I want to know everything there is to buying and owning a home before I even consider purchasing one, but is there anything wrong with a 19-20 year old wanting to buy instead of rent? I just don't see the point in wasting the money on rent when I can put it toward a good investment, also I heard the payments can be lower than paying rent. My credit is great and I'm very responsible. It's not something I want to rush into, like I said I want to know every detail before moving forward with the idea, but I would like some opinions from others.
2007-03-12 05:44:53 · 10 answers · asked by ? 3 in Business & Finance ➔ Renting & Real Estate
Also, just for my information... how much do you think the lowest monthly payments would be for owning a home?
2007-03-12 06:04:51 · update #1
As an old guy, I think it's a wonderful idea. When you rent, you will have nothing to show for it when you move. As an owner, you will hopefully have gained some esgrow and will make a few bucks when you sell.
Right now, it is a buyers market, so do not be afraid to offer what you may consider is a low price on a house you find. It will either be accepted or counter offered. Do your homework and be patient when buying.
Don't forget that you will have added costs you didn't have when renting. Home owners insurance, maintenance costs for repairing "stuff" that goes wrong, maybe mortgage insurance, real estate taxes, etc.
Your mortgage payment , taxes, and insurance should not be over 30% of your income. When you get beyond this figure, things start to get tight in the budget. I know people who are at 50% and they don't have money to do a lot of extra things.
Good luck!
2007-03-12 06:00:48 · answer #1 · answered by Bare B 6 · 2⤊ 0⤋
I bought my first house at 20. There are many pros and cons. But you should know that in most areas, buying is quite a bit more than renting. You need to figure in the Principle and interest, home owners insurance (Required by your lender) and yearly property taxes. If you have less than 20% down you'll probably pay PMI as part of yoru payment too-- this is extra insurance that the lender collects in case you default, and can be 50-150$ per month.
PROS:
*Pride of ownership
*Security for the future (pay on time and you build up equity in a decent market-- You could gain serious financial wealth by buying now!
*Status symbol-- everyone's impressed when you own especially at a young age!
CONS:
*You cant "Up and move" like with an apartment. At 19 or 20 you'd be suprised how often what you want may change.
*Buying a house adds about 3-5% of the price of the house in closing costs. Selling a house costs you about 8-10% of the selling price in costs for realtors, taxes, etc. Once you'er in the home you HAVE to stay for a bit or risk being upside down and not being able to walk away if something happens. it's a major commitment.
*If anything breaks-- YOU fix it. A small savings is very important to cover leaks, electrical, furnace, roof, etc.
Part of me did regret buying a house at 20. The responsibilty is much bigger and I was constantly working on stuff-- lawn work, painting, building a fence, etc. I bought a brand new (watched it be built) house so the house itself was fine but the landscaping cost TONS Of money.
Basically step #1 for you is to go to a bank or mortgage broker and get preapproved. You may think you have great credit becuase you've had a couple credit cards and always paid on time. But this doesn't mean you have a high score. 2 years of history (since it only starts at 18) is VERY short and limits your ability to have a high score. Carrying anything more than 30% balance on yoru card lowers your score.
If you find that you are approved for a reasonable interest rate and you can afford the home and still have enough cash flow, go for it. If it looks really tight, think long and hard about what you'll sacrifice to own a home-- or see if a friend would be willing to rent rooms from you.
2007-03-12 13:06:57 · answer #2 · answered by Anonymous · 0⤊ 0⤋
You should very definitely consider buying at a young age.
If you rent, most of the rent you pay is often simply going towards paying the mortgage of the person you're renting from! So you may as well buy. Also, if you buy in an area that is on the way up in terms of social status, then the value of your house will likely go up faster than inflation.
Of course there are some downsides too. You must keep up the mortgage payments, otherwise you risk losing the lot. And if you buy in a bad neighbourhood, the value of your investment can go down.
2007-03-12 12:57:13 · answer #3 · answered by Always Hopeful 6 · 0⤊ 0⤋
I was 22 when I bought my house. As long as you have the income and you don't really plan on moving anytime soon... I don't see a problem with it.
You'll have to get a 20% loan and a 80% mortgage so you don't end up paying for mortgage insurance... so you may end up paying 3x the rent you currently do. But as long as you're comfortable with it, go for it.
I highly recommend doing for sale by owner to bargain the sellers down and learn about the process. It's cool.
2007-03-12 12:54:20 · answer #4 · answered by fail r us 3 · 1⤊ 0⤋
If only I had a time machine! I would have invested when I learned to walk! You are right on Track! Invest now while the market is struggling abit. Property is a fantastic investment. Even if you decide to move you can rent it out and buy another one. Read "RichDad PoorDad"
Good luck!
2007-03-12 12:52:35 · answer #5 · answered by HonestBizPro 2 · 1⤊ 0⤋
i agree with you. it is a waste of time paying rent to someone every month when you could be paying a mortgage. as long as your credit score is good and you have a good income where you will be able to pay your mortgage every month you will be good. shot me an email i will be able to help you depending on where you live at.
2007-03-12 13:03:57 · answer #6 · answered by cmruffin1 2 · 1⤊ 0⤋
As long as the cost isn't a problem for you, ya' can't go wrong with real estate. Just be sure you're well insured for loss and liability. Good luck.
2007-03-12 12:57:15 · answer #7 · answered by lurned1 3 · 0⤊ 0⤋
you arent wasting money....when you are young, you are more likely to move, or change jobs, or whatever....
You really arent "wasting" money on rent..you get a valuable service.....all you do is pay your rent, and you get to live there without worrying about maintenance, taxes, insurance, liability, etc.
If you have money left over you should invest.
Go to borders books and get home buying for dummies....
2007-03-12 13:07:50 · answer #8 · answered by Anonymous · 0⤊ 1⤋
I'm 21 I bought a house when I was 18....
2007-03-12 13:06:58 · answer #9 · answered by angel2005_2001 5 · 0⤊ 1⤋
if u think u can do it, go ahead
2007-03-12 12:55:59 · answer #10 · answered by shorty21 5 · 1⤊ 0⤋