Why are you paying off your GF's debt?

 

[Triumph]

If you can buy any house for 125k, you must not be in a high growth, high cost of living area. I say buy that one. The more expensive house has the attraction in that you will be building more equity, but what you can do is pay more each month on top of the mortgage of the smaller house. You'd build the same amount of equity, but with a buffer zone in case money is tight for a few months. I say don't kill yourself with a mortgage that you can barely manage, and you don't want to default on those other loans.

 

[Jumpem]

Originally posted by: iamwiz82
IIRC, you make almost exactly what we do and a $225k would be way too much even with no debt. I'd stick to the rule of 1/3 of your take home, at least.

I just used my mortgage companies calculator. With taxes, insurance, and mortgage one-third of my take home pay would let me buya $190-200k house max then.

 

[Jumpem]

Originally posted by: acemcmac
Why are you paying off your GF's debt?

Because it is holding us back. It is always good to get rid off high-interest debt.

I've been saving $500 a month to try and get her a ring around Christmas time. then a cheap $5k wedding sometime in the relatively near future.

 

[Triumph]

Originally posted by: Jumpem

Originally posted by: dud
Wait a minute, you are leaving some important info out. Where (what city) do you live in? If you live in an area the has a relatively good real estate appreciation rate AND is not considered over-priced (as of today) then the "buy the house" option (either house) is a much better option.

In five years you could realize a substantial increase in equity (as well as your bottom line).

I live in Syracuse, NY. House prices are slowly rising, but nothing really noticeable like out in California.

Another thing to consider with the starter home is that I will lose $8k right off the bat from closing costs, fees, NY mortgage tax, and other stuff. So I would have to gain enough equity to come out ahead from that. not to mention that in the first few years of owning a house I would be paying mostly just interest.

So I'm not sure if it makes more sense to buy, and hope for the price of the house to rise and make up for that... or to keep renting and just wait several years and buy the house I want to keep long term.

You're in an average housing market. The general rule of thumb that I've heard is don't buy in one of those markets if you don't plan on staying there for less than ~3 years, considering all of those same concerns that you have. 5 years and I think you should be fine.

Another thing you can think about is keeping the 125k home after you've moved out, and renting it. At 125k, it's probably just the right size and price for renting. Long term rental properties provide great rewards. My dad put 6 kids through college mainly due to owning 2 duplexes.

 

[Jumpem]

Originally posted by: Triumph
If you can buy any house for 125k, you must not be in a high growth, high cost of living area. I say buy that one. The more expensive house has the attraction in that you will be building more equity, but what you can do is pay more each month on top of the mortgage of the smaller house. You'd build the same amount of equity, but with a buffer zone in case money is tight for a few months. I say don't kill yourself with a mortgage that you can barely manage, and you don't want to default on those other loans.

Growth is stagnant or very slow in upstate NY. Lots of jobs are leaving, but some sectors are gaining. Cost of living is relatively low, other than high taxes.

 

[Amused]

Buy the cheap house and start building equity while paying off your loans. Plan to stay in it for at least seven years.

Then move up IF you feel the need AND can fully justify it.

Know this: The house you "really want" is almost always too much house for you. When shopping for just about anything, check yourself for "keeping up with the jones" syndrome. In most things, you'll find you're over buying and slipping into living beyond your means.

 

[Jumpem]

Originally posted by: Amused
Buy the cheap house and start building equity while paying off your loans. Plan to stay in it for at least seven years.

Then move up IF you feel the need AND can fully justify it.

Know this: The house you "really want" is almost always too much house for you. When shopping for just about anything, check yourself for "keeping up with the jones" syndrome. In most things, you'll find you're over buying and slipping into living beyond your means.

I don't think it's "too much" house. It could be, but I am not worried about trying to impress others. There are two type of houses that I am considering for long term. Either:

1 acre on Oneida lake, with a simple ~1200-1500sq.ft. chalet style house. I love riding jet-skis which would be the huge draw to this type of property.

5-10 acres in a wooded and hilly area, with a 1500-2000sq.ft. log-cabin or other interesting house.

Edit: Yeah, buying either of these would be living above my means right now. In 5-7 years when all of our student loans are paid off it would be reasonable I think.

 

[meltdown75]

those properties you described sound great. they sound like retirement properties though - or, i mean... properties you have when you are well established and your kids are out of the house etc. but hey, if you work hard and get them sooner, that is awesome - more power to you!

 

[Kalbi]

Mortgage interest will benefit your tax status; you should buy depending on your income. How much are you making?

 

[Jumpem]

Originally posted by: Kalbi
Mortgage interest will benefit your tax status; you should buy depending on your income. How much are you making?

Between my gf and I, just under $90k. However we have $15k in CC and short-term debt, $70k in student loans, and she owes $22k or so her car.

 

[Triumph]

Assuming she makes 1/2 of $90k, your girlfriend bought a car that was more than $22k? That's your problem right there. Why don't you sell it and buy a $10-12k car?

 

[Jumpem]

Originally posted by: Triumph
Assuming she makes 1/2 of $90k, your girlfriend bought a car that was more than $22k? That's your problem right there. Why don't you sell it and buy a $10-12k car?

The problem is I bought one too. I sold mine though. We got a little excited right out of college and bought cars.

I would consider selling it if we could come out ahead on it. She got a $31k car with 3k miles on it for $22k, so it was a good deal, but its hard to sell cars these days. We are both using it right now so its not too bad.

I'm also paranoid about her having a reliable car because she travels by herself for business, and sometimes the areas around the city can be sketchy.

 

[Jumpem]

Those of you voting to just buy a nice house from the start... can you post your reasoning?