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Hey, Dakka, I'm currently 20 years old and living with my parents. I work two jobs and make about 1800 a month while taking classes on the side. My girlfriend will be going to university in fall and while she would live with me if we had our own place, couldn't contribute financially. Should I even be considering looking for a house, or should I be waiting for better financial stability? I'm really a bit lost when it comes to what it takes to buy a house.

Are you happy with any of your jobs? Are they jobs you see yourself staying with for 10-30 years?

Purchasing a home (be it a house or condo) is a major long-term investment, and you need to consider a lot of factors for your budget as well as whether or not you plan on working off a mortgage:

Can you afford the monthly payments?
Can you afford utilities?
Can you afford the time or money for maintenance?
Do you have furniture?

I'm happy with both of my jobs, but no I don't really see myself at either of them in the next 10 years, although I could stick with them if I needed to or if I was given some kind of incentive (a raise or promotion)

While it would affect my standard of living greatly, I could afford a decently sized house and maintain it. I have some furniture, but not much.

I think one of the biggest things is wanting to stay in the same place for the 10-30 years.

Maybe you should be looking into renting a house? Or even an apartment for that matter. It'll also matter what the going rate for a house/apartment rental is in your area. Around here you probably range between 300-750 monthly or more for a big/nice place, be it an apartment or house. I think mortgage payments are usually a bit lighter than rent on an equivalent place, but you've gotta be in for the long haul.

Like curran said you've definitely got to consider how stable/enjoyable your jobs are, how stable you relationship is, and all of that stuff. If you live in the city your rates for renting places could be well beyond what we have here in my small town.

Furniture and appliances are things that you can kind of accumulate as time goes by, but I suspect buying a place will involve needing major appliances all at once unless they're included.

Oh also, if your relationship is of the long haul variety, consider if your lady would be willing to stay in the same place for that long, and if she could even get a job in her field around your location.

If you're comfortable with your current living situation, you could stay for awhile longer and try to save up as much money as you can before moving out. This will help give you a cushion later. You'll also need money to make a down payment if you're actually thinking about buying rather than renting.

yeah, I've been saving money for a while. Luckily, my addiction to plastic crack wasn't that bad through highschool and I managed to bank a good sum of money then. Is there a certain amount I should be looking to save?

 Squidmanlolz wrote:
yeah, I've been saving money for a while. Luckily, my addiction to plastic crack wasn't that bad through highschool and I managed to bank a good sum of money then. Is there a certain amount I should be looking to save?

Well, a lot of it depends on what you're looking to buy, and how much of a financial cushion you think you need. My brother bought his house in his early 20s, but he is married and both him and his wife have good jobs that they are planning on staying in. There's nothing wrong with buying a house early, you just need to make sure you're considering all the factors that go into it. Financial stability, plans to stay in the same area for a long time, plans to stay in the same job, the existence of other jobs you could get in the area in case the one you are in doesn't work out down the road. You just want to make sure you're considering all those factors and have appropriate answers to them, and not just buying a house because you just feel like it's the thing to do. I'm not trying to discourage you, but just reinforcing that it's a decision with some significant gravity, and comes with consequences. Just carefully consider things, and don't do it on a whim. There's no reason to rush into it if you think waiting awhile longer would be better in the long run, even if that means waiting until your girlfriend graduates and gets a job.

thanks for the advice

Don't rush. Work your jobs, go to school. Let the misses go to and finish school. When you guys get more established and get your post education jobs, revisit the subject than. Save, plan, repeat. Don't rush... that's how foreclosures happen.

Maybe find a small apartment if she wont/cant live with you now?

Do a stint in the National Guard. Qualify for VA Home Loan. No money down. Cost you one weekend a month and two weeks a year (and whatever military school you volunteer for) It makes getting a Home Lome much much easier..

 Jihadin wrote:
Do a stint in the National Guard. Qualify for VA Home Loan. No money down. Cost you one weekend a month and two weeks a year (and whatever military school you volunteer for) It makes getting a Home Lome much much easier..

Idk if it's an option. Spent a a year and change in ROTC when I was in college full time. Overall, I enjoyed the experience, but my dodmerb screwed me pretty bad.

It's probably best you save and wait until you are down to one steady job and make a bit more income. Banks nowadays are spooked by someone working multiple jobs, especially with as little as you gross.

Looking in your area as a control, one of the cheapest houses I found was in Neptune NJ, for $150k. After your typical 20% (30k), it's a $540 mortgage, $175 in taxes, probably around $100 insurance (assuming your credit score is above 760). Thats almost half your monthly income BEFORE utilities. And if you get things like electric heat, those bills stack up fast mate. Plus any repairs are on you. Hot water heater blows and spills water everywhere, its on you. Refrigerator dies, thats a few hundred minimum to replace. It's not just paying for the house, its building a safety net for when things do go wrong, and it sounds like you aren't in a reliable position to do that.

I'd go with Byte's idea and get an apartment, and see where you wind up in a few years

I live in NYC...for $1800 a month, i could afford a bad studio. Man...this place stinks. Literally, it smells like urine everywhere. I'm so glad i got out of student life. Don't have to deal with studios and subway rides anymore. 7 years, and I'm gonna get a three floor house in the suburbs with a garage the size of a gym. I'm gonna use it as a gaming room, a lab, and a workshop. And somewhere in the house is gonna be a pillar of marble. Wish me luck peeps.

Just rent instead, you're not ready for a house.

 LumenPraebeo wrote:
I live in NYC...for $1800 a month, i could afford a bad studio. Man...this place stinks. Literally, it smells like urine everywhere. I'm so glad i got out of student life. Don't have to deal with studios and subway rides anymore. 7 years, and I'm gonna get a three floor house in the suburbs with a garage the size of a gym. I'm gonna use it as a gaming room, a lab, and a workshop. And somewhere in the house is gonna be a pillar of marble. Wish me luck peeps.

Will the marble be a Greek or Roman antique?

 Cheesecat wrote:
Just rent instead, you're not ready for a house.

If you have the cash for a good deposit and can find a place to buy which will be reasonably quick to sell then buying can be a good idea if you are looking at living somewhere reasonably long term (several years). Means that the fees associated with buying and selling may well be less than the rent you would essentially throw away, and the mortgage payments would go towards your next (hopefully better) house when you sell up (and again hopefully for a profit too).

 curran12 wrote:
Are you happy with any of your jobs? Are they jobs you see yourself staying with for 10-30 years?

Purchasing a home (be it a house or condo) is a major long-term investment, and you need to consider a lot of factors for your budget as well as whether or not you plan on working off a mortgage:

Can you afford the monthly payments?
Can you afford utilities?
Can you afford the time or money for maintenance?
Do you have furniture?

I'll really only change this slightly. Can you find a cheap enough house, and by that I'm talking repossessed homes and such? Its getting harder to get those awesome deals. My wife and I got a fixer upper on cheap and so we jumped on it. Doing that would make your 1800 a month go a long way. But sit down Anne literately make a list of EVERY expense you will have over the month owning a home from differing price ranges. Don't forget to ask your parents because there will be costs you never thought of.

That will give you a better idea of if you can even afford a home.

How I'm looking at it is comparing the price of renting an apartment with the price of buying a house. I'm just about to start my first job out of college after their training is done. Its duration is 8-10 years. I found an apartment in the area for $850 a month, so over 10 years I will be paying around 100k in rent. Houses around that area (upstate NY) seem to start at 130k for something that isn't basically a mobile home on bricks, so assuming I stay at this job for as long as I possibly can I'm still paying less in rent than I would be to get a house.

I'm not sure if that's the best way of looking at things, but that's my thought process at the moment.

 dementedwombat wrote:
How I'm looking at it is comparing the price of renting an apartment with the price of buying a house. I'm just about to start my first job out of college after their training is done. Its duration is 8-10 years. I found an apartment in the area for $850 a month, so over 10 years I will be paying around 100k in rent. Houses around that area (upstate NY) seem to start at 130k for something that isn't basically a mobile home on bricks, so assuming I stay at this job for as long as I possibly can I'm still paying less in rent than I would be to get a house.

I'm not sure if that's the best way of looking at things, but that's my thought process at the moment.

The problem with your analysis is you're not factoring in equity.

You pay 100k in rent. You move. You get nothing except your security deposit back.

You pay 130k in mortgage on a house worth 300k. You move. You sell the house for lets say 300k (it can and will go up and down). There's 170 left on the loan. You pay that. You pocket rest.

I'm simplifying, but you get what i mean.




The OP is not financially ready for a house. 1800 is not enough in Jersey (i live in Mass, so i know how pants on head stupid the northeast real estate market is). Two jobs makes you a risk to the loan underwriter (if you lose one, by your fault or not, its that much more likely you will default). As a 20 year old, unless you have a cosigner with assets, you will be a credit risk due to insufficient period of establishment of your credit. Essentially 2 years isn't long enough for anyone to make a credit judgement call, so they'll deem you at least a moderate risk. Which means higher interest. Or you get a cosign.

If you get a first time home buyer loan you can put 3% down, but the principle gets rolled into the mortgage, so the monthly payment is bigger. Also closing costs, unless you negotiate that you dont want to pay them and seller accepts, thats cash up front out of your pocket. Buying my house cost me about 8 grand, and 30 days later i had a 2200 mortgage payment due.


For the first 10 years of the loan if you pay no extra, you'll also have about 10% of your mortgage value tacked on again as PMI - private mortgage insurance. This is to protect the underwriter / bank against default. The PMI on my loan is about 240 bucks a month. Thankfully we're set to get rid of it by year 5, which i'm super duper psyched about. So there's that too. Don't trust those online mortgage calculators. They are not factoring in stuff like PMI, Property taxes, etc. so they can be misleading. Really, really misleading.

Also don't trust your realtor to dial back your aspirations (unless they are a really nice one), as they make their commission whether or not you default. If you can only afford 150k house, and you buy a 250k one you CANT' afford, unless they are scrupulous, they don't give a feth. The default doesn't affect them at all.


My suggestion: You're young. At 20 you don't even know if you'll stay in Jersey forever. Having a mortgage makes it hard to just get up and go if an opportunity arises, especially if you can't afford to take a loss on a house during a dip in values or being slightly underwater on the investment (which tends to happen for the first few years of a mortgage, as almost all your paments each month go to interest, and you probably had some out of pocket expenses up front). 1800 over two jobs is not enough to cover a house, incidentals, etc.

While its good that you have savings, i would continue to save. If you don't want to live at home, get a modest Studio that will still let you save as much as possible. Though if you're on good terms with your folks, and you can stick it out a little longer, i'd save every damn penny you can while living with them if they're cool with it.

Just my .02. I think if you really start looking at the costs of this, you will quickly realize that you are not going to be able to afford it. Which sucks, but it's goddamn expensive to own a house in the northeast / upper mid atlantic.

When you're financially stable and want to leave home.

Then depends on the area you wish to move to cause renting could actually be a better idea, but then again that really depends.

If you're making 1800 a month and the sole provider, have a look at how the payments match up against that. Without forgetting all the extra costs of course. People somehow forget them and focus on the actual payments.

Yeah, about all I know on finance is the very basics of not spending outside your means, not taking high interest loans, and saving for emergencies/retirement. When it comes to stuff like actual legitimate loans, credit ratings, investing money other than just putting it into a 401k, or much of anything about taxes (will be filling those out for the first time this year, that will be fun...) I have some learning to do.

Anyway, that's enough thread derailment for me. I'll be reading it in case any other interesting financial information comes up.

The more money you bring to the table the better. There are all sorts of costs involved, although some of them can be wrapped up in the mortgage. IIRC we had our closing costs just tacked on to the loan, so there wasn’t a big hit from those. That said, I had a large amount of savings I was able to dump into the down payment. I’d been working a real job for a few years, but kept living like a starving college student, and banked the difference. I was lucky, as The Wife (we were just engaged when we got the house) is a bit older, and had a steady job and good credit rating. Between us, we had what the bank wanted to see. You might look into getting your parents to co-sign, if they are able/willing. Leverage the years of mortgage payments they’ve been making.

Having equity in a house is a good long term thing. It’s an investment. But it does take maintenance. A couple of weekends ago when I was dealing with a frozen sump-pump in -5 degree weather, I really wished I could have just called my landlord. Besides the investment aspect, it’s also your home. You can paint it what you want, knock down that wall to make a gaming room, etc.

Real estate agents want to sell you a big house for a big commission. Looking at the numbers that they told us we could afford, and what we actually could was a bit awkward. We did some research, and bought a smaller starter home. Our monthly payments are still a bit high, but manageable. Taxes get you. Make sure you account for everything.

Besides the financials, there are all the little things you need that add up. Appliances, things like lawn mowers (or paying a service), re-surfacing the driveway, fixing broken stuff, it’s always something. You should budget a chunk of change each year for the little things, and the big things that come up. You want a buffer in your bank for when the water heater stops. Because it will. Not every year, but the year it doesn’t, you might have a leak in the roof that needs fixing, or a broken window. Plan for unplanned expenses.

 curran12 wrote:
Are you happy with any of your jobs? Are they jobs you see yourself staying with for 10-30 years?

Purchasing a home (be it a house or condo) is a major long-term investment, and you need to consider a lot of factors for your budget as well as whether or not you plan on working off a mortgage:

Can you afford the monthly payments?
Can you afford utilities?
Can you afford the time or money for maintenance?
Do you have furniture?

You forgot:
Can you afford the home owners association fees? I've seen them cost as much as the payments.
Can you afford the insurance?
Can you afford the taxes?

But the biggest considerations should be paid to it's location, When I picked where to move to I found a place with no history of earthquakes, floods, hurricanes, or tornadoes.

When you're young, there's no reason to spend a lot of money on buying a house. A decent apartment will cost a fraction of a house with far fewer long term commitments. That way you can save money to actually have a life, pay off student loans, start putting money towards retirement, etc. Don't bother with a house until both of you have other debts payed down with steady income and whatnot.

Also, a financial advisor would probably tell you to keep living expenses below 30% of your income. Otherwise, if you lose a job or have a medical emergency, you run a much lower risk of going into debt or missing payments.

Don't buy a house until you find a solid, well paying job you know for sure you can stick with for at least a year or 5. Otherwise you will have a lot of (financial) pain.
If you really want to get away from your parents, look into renting a room or small apartment.
I'd say 20 is rather young for moving out though, most folks here are quite a lot older when they move out (as in getting your own house, not in renting a room in the city you study, that is quite common)

Maybe it is me, but I dont see the point of buying a house.

 hotsauceman1 wrote:
Maybe it is me, but I dont see the point of buying a house.

You're not thinking big enough

 hotsauceman1 wrote:
Maybe it is me, but I dont see the point of buying a house.

It's you. And it is an understandable thing, though.

Buying a house, as opposed to renting, is an investment that will greatly build one's wealth provided they can see it through.

 Shadow Captain Edithae wrote:
Will the marble be a Greek or Roman antique?

a 5x4 100 pound slab costs anywhere from $600 to $1400 to ship from Italy to the United States. Ordering and shipping within the continent is only going to be a bit cheaper. You get less variety and its harder to find good quality in the US though. As for antique...I would never buy antique marble if I don't plan to have a display case for it.

 hotsauceman1 wrote:
Maybe it is me, but I dont see the point of buying a house.

It's you. Especially right now its one of the most solid investments you can make. 8 years ago, not so much. Right now ? hell yes.

I walked into 40k worth of equity the day i signed the loan docs on my house. No 401k does that. Period.