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I suppose one thing to consider is how much renting a place will cost you vs a mortgage.

In some places, rent isn't all that much less than a mortgage. And you might as well be building equity. Even if you aren't planning on living in the area for 10+ years. But if you think you'll be in the area for 5-8ish years it might be worth it. Real estate prices are relatively low right now and the economy is picking up, so as long as you maintain the house reasonably you should also have increasing value on your side.

You'll be paying utilities either way so that's a wash.

The other thing is that even if you do decide to move away, a rental can be a good source of income. It continues to help pay down the mortgage and is a steady source of income, assuming you get a good steady renter. If you don't want to bother finding a renter yourself and/or you are a ways away you can have a rental agency take care of that for a commission.

Thanks for all of the help, guys.
I was feeling a bit lost, seeing as my dad lived with his parents until he was 35, working consistently high paying jobs and buying a million dollar house a year before getting married. He couldn't really offer advice since our situations are so different

My mortgage is less than the rent I was paying on my old place.
One of my few regrets in life is that I didn't buy a house in my 20's
rental money is wasted money.
You're paying someone else's mortgage when you rent.

If you're in a position to do so, buy.

Another way to think of it is.

When you're renting a house, you're paying off someone else's mortgage.

I find that thought was a good way to focus the mind about things.

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

It's absolutely just you.

Renting is akin to wiping your ass with your money and then lighting it on fire.

How about giving me an example of why that is? And not just rehtoric.

 hotsauceman1 wrote:
How about giving me an example of why that is? And not just rehtoric.

Seriously?

You mean, aside the fact that with renting you don't ever own anything or build equity?

There's no substance in your material gain.

 cincydooley wrote:

 hotsauceman1 wrote:
How about giving me an example of why that is? And not just rehtoric.

Seriously?

You mean, aside the fact that with renting you don't ever own anything or build equity?

And owning a house can go a million ways wrong and outs you into stupid dpet. And forces you to commit to a single place?

 Squidmanlolz wrote:
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.

$1800/mo is no where near adequate for most homes.

This also does not address that you are going to need a substantial down-payment (with good credit, 10% is expected! with lower credit! they will want more), and that there are going to be approximately equal costs for the various fees and taxes associated with the purchase.

You buy a house to build equity (so that your "rent" converts into ownership of your domicile, and not simply buying temporary use of it).

This means that after the down payment, and other expenses of the initial purchase, after calculating in utilities, insurance (if you are buying the house with a loan, then you will HAVE to have insurance... They make you, or won't sell you the house), and other expenses usually connected to a neighborhood association which will have rules about maintenance and upkeep of the house, so that you do not drive other's property values down, that the purchase of the house will actually be saving you money over renting.

In the USA, the cost of owning a house has risen faster than has the median wage, making home ownership decline (or at least the rate of ownership decline in periods of better economic conditions).

Also.... Very few 20 year-olds are going to own homes in this day and age, unless their parents are involved, and have a good deal of cash.

I bought my first home at 25, but then I came from a family that was pretty well off, and I was making about $75k/yr in 1987/88 (technically more than that, considering I had considerable income from a nightclub that went wholly unreported by the owners at the time).

If you live in a rural area, $50k/yr is pretty much the minimum required to buy a home, and then it would be small.

For an urban area in a place with affordable housing (such as Colorado, Alabama, or Mississippi, which doesn't really have urban areas that compare to actual cities in the NE, Great Lakes Area, Texas, or the West Coast) you will need to be making about $75k/yr - 100k/yr minimum (and even then that is barely enough for cities like San Francisco, Los Angeles, or New York).

But if you start saving now, and manage to save about $30k by the time you are in your mid-20's, then that will put you in an excellent position to start thinking about it.

MB

 hotsauceman1 wrote:

 cincydooley wrote:

 hotsauceman1 wrote:
How about giving me an example of why that is? And not just rehtoric.

Seriously?

You mean, aside the fact that with renting you don't ever own anything or build equity?

And owning a house can go a million ways wrong and outs you into stupid dpet. And forces you to commit to a single place?

Renting can go wrong too. And buying a house doesn't necessarily commit you to a single place any more than renting, although it can make it more difficult in certain circumstances.

 hotsauceman1 wrote:

 cincydooley wrote:

 hotsauceman1 wrote:
How about giving me an example of why that is? And not just rehtoric.

Seriously?

You mean, aside the fact that with renting you don't ever own anything or build equity?

And owning a house can go a million ways wrong and outs you into stupid dpet. And forces you to commit to a single place?

Not if you shop for your home loans intelligently, get a fixed rated mortgage, and don't make yourself house poor.

As to, "forces you to commit to a single place.." I don't even know what to say about that. The transience of people that I see worried about getting their KS rewards shipped to them shocks me.

Outside of when I was in college, I've lived in a total of 4 places. Two homes with my family when I was still living with my parents, an apartment I was living in when I graduated from college, and finally the home we now own.

Again, the transience astounds me.

 marv335 wrote:

My mortgage is less than the rent I was paying on my old place.

Mine isn't. But then I went from a trashy studio apartment to a three bedroom house with some nice amenities. My current mortgage is about 1.6 times my old rent. Then I have to add on HOA, Sewer, larger electricity bill, etc. so it comes out to roughly double. Pretty good for such an increase in floor space.

My best advice? Get a fixed rate mortgage. New construction, if possible. It will amaze you how slowly you'll be paying off that loan compared to how much you've actually thrown at it, so pay more each month if possible and have that additional money applied to principle.

Figure out your TOTAL monthly bills involved in home ownership and make sure you can afford that while feeding yourself, paying all your other bills, and working to rebuild your savings.

 Squidmanlolz wrote:
Thanks for all of the help, guys.
I was feeling a bit lost, seeing as my dad lived with his parents until he was 35, working consistently high paying jobs and buying a million dollar house a year before getting married. He couldn't really offer advice since our situations are so different

It sounds like your parents could afford to rent, maybe ask them to move out

My solution to the problem (20 years ago) when I really couldn't afford to buy alone on a very low starting salary, was to buy and sub-let - I bought a 3 bedroom house and rented 2 rooms out to tenants. In just 5 years I had about 15 lodgers, the majority of whom were good people who paid their rent on time, and we all got on fine. This continued until I could afford the mortgage myself, and at the end I had a somewhat reduced mortgage debt and a property worth a fair bit more than I paid for it, so was well worth doing. The pre-requisite for this solution was my parents guaranteeing the mortgage, ie signing something that said if I couldn't pay it, they would. It was never necessary in the end, and this isn't a solution open to everyone but sounds like it might be to you. Just an idea.

You have two choice when it comes to living somewhere, you can either pay off your own mortgage, or you can pay off someone else’s instead.

That’s not to say you should just walk straight into buying. When young renting has considerable advantages, especially as it's not uncommon for people early in their career to change jobs every few years, so the ability to relocate quickly is advantageous. But once you've decided to settle on geographic area and make it your home for at least the next 5-10 years they you should strongly consider buying.

 hotsauceman1 wrote:
How about giving me an example of why that is? And not just rehtoric.

It boils down to one word: equity.

You get nothing but one month security when you move when you rent.

You get whatever equity you've built in the property back when you sell property that you have mortgaged. Sure, it can go up and down, but on an infinite timeline, properties recover from housing bubbles, and always gain value as long as they are maintained.

 cincydooley wrote:

 hotsauceman1 wrote:

 cincydooley wrote:

 hotsauceman1 wrote:
How about giving me an example of why that is? And not just rehtoric.

Seriously?

You mean, aside the fact that with renting you don't ever own anything or build equity?

And owning a house can go a million ways wrong and outs you into stupid dpet. And forces you to commit to a single place?

Not if you shop for your home loans intelligently, get a fixed rated mortgage, and don't make yourself house poor.

As to, "forces you to commit to a single place.." I don't even know what to say about that. The transience of people that I see worried about getting their KS rewards shipped to them shocks me.

Outside of when I was in college, I've lived in a total of 4 places. Two homes with my family when I was still living with my parents, an apartment I was living in when I graduated from college, and finally the home we now own.

Again, the transience astounds me.

What's so astounding about transience? in 20 years I went from:
phoenix az, to orlando fl, to great lakes il, san diego ca, long beach, ca, guam, san diego, japan, san diego, small island off the coast of san diego (san clamente) to japan, to san diego, to ontario canada. And that's just where I officially lived, I traveled a lot more than that.

Some places I was at for less than 6 months, and most of them 2 years on average. and I'm getting ready to move again this summer I loved all the places I lived at, they were all amazing and had so many things going for them.

Let's also remember the bubble, and how many people are still under water on their houses, they paid more for their house than it's currently worth. Then think of those living in Detroit, now their committed to their place, any sensible person would have moved. You might love where you live, but if the town around you dies, you won't have any equity to speak of.

Exactly.


Automatically Appended Next Post:
I dont want to be one of those people who just stays in one place with his family his whole life. I want to live in different parts of the world, take my family with me and show them the diversity

If you want to do that its far cheaper just to take short vacations than constantly be moving.

 hotsauceman1 wrote:
Exactly.


Automatically Appended Next Post:
I dont want to be one of those people who just stays in one place with his family his whole life. I want to live in different parts of the world, take my family with me and show them the diversity

Yes. Heaven forbid you give your kids and stability in their schooling or friendships. That's just ludicrous!

Quit being so silly, GT. You can't possibly experience diversity or culture unless you're constantly moving!

I know perfectly normal people that have grown up like that.

Its still bad to keep uprooting kids up and moving from school to school. Losing all their friends. etc...

In the age of I.ternet, you never loose friends. And you get a different experience living there rather then traveling

 hotsauceman1 wrote:
I know perfectly normal people that have grown up like that.

Of course you have.

Doesnt change the research.

And then If we really want to base it on anecdotes, I have plenty of them from both my own and my wife's years of teaching.


Automatically Appended Next Post:

 hotsauceman1 wrote:
In the age of I.ternet, you never loose friends.

Yeah. It's totes the same.

All IM saying is there more then one way to live, and that it seems stupid to base you,entire life on just making sure you have money and a house on a small plot,of land when there is a whole,world out there to experience.

 Squidmanlolz wrote:
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.

It's not a bad idea to consider buying a home. You just need to know a few things in advance. And have some money.

First thing to consider is. How much are you making. A certain percentage should go to the mortgage. Personally I think it should vary but your mortgage should never be more than 50% of your income after taxes.

Look at the location you live and work at. Will you be residing here for a long time or do you think you may relocate? If you think your current job is going to relocate you often, then you may want to consider what the housing market is like in your area. Do homes go up in value? Are they in decline? If you're 20 and making avg money, you will be tempered to buy a cheap home and usually cheap homes go for cheap for a reason. If it's due to location resell will be a little tougher unless you put some cash into the home. Renovate kitchens floors.

Do you have enough saved up? Most lenders require a 20% down payment. Some lenders offer 0% down but are rare. Navy federal credit union offered me a 0% non VA insured loan for a slightly higher intrest rate. But you might have to be in the military to get s navy fed loan

Do not get an adjustable rate mortgage. Interest fees will go up and rarely go down. Always try to get a fixed rate loan.

Buying is a good investment. Most times you're paying less on mortgage than you would paying rent. Paying rent is really just paying someone else's mortgage. Plus sometimes the home owner will add a few to make some profit. You can look at sale records and see hat the person paid for their home and estimate what the mortgage is compared to the rent they are charging.

 hotsauceman1 wrote:
Exactly.


Automatically Appended Next Post:
I dont want to be one of those people who just stays in one place with his family his whole life. I want to live in different parts of the world, take my family with me and show them the diversity

If I got a dollar for every time I heard someone say this ten years ago that are still living in the same place now, I'd have my mortgage payment for this month.

Do you ACTUALLY have plans to move around? A job that allows it? It's hard to just wonder around unless your job allows it or you're willing to live in the more rundown areas in the places you visit.

By the way, you can sell a house. My nephew has the same argument that you have that if you buy a house that "you're stuck in the same spot." I'm not sure if that's the weed talking or what, but it's simply a dead argument.

Now is an excellent time to buy a house.

With that said, I agree that $1,800 is probably not enough to own a house on. Would that be $1,800 take home or $1,800 gross? $1,800 take home would be manageable in some areas. I pay about $1,500 for mortgage, utilities, internet, etc. That doesn't include food, clothing or other stuff I may want, so $1,800 would be frugal living for me and would leave little room for error or emergency money. Also as mentioned above, you should just assume you will need a 20% down payment, so you better get saving!

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

It's just you. The place you're renting is someone else's home. Chances are they have a mortgage. And technically you're paying for it.

Investment opportunity is the main reason.

I live in Hawaii. I was willing to rent but due to having two German Shepherd dogs. No one would rent to us. In Hawaii most home owners don't allow pets.

We instead chose to buy. We bought our house for $500,000 in January 2011. Last month we put our house on the market for $670,000 and we accepted an offer for $655,000

After we pay the realtor his 4.5% or $29,000 my wife and I are looking to profit $110,000

That's for a 4 year investment.

Had we rented a home initially, we would have paid about $2800-$3100 in rent for a four bedroom house. Instead, we bought one and our mortgage including taxes, insurance was $2600.

So yeah, a house is not a bad idea if you have the money to purchase one. Otherwise, you're just paying for someone else's house.

The blanket statement that buying a house is an investment and renting is a waste of money is stupid. I'm amazed anyone still thinks that after the housing market fluctuations of the last decade. It can be an investment, but probably a pretty bad one if you're making $1800 a month.

http://www.wsj.com/articles/SB10001424127887323949904578538012957595402

Johnnytorrance wrote:

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

It's just you. The place you're renting is someone else's home. Chances are they have a mortgage. And technically you're paying for it.

Investment opportunity is the main reason.

I live in Hawaii. I was willing to rent but due to having two German Shepherd dogs. No one would rent to us. In Hawaii most home owners don't allow pets.

We instead chose to buy. We bought our house for $500,000 in January 2011. Last month we put our house on the market for $670,000 and we accepted an offer for $655,000

After we pay the realtor his 4.5% or $29,000 my wife and I are looking to profit $110,000

That's for a 4 year investment.

Had we rented a home initially, we would have paid about $2800-$3100 in rent for a four bedroom house. Instead, we bought one and our mortgage including taxes, insurance was $2600.

So yeah, a house is not a bad idea if you have the money to purchase one. Otherwise, you're just paying for someone else's house.

And that's Hawaii for you. Other places you can sit in your house for years after putting in on the market waiting for it to sell.