Seriously. I'm in my mid 20s, been living on my own for several yrs now, and live in the Philadelphia area, where you can buy a decent starter home for under $200K…yet I'm STILL renting a 1bd apartment for over $900/mo!! What a rip-off, do you agree?
Currently I make over $30K verifiable income and…
I would totally go for it – you are completely wasting your money on rent – at least owning – your money is actually going somewhere to benefit you instead of your landlords pocket! It seems like you have been very responsible in your spending so I would seriously go for it – what would you loose! There are alto of options for first time home owners so I would find a Real Estate Agent you trust and have a good relationship with – if you don’t know any – start asking people and meeting several before you pick one! The good thing is – you don’t pay them – they make their money when they sell houses!
So Good luck and have fun looking for the perfect place!!!
I have a buddy who’s a real estate Guru, he said the buying time is not ‘necessarily” yet. If you can purchase something 25-30% below market value, DO IT! There is a great chance the market is going to fall 15% adjusted over the next year or two, ntil all this house madness settles down. But if you buy a house at market value, you are most likely going to lose over the next five years. After that, the economy will bounce back.
With a 700 credit rating you will get low financing under 6%, if you go under a HUD gaurantee you can do almost nothing down, conventional loans usually as 15% down. All you need for a Hud loan is usually proof that youve been renting over a year. THey allow 33% of your income to go towards house payments, that should allow you a house payment of about $850 a month, probably a house under $130,000 will be your market.
That’s not a valid comparison. Just like anything else, living somewhere is NOT a matter of “timing your investments”. And frankly, if you’re making $40,000 a year, you can’t AFFORD a $200,000 house.
Most lenders would lend you, with no debt, up to three times your annual salary. So you’d get a LOAN of about $90K.
Keep in mind, it’s not just about the mortgage payment (which, for a $200K house, would be $2,000 a month), but also insurance and property taxes – another $1,000 a month in Philly. So, your BASE expense will be more than 3X the cost of your apartment right now. Or, in other words . . .about 75% of your takehome pay is what you need, to just pay the house. Not counting food & utilities.
You can afford a $75,000 house. If you’re going to live in Philly for the next five years, and can find a house for $75K or less, I’d buy it.
You have good credit. If you have the income, and you can find the right house for the right price, buying a house would be a good idea. It’s a buyer’s market, so you should be able to find a good deal. You don’t need 50% down! 10-20% down payment is best, but if you get an FHA loan you can definitely put down a smaller down payment. With FHA or any other other low-down payment loan, you will pay PMI, which will affect your monthly payment and what you can afford. So that is a consideration. Some people get piggy back loans, which enable them to do without PMI. I say get your numbers in order and go shopping! Talk to several lenders and see what they can offer you. Good luck!
I’m a big advocate of buying. Maybe your best bet is to talk to a realtor and tell him/her everything you said here, and also tell the realtor what neighborhoods you’re interested in. They can give you whether you think you can find something you can afford.
The big wildcard for you will be property taxes – here in Pittsburgh, PA they are out of control. You can find a house for under $100k, but if your house is assessed at $100k, you pay over $3,000 a year in property taxes. So I’d look into not only what the housing prices are, but what the taxes are, too.
Since you’re a single person, maybe a condo would be an option for you. You could get a 1 or 2 bedroom and it would be easier to maintain than a single family. Just something to consider….
Good luck! Julie
My fiance and I (21 years old) are skipping the renting process all together. You’re basically paying a mortgage to get nothing in return.
We are going to be buying a condo ( the condo’s were looking at are 2 bedroom condos for between 135-140,000) There is a pool, tennis court, and heat and hot water are included in the common charges.
our monthly mortgage payment (taxes and insurance included) for a 30 year fixed rate mortgage at about 6.5% is esitmated to be just under 1,000 dollars per month.
When we’re ready to move we can do 1 of 2 things. We can sell it and most likley make a small profit (selling right now we might lose, but over a long period of time theres a bigger chance of us making a profit rather than losing..and we intend to stay wherever we buy for at least 5-10 years)…OR we can rent it out and make a little extra cash each month until we decide to sell.
Whatever you do (condo, small home,)….I would buy! Just be careful.
House values may have dropped, but unless your landlord sells the property, he is still paying the same amount for his mortgage. All his other costs are going up. The rent is based in part on what similar apartments are renting for, and in part on all his costs. If a whole buch of people come in and buy those devalued properties, then figured out the rent to cover their costs, then those units would have cheaper rent. That means the market price would come down. The other rents would go down or the remaining landlords would have to sell.
If you are paying 900 a month or more check into housing, figure in the monthly mortgage and insurance you will pay. If it’s cheaper than rent you need to buy. Buying a home is a long term investment. If you are stable and able to maintain a home you should buy instead of rent.
this is helpful; http://www.ginniemae.gov/rent_vs_buy/Ren…
Where do you think that money is going toward when paying rent? Nowhere! Buying a house is a road toward owning it, but you are only twenty years old. You’re still single? In school? Any pets? Future decisions? This really depends on if you’re ready for a house. For now if you’re hesitating, I suggest dorming if you’re in school, but if you aren’t, look for a cheaper apartment.
Sorry u sound like u want to shoot ur self in ur wallet.
u r making 30K and that will not get u into 200K with out some serious funny paper.
get a cheaper flat , work to increase ur income, increase ur job skills/values , save as u work 2 extra jobs.
read ‘ house buying for dummies ‘ will save u 1000S$ , read ‘total money make over’
will save u hard experiences/expensive.
what ever the P&i is should not be more than one weeks take home, 2nd week will go for taxes insurances, 3rd week goes for utilities transportation, 4th week u get to live on.
seriously 30k/200k u’ll be working 3 jobs to afford it.
what happens when future wife doesn’t like it?