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Posted on 6/10/15 at 8:41 am to Athletix
I recommend waiting until you have 20%. Wait until you have 20%. Wait. Wait until you have 20%. Just save up 20%.
I don't know what it would take to convince you. Maybe my own story.
Bought a house for $179k. PMI ended up being around $200/month.
We've owned that house for seven years.
That's $16800 we've lost. Just gone. For a house that we eventually didn't like because it was too much of a commute. Because of the market dipping, we weren't able to sell. Now we rent it to (thankfully) great tenants. Sure, it's a little bit of monthly income, but it's a headache. And if we were in this same situation but had put down 20%, our rental income would be $200 more.
So again, save up for the 20%. How much would you need for a $150k house?
30k. If you're making $4k a month and she's making a little over $2k a month, I see no reason why you can't put $1k/month in the bank and save for three years.
Or you could devote her entire salary to the student loans. Pay them off in about four years and then have the ability to save up for a really nice house. House of your dreams kind of house.
I guess I just don't see the need to buy a house in your situation. You're young, about to get married, and have some serious student loan debt. You never know what marriage will do to change you. Maybe you're up one night after great sex talking about things you've always wanted to do and you realize you'd rather live in Colorado or the beach or New York City or wherever. And you decide to pursue that, but you're stuck in a house that may not sell the way you want it to. You may take a loss.
So again, I say save up 20% and then perhaps wait until you're ready to settle not in a $150k house but one that is more of the "dream house" type that you'd retire in.
I don't know what it would take to convince you. Maybe my own story.
Bought a house for $179k. PMI ended up being around $200/month.
We've owned that house for seven years.
That's $16800 we've lost. Just gone. For a house that we eventually didn't like because it was too much of a commute. Because of the market dipping, we weren't able to sell. Now we rent it to (thankfully) great tenants. Sure, it's a little bit of monthly income, but it's a headache. And if we were in this same situation but had put down 20%, our rental income would be $200 more.
So again, save up for the 20%. How much would you need for a $150k house?
30k. If you're making $4k a month and she's making a little over $2k a month, I see no reason why you can't put $1k/month in the bank and save for three years.
Or you could devote her entire salary to the student loans. Pay them off in about four years and then have the ability to save up for a really nice house. House of your dreams kind of house.
I guess I just don't see the need to buy a house in your situation. You're young, about to get married, and have some serious student loan debt. You never know what marriage will do to change you. Maybe you're up one night after great sex talking about things you've always wanted to do and you realize you'd rather live in Colorado or the beach or New York City or wherever. And you decide to pursue that, but you're stuck in a house that may not sell the way you want it to. You may take a loss.
So again, I say save up 20% and then perhaps wait until you're ready to settle not in a $150k house but one that is more of the "dream house" type that you'd retire in.
This post was edited on 6/10/15 at 8:56 am
Posted on 6/10/15 at 9:28 am to StringedInstruments
quote:
I guess I just don't see the need to buy a house in your situation. You're young
unfortunately, hes been sold for years that hes supposed to buy and that buying is success and renting is failure to achieve that benchmark.
and when its a fundamental building block to how you put together worth both financially, and personally --- its real hard to change, even if the arguments against it make sense.
Posted on 6/10/15 at 10:03 am to NoSaint
quote:
unfortunately, hes been sold for years that hes supposed to buy and that buying is success and renting is failure to achieve that benchmark.
and when its a fundamental building block to how you put together worth both financially, and personally --- its real hard to change, even if the arguments against it make sense.
No kidding.
At least he's in a time where there are plenty of people to educate him on it. When I was buying in 2009, I had ZERO people in my life tell me not to buy. Everyone encouraged me to buy.
My dad said, "If you don't like the house, just sell it. You'll make some money on it in a few years."
Because that's what he did his whole life. I bet he's bought and sold six houses since he got married and every time was at worst "breaking even."
The market's changed. My house is finally getting back to a good price (Zillow estimate is $174k). When I bought it, every other house in the neighborhood was priced around $200k. Mine was flipped with a brand new roof and priced at $179k. Seemed like a great deal. Then when I tried to sell it in 2013, the best offer I got was $162k and most of the houses in the neighborhood were priced in the mid $160s.
Posted on 6/10/15 at 10:14 am to StringedInstruments
quote:Im sorry but this is a major issue I have with this board. Saving 40-50k is unrealistic unless you have family giving you money. A person starting out would take around 10 years to save this amount of money assuming they are also saving for retirement and not eating canned beans and living at their parents
I recommend waiting until you have 20%. Wait until you have 20%. Wait. Wait until you have 20%. Just save up 20%.
Posted on 6/10/15 at 10:36 am to lsupride87
quote:
Im sorry but this is a major issue I have with this board. Saving 40-50k is unrealistic unless you have family giving you money. A person starting out would take around 10 years to save this amount of money assuming they are also saving for retirement and not eating canned beans and living at their parents
This is not true.
I used to think that way, but now I don't. You just have to re-prioritize your life.
We fixed our food budget and freed up $250/month (was spending $1000. Now spend $750.)
We cut the cord and freed up $70/month.
We've devoted extra money to my wife's student loan and extra money to the little bit of credit card debt and will free up $400/month starting in May of 2016.
We're debating on purchasing a new vehicle (see the Dave Ramsey car thread) but if we don't or if we find the right deal, we could free up $250/month in June of 2016.
That's $970/month. My wife and I make $75k combined, which is less than what the OP will make when his soon-to-be wife gets a job paying $35k. We also are a bit more "house-poor" than we'd like to be but it was difficult to find a family-friendly, safe area that accepts a dog, so we're paying $1200/month for rent. We could easily free up more money if we were willing to sacrifice our living situation.
Allocating that money that we were already spending to a savings account for a house would mean we'd have 20% to put down in 4 years.
Even if it took 10 years, is it worth it? I say so. By the time he is 34, he should know what he wants to do with his life and where he wants to be.
Posted on 6/10/15 at 10:49 am to lsupride87
quote:
Im sorry but this is a major issue I have with this board. Saving 40-50k is unrealistic unless you have family giving you money. A person starting out would take around 10 years to save this amount of money assuming they are also saving for retirement and not eating canned beans and living at their parents
Totally disagree that saving 40k is unrealistic.
What's wrong with not saving for retirement for 2 years at 24-25 so you can buy a home? I did it and I am very happy with my decision. I was able to put down 20% on a 190k house by 26 without help from my family. I ate a ton of Totino's pizza and drank cheap beer/wine a lot, but I still had a great time and now I have a home that I love and I'm proud of.
However, I didn't have student debt which would have me worried in this specific case. That extra 500-600 a month is pretty crucial to saving for a large down payment. But I don't want anyone else who is reading this thread to believe you cannot save 40k in a couple years with a good job and financially sound decision making.
I am sure you bought a house with under 20% and have PMI and so you don't want to make it sound like you made a bad decision (and I'm not saying you did) but it truly is just giving $200 away. That still may be a good decision for you.
Say you buy a $190k home with $10k down.
You are gonna have approximately a $1315/mo payment ($912 Prin/Int, 220 Tax, 75 Insur, 110 PMI).
Could you rent a 3bed/2bath $190k place for $1315? Probably not. So even though you are wasting money on PMI, it's still a better price than renting the same place.
Plus some of the payment is just forced savings (principal portion) given that you can one day sell the house for a similar price. You also get a tax benefit of the interest.
The negatives are obvious also. You lock yourself into a place for a long period of time. You also have to pay for your own problems... Roof goes bad, AC dies, etc.
This isn't a black and white question. Everyone situation is different. There are so many variables each person should look at all of them and make an educated decision based on their lifestyle, preferences, and desires.
That being said, from what I see in the OP's posts, he probably shouldn't be in the market for a house right now. Too much current debt. Not enough stability.
But it is always great to look and educate yourself on these things. I am not in the market for another house, but I check weekly at listings in my area, how prices are fluctuating, and how that may affect me. Keep it up OP and some day you will be able to purchase a home. You have a good job. But home ownership can bring problems you don't want to occur with a situation like you have.
This post was edited on 6/10/15 at 11:10 am
Posted on 6/10/15 at 10:54 am to StringedInstruments
quote:
I recommend waiting until you have 20%. Wait until you have 20%. Wait. Wait until you have 20%. Just save up 20%.
Or you could do like I did and not save 20%. Buy a $190k house a couple years out of school, not put a penny down through an RD loan, sell the house 3 years later for $240k and have about $50k cash to put down on the next house.
Blanket statements...This board.
Posted on 6/10/15 at 10:56 am to LSUAfro
quote:
Or you could do like I did and not save 20%. Buy a $190k house a couple years out of school, not put a penny down through an RD loan, sell the house 3 years later for $240k and have about $50k cash to put down on the next house.
Blanket statements...This board.
Do you think your situation is the norm in today's market?
Posted on 6/10/15 at 10:59 am to StringedInstruments
quote:
Do you think your situation is the norm in today's market?
Depends on when you bought and where you bought.
I know many who have had similar experiences as me and a few that have had experiences like you.
Posted on 6/10/15 at 11:05 am to SouthOfSouth
quote:I agree with everything you just wrote(which is alot
Totally disagree.
What's wrong with not saving for retirement for 2 years at 24-25 so you can buy a home? I did it and I am very happy with my decision. I was able to put down 20% on a 190k house by 26 without help from my family. I ate a ton of Totino's pizza and drank cheap beer/wine a lot, but I still had a great time and now I have a home that I love and I'm proud of.
However, I didn't have student debt which would have me worried in this specific case. That extra 500-600 a month is pretty crucial to saving for a large down payment. But I don't want anyone else who is reading this thread to believe you cannot save 40k in a couple years with a good job and financially sound decision making.
I am sure you bought a house with under 20% and have PMI and so you don't want to make it sound like you made a bad decision (and I'm not saying you did) but it truly is just giving $200 away. That still may be a good decision for you.
Say you buy a $190k home with $10k down.
You are gonna have approximately a $1315/mo payment ($912 Prin/Int, 220 Tax, 75 Insur, 110 PMI).
Could you rent a 3bed/2bath $190k place for $1315? Probably not. So even though you are wasting money on PMI, it's still a better price than renting the same place.
Plus some of the payment is just forced savings (principal portion) given that you can one day sell the house for a similar price. You also get a tax benefit of the interest.
The negatives are obvious also. You lock yourself into a place for a long period of time. You also have to pay for your own problems... Roof goes bad, AC dies, etc.
This isn't a black and white question. Everyone situation is different. There are so many variables each person should look at all of them and make an educated decision based on their lifestyle, preferences, and desires.
That being said, from what I see in the OP's posts, he probably shouldn't be in the market for a house right now. Too much current debt. Not enough stability.
But it is always great to look and educate yourself on these things. I am not in the market for another house, but I check weekly at listings in my area, how prices are fluctuating, and how that may affect me. Keep it up OP and some day you will be able to purchase a home. You have a good job. But home ownership can bring problems you don't want to occur with a situation like you have.
) I may have come off too strong. This board pushes : NOT UNTIL YOU HAVE 20%, NOT UNTIL YOU HAVE 20%, NOT UNTIL YOU HAVE 20% I am sorry, but for alot of markets that is extremely unrealistic for first time home buyers unless they have family giving them money for a down payment.
In some cases im sure it is possible and makes sense
Posted on 6/10/15 at 11:05 am to LSUAfro
quote:
Depends on when you bought and where you bought.
I know many who have had similar experiences as me and a few that have had experiences like you.
Speaking of blanket statements.
Honestly, I'd never want to make a serious financial home ownership decision based on the expectation of a 26% increase in value in 3 years.
You hit the market well, but come on man. Appreciate your situation but have an eye for what is happening right now. You are the lucky one.
Posted on 6/10/15 at 11:09 am to lsupride87
quote:
I agree with everything you just wrote(which is alot ) I may have come off too strong.
Honestly I assumed you felt similarly. I just wanted to clear up some of the pro's and con's for any first time home buyers that may come to this thread.
This is a great site for learning about personal finances and I just wanted to make sure someone reading your post didn't get discouraged about trying for 20% down nor thought it was a great idea to buy a home with 0% down and 90k in student loan debt.
Posted on 6/10/15 at 11:12 am to SouthOfSouth
quote:Where'd you find one that I made?
Speaking of blanket statements.
quote:
Honestly, I'd never want to make a serious financial home ownership decision based on the expectation of a 26% increase in value in 3 years
I didn't. I Just bought a house because I knew I wasn't moving and the rental market in BR is ridiculous IMO. If I would've waited till I saved almost $40k I'd be so much further behind right now. You can't just tell people to save 20% because it's smart. Of course it is, but it's definitely not necessary.
quote:
You hit the market well, but come on man. Appreciate your situation but have an eye for what is happening right now. You are the lucky one
So have many in S Louisiana over the past decade.
ETA: I haven't read the whole thread. I was just commenting on the "save, save, save" comment. I know too many who didn't save, save, save and turned out better than fine.
This post was edited on 6/10/15 at 11:16 am
Posted on 6/10/15 at 11:17 am to lsupride87
quote:This is a thing?
unless they have family giving them money for a down payment.
Posted on 6/10/15 at 11:19 am to bayoubengals88
quote:Are you serious? The mortgage banker I spoke with said over 50% of first time home buyers under 30 have a gift from family. Which I see nothing wrong with
This is a thing?
This post was edited on 6/10/15 at 11:19 am
Posted on 6/10/15 at 11:21 am to lsupride87
quote:
Are you serious? The mortgage banker I spoke with said over 50% of first time home buyers under 30 have a gift from family. Which I see nothing wrong with
Yep. Majority of people I know that managed to put 20% down on their first home did so by borrowing a portion of it from a family member.
My dad laughed at me and told me to find another plan
. I'm glad he did.Posted on 6/10/15 at 11:22 am to lsupride87
Everyone I know that has purchased a home has received a large sum from family. Well one guy had money from a wreck.
We got the shaft!
We got the shaft!
Posted on 6/10/15 at 11:26 am to bayoubengals88
quote:
This is a thing?
If you had the means to help a child save $200 a month would you? Shoot I would help out on a down payment to help a child and make them pay me back whatever their PMI would have been till I get it all back. Doesn't have to be an outright gift as much as a loan that prevents someone from giving away more money than necessary.
Posted on 6/10/15 at 6:28 pm to SouthOfSouth
A lot of good advice here. On the phone so being able to quote and give a response to the statements and questions is a little tough.
I haven't been officially approved through a lender. Never pursued it too far. However, I did speak with a GMFS rep. The rep was very confident I would have no problem being approved at the price range I was looking.
I'd love to have 20% down to put on a house. If I'm being honest, I'll never (in the near future) have that kinda cash to put towards a house. I know this thread is about a house, but there is just stuff I wanna do/buy and that definitely factors in. If I bought nothing for myself and lived really cheap I could maybe swing it in a few years, but I'll end up buying a vehicle next year and we've got too much student loan debt. However, I do have land. 2.35 acres that I will someday build on. I've heard of people using there land as a substitution for the down payment. I have no clue how it works but maybe it could be an option.
There are so many what ifs at the moment. We are soaking up the free living until marriage then probably moving into an apartment before making any house purchases. How long we will be in an apartment will be dependent on so many factors. Fun stuff trying to think about where you'll be in x years
I haven't been officially approved through a lender. Never pursued it too far. However, I did speak with a GMFS rep. The rep was very confident I would have no problem being approved at the price range I was looking.
I'd love to have 20% down to put on a house. If I'm being honest, I'll never (in the near future) have that kinda cash to put towards a house. I know this thread is about a house, but there is just stuff I wanna do/buy and that definitely factors in. If I bought nothing for myself and lived really cheap I could maybe swing it in a few years, but I'll end up buying a vehicle next year and we've got too much student loan debt. However, I do have land. 2.35 acres that I will someday build on. I've heard of people using there land as a substitution for the down payment. I have no clue how it works but maybe it could be an option.
There are so many what ifs at the moment. We are soaking up the free living until marriage then probably moving into an apartment before making any house purchases. How long we will be in an apartment will be dependent on so many factors. Fun stuff trying to think about where you'll be in x years
This post was edited on 6/10/15 at 6:31 pm
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