Post # 1
We just moved into an apartment a few months ago. Already, we’re so sick of renting and wasting money. The landlord said it shouldn’t be an issue finding someone (apt fill fast where we are). We want to invest since the housing market is prime for investing and while have the extra money to do so. Though, I’m worried about all these government tax-cuts affecting the housing market for quite some time. We’ve browsed online but this will be our first home buying experience. Needless to say, we’re complete nubes!! Can you give us some pointers?
We have a co-signer, and all three of us have great credit/long hisory (scores in the 800’s). The 2 bdrm Townhomes that we’ve been looking at are around $40-50k, with taxes around $500-1500/year; HOA ees around $100-250 (which I’ll have to find out if it may increase at any time–from my understanding!) We’ll have around $10,000 for a down payment and extra money in savings for emergencies.
We both work part-time and have school full-time. I understand that it’s important to be able to make payments in-case something happens to one-of-us. We have security funds in case such an emergency were to occur. I just turned 22 years old, and he’s several years older, than I. I’m finishing up my graduate studies now with jobs lined up in the health care field (nutrition research) nearby when I graduate. We’re not married…should we be if we buy a home??
HELP! thank you!
Post # 3
Any pros/cons to beung married beforr buying a house?
Post # 4
First question…did you say that townhouses in your area cost $40-50,000?
What? I’ve never heard of such a low cost. Where do you live?
Post # 5
Well, we highered it to 55-60k bc of the better deals, doesn’t need as many upgrades as the lower priced townhomes.
Post # 6
Couple thoughts – a townhome is a lot like an apartment without upstairs neighbors. You’ll still have people on either side of the wall. If that’s what bugs you about apartment life you might want to wait until you can afford a stand-alone home.
I would also wait until I could do it without a cosigner. By having a cosigner, you’re putting someone else on the hook for your debt. Sure you have all the intentions of paying it currently, but someone loses a job or gets sick or whatever, then your cosigner is on the hook for payments you can’t make.
It’s not fair to get someone on the hook for your debt. A large percentage of people who cosign end up having to pay the debt. Some studies have shown this percentage is as high as 75%! IMO, if you can’t afford a house without a cosigner then you can’t afford a house.
I’d be a little worried about buying something while in school. You just don’t know what the future will bring once you’ve completed your degrees. What if you decide you want to move, get great offers somewhere else, even just a job way across town and you don’t like the commute. Being tied to a house would be a burden in these cases. If you know you can flip it if you need to, then that’s a little different, but if you think the market may be sluggish or drop, you could find yourself stuck in something you can’t sell.
As far as owning a house with someone you aren’t married to, that would be a worry for me, although some people certainly make it work. If two unmarried people own a house they need to keep pretty good records of who pays what mortgage/mortgage interest and taxes so that you can allocate the tax deductions correctly. Partners don’t have all the same protections that spouses do – like auto transfer of property on death, etc. You have to plan how you’re going to own the property – joint tenants, jt with rights of survivorship, tenant in common, creating a trust.
Post # 7
- Wedding: October 2011 - Bed & Breakfast
Don’t buy a house because it’s an “investment.” It’s not. A house is a fun money pit. There will always be something to repair or replace, and you will be financially responsible for it. In a normal market, the “appreciation” that you will see over 10 years will only make-up for the money you have sunk into the place over that same time period to fix what gets broken and maybe update a few cosmetic things to make them more your style.
Buy a house if you want to have another project, want to have something that you can change without someone else’s permission, want that level of responsibility, and have enough income and savings to make it all work. And only buy after you two have a legally binding written agreement that explains how the house will be dealt with if you break-up. Since you are not married, this is a very important thing to do.
Also, if you can’t qualify for a mortgage without a co-signer, you are most likely not financially ready to be a homeowner. (Note: I am making the assumption that you can;t qualify on your own because I can’t think of a reason why someone would want to add a third party to their mortgage. But I acknowledge that this may be an incorrect assumption.)
Post # 8
@Jennlee: +1 on everything you said.
Just my opinion, if you can’t afford to buy a house without a cosigner, you can’t afford to buy a house. The cost of the house does not end at the list price. There are a lot of hidden costs, like closing costs, insurance, interest rates, propery tax, not to mention the unforseen costs that can pop up while owning a home (you don’t thave a landlord anymore, so if something breaks, guess who’s paying to have it fixed). 22 is very young, don’t rush into something you potentially can’t afford just because you don’t like living in an apartment anymore. Plus, a townhome is basically an apartment with stairs, so it’s not like you’ll be solving any of your problems.
Post # 9
How about renting a house? It’d get you out of an apartment and give you a taste of what it’d be like to be in your own home.
The big thing people say is “don’t throw money away on rent.” But whether you rent or buy, you’re still spending money to house yourself. I believe if you buy a house you “throw away” the equivalent amount in other ways – property taxes is a big one, maintenance, insurance, utilities, etc.
Post # 10
@cbgg: Yes. I need to know where this is so I can swoop in there and buy one tomorrow, lol.
Post # 11
@Jennlee: +1 – You said everything I was thinking 🙂
Post # 13
I would not buy a home together without being married, personally. I also would not suggest purchasing if you can’t do it without a cosigner. I kind of doubt you will get a loan only working part time, but you could go speak to someone at your bank and see what they suggest.
Post # 14
@lovekiss: +1 I absolutely agree with everything you’ve said.
The co-signer worries me, and I personally would not get a house with one. If your credit scores are in the 800’s as described, you should have no problem qualifying for a reasonable mortgage on your own. For comparison, my Fiance and I’s scores were in the 700’s and we qualified without a co-signer.
It is usually not a big deal to purchase a house while unmarried. At or around closing, you will need to sign legal documents deciding how to divide the property if something were to happen to one of you. We did not want our property to go to our parents if one of us were still living, so we chose to give our shares to each other. That was really the only hurdle we had to deal with that a married couple would not have to.
Homes have hidden costs, so do your research on the house, the HOA, and the type of maintenance you may need to do. Get a good home inspector because you do not want to be stuck with an unexpected repair right after closing. Once you close, repairs will come from your pockets, not the landlord’s. I’m not trying to discourage you from home ownership, but I do encourage you to learn as much as you can before entering into this process.
Post # 15
@ExcitedScaredBee: And in an area where rentals fill quickly! Maybe I should be makign this investment! (JK)
To OP – renting is not always throwing money away. Run your numbers carefully first taking into account all the extra costs of home ownership (maintenance, saving for repairs, interest payments on your morgage, transaction and realatry fees for both when you buy and when you sell, as well as the positives such as tax credits) and make sure that home ownership is right for you. Many MANY people lose money on home ownership when compared to renting. But many others don’t. It depends on your area and your particular situation. In particular, the less debt you take on (aka, higher down payment and accellerated payment schedule) and the longer you plan to stay in the house, the better off you’ll likley be.
Your post is riddled with red flags. (Co-signer, unmarried, only been living in an appartment for a few months.) I doubt that home ownership is right for you at this point. And that’s ok! I don’t own a home right now, because financially it would not be a good decision for me.