Author Topic: Advice on first home  (Read 2287 times)

APBioSpartan

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Advice on first home
« on: June 21, 2017, 07:28:46 AM »
Hello!

Thank you in advance for your input.  This is my first post, although I have been reading this blog/forum for about a year now.

My wife and I recently moved to a city that has a MUCH higher COL than what we are used to.  Reason being that we absolutely love the outdoors and being in/near this city actually has some sort of ROI with us exploring more, taking less vacations, and doing a lot of "free" activities (music festivals, camping, hiking, etc.).  With that being said, the housing market here is absolutely terrible and the economy here is just wack.  Starter homes go for 300-400k and the average income is terrible.  However, we are fortunate with our income and would like to purchase a home within the next 1-1.5 year(s).  Before my question, here are a few details:

Age: 25/26 (Just married 2 weeks ago)
Combined income: $155,000 + small bonuses
Student Loans: $18,000 (down from $63,000 - ~5.5% interest)
401k: $36,000
Roth: $6,000
Savings: $5,000 or so - throwing everything we have at student loans
Expenses: I don't "track" (yet), but we are very mindful with our money

My question to you all is in regards to how much house we can afford.  I realize and appreciate that there is already a post on this topic, but the area that I came from had starter homes listed for $100,000 and it would give me sanity to confirm.  The research that I have done shows that we should be able to comfortably purchase a $400,000 home, but that just seems outrageous, ridiculous, and stressful to me.  However, that seems to be par with the market and maybe I/we just need to adjust our mindset.  Thoughts?  Advice?  Are we jumping the gun?

P.s., we fully understand that we will need to "pause" the loan payments and save aggressively for a down-payment.  We plan on starting that process next week. 
« Last Edit: August 08, 2017, 06:31:27 AM by APBioSpartan »

Fishindude

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Re: Advice on first home
« Reply #1 on: June 21, 2017, 07:44:22 AM »
With only $5,000 savings you don't have enough for a down payment on much of anything.   You should have a full 20% down payment saved, plus some additional savings set aside for emergencies, misc. expenses, etc.   Once you get the above taken care of, I'd try to find something $200K or less for your first home, despite what all the "expert rule of thumbs" say.  Would also go with a 15 year fixed rate mortgage so you have it paid off by age 40.

Mr. Green

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Re: Advice on first home
« Reply #2 on: June 21, 2017, 08:10:20 AM »
With interest rates on mortgages as low as they are now, a 30 year mortgage can be useful depending on what your goals are. The difference in payment on a 15 year vs. 30 year is significant. You can have a 30 year note and elect to pay extra to match the payment of a 15 year. Yes, you will pay a little more in interest but you also have more flexibility because you aren't required to pay the extra amount. You're young so you have limited liquidity in other accounts. You might find that flexibility is useful early on depending on what your goals are. When everything went to crap in 2008 we started stashing cash and ended up using a pile of money to buy a property (deal of a lifetime scenario). You could elect to throw that extra monthly amount into investment accounts during a correction, knowing you're going to get a healthy return on the bounce (more so than the 4% on your mortgage). You also have wiggle room if life happens, an income gets lost, etc.

Just some thoughts. I'm a big fan of the 15 year mortgage. I have one myself. I'm not sure if I would have wanted it at a time when I didn't have enough liquid funds in other places to potentially take advantage of deals, etc. Cash is still king in quite a number of circumstances.

edit: typos
« Last Edit: June 21, 2017, 08:15:46 AM by Mr. Green »
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SilveradoBojangles

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Re: Advice on first home
« Reply #3 on: June 21, 2017, 08:33:49 AM »
We are in a similar situation in that we just purchased our first home in an area where small/old homes start at 300K, anything nice is 500K+, and most things go for over asking within a week. However, rents are even higher here, so buying makes financial sense. Based on our income we could have purchased something in the 700K range, but that sounds insane, and the idea of having a giant mortgage payment just stressed me out. We had about 70K saved, and we happened to find (via our excellent realtor) a diamond in the rough, that is, a 1000 sq. ft house in the neighborhood we wanted for 290K. 2 blocks away an 800 sq. ft house of similar age (that had been nicely painted and beautifully staged) sold for $311K the same week we put an offer on this house, and a few weeks later another house the same age, style, and size as ours sold for 335K. The purchase was incredibly unstressful because we had the cash for a 20% down payment (we beat out another offer because of this), and the mortgage payments are well within what we can afford. We would have paid about $5-600 more per month to rent something similar. And we have the money to make some upgrades to this house in addition to growing our stash.

So get a good realtor (ours also flips houses, knows the market well, and has a keen eye for value) and take your time looking to get a feel for the market while you build up your down payment. Think hard about the location you want and how much house you really need. Also, consider property taxes when thinking about what you can afford. Ours were surprisingly high (adding ~500/month to our mortgage). Closing costs were an addition 10k, and the start up costs (moving, painting, some fixes, curtains, etc.) will be another 5K when it is all said and done, so make sure you have more cash than you think you'll need.

Cwadda

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Re: Advice on first home
« Reply #4 on: June 21, 2017, 08:45:45 AM »
Another option you may want to consider is purchasing a multi family home, living in one unit and renting the other(s). This is achievable with an FHA loan, as low as 3.5% down.

APBioSpartan

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Re: Advice on first home
« Reply #5 on: July 26, 2017, 08:09:55 AM »
Just found out that my employer's Credit Union offers the following:

10 Year ARM
Down payment as low as 3%
No PMI (included in interest rates below)
Fixed between 3.7-4.2% (depending on Credit) for 10 years, then variable.

What are your thoughts on doing a 3% down payment with the above for a first home?  Too much risk?
My thoughts are that a lower down payment would free up some (initial) money to pay off other debts and add some value to the home. 

waltworks

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Re: Advice on first home
« Reply #6 on: July 26, 2017, 08:31:27 AM »
What is the rush? You're at the age when you'll be changing jobs/life plans/etc a lot. At least wait until you have 20% to put down and you're sure you'll be in the area for 5+ years.

-W

Dicey

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Re: Advice on first home
« Reply #7 on: July 26, 2017, 08:54:45 AM »
While I agree with Walt, 3% down with no PMI is pretty attractive. Try not to buy more house than you need and look for something that has good rental potential, should the need to move arise.
Next, check Earnest or So-FI because 5.5% seems kinda high. Not sure if you're below their minimums, but worth your time to check. Don't do a 0% balance transfer CC if you think you'll buy a house soon. Also, it could pay off to wait to buy until the late fall/winter months.
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GizmoTX

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Re: Advice on first home
« Reply #8 on: July 26, 2017, 11:00:04 AM »
I certainly wouldn't do an ARM at this point, & you are being charged PMI in your interest rate. Variable after 10 years is also a time bomb.
You're going to incur a lot of unknown costs with home ownership. Get debt free, save more, & buy a house when you are really financially ready & starting a family. Renting allows you to stay flexible, learn your new area, not have yard care or maintenance, & more easily 'lock & leave' while traveling.

Dicey

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Re: Advice on first home
« Reply #9 on: July 26, 2017, 11:49:28 AM »
Most people don't stay in their home for ten years, so I'm okay with that lock period. Also, the rates are not terribly out of line, especially at 3.7%, so who cares if PMI is buried in the interest rate? This allows for a re-fi at an earlier date, if desired, which separate PMI may preclude. That's a good trade for only 3% down.

I'm not telling OP if they should buy or wait, I'm just saying that's not a bad deal at all. I've bought enough houses to have an opinion that's based on experience.

OP - Please make sure there's no pre-payment penalty.
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patchyfacialhair

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Re: Advice on first home
« Reply #10 on: July 26, 2017, 12:05:25 PM »
Keep in mind that moving into a house may bring lots more "unexpected" expenses. We have similar income and put 5% down on a 400k home (a forever home), and we still have dropped about 20k since move in on....stuff. We installed A/C, fixed some landscaping, painted, bought a crap ton of furniture, and splurged on a giant 65 in tv

Granted, none of that is required, or even remotely mustachian, but my wife was all "we have the money and I'd rather not have an empty house." It reduced our emergency fund from 6 to 3 months, but we should be back up to where we need to be by February.

I guess what I'm trying to say is that moving in with only 5k liquid savings seems risky to me. Based on what I recently just went through.

Another Reader

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Re: Advice on first home
« Reply #11 on: July 26, 2017, 12:19:39 PM »
Most people don't stay in their home for ten years, so I'm okay with that lock period. Also, the rates are not terribly out of line, especially at 3.7%, so who cares if PMI is buried in the interest rate? This allows for a re-fi at an earlier date, if desired, which separate PMI may preclude. That's a good trade for only 3% down.

I'm not telling OP if they should buy or wait, I'm just saying that's not a bad deal at all. I've bought enough houses to have an opinion that's based on experience.

OP - Please make sure there's no pre-payment penalty.

The numbers are ok, but they just got married 2 weeks ago, are 25 and 26, and recently moved to this city.  In their shoes, I would focus on saving up for the down payment, paying off the student loans , and adjusting to married life.  Spend some time looking at houses to know what you want and can afford.  Bank what you can and pay down the debt some more.  Maybe start looking at the beginning of the spring selling season, when you are in a better position all around.

MountainTown

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Re: Advice on first home
« Reply #12 on: August 01, 2017, 11:27:01 PM »
Congrats on having an awesome income and extremely low COLA area. I am envious.

Yup--you are jumping the gun. Posts in here are saying that a 10 year ARM is smart? Uh...? Okay whatever. I don't even want to entertain that.

Honestly I am 2 years into my marriage and I appreciate people in here talking me down from buying. We have learned a lot about each other over the past couple years. Handling a budget together, living together, commuting, talking about kids...it's so much. And it should be fun! It won't always be fun but I have a feeling it's more fun with less responsibility and commitment(debt).

I would agree that paying down debt is the wise thing to do now. No, don't do an ARM. And really consider what the rents are there? I don't know about your town but sometimes rents are crazy cheap. What are they? If they are as low as 1500 and you are looking at 400k houses ....I would say hello no. If they are more like 2000 to 2500 maybe next year.

One more thing about 3% down and Arms...I am really skeptical that the rate is that low really. I mean yea I'm sure it is but you are paying for it somewhere. What are your closing costs? Are you doing a down payment loan? I am surprised no one else has asked this...that's typically how it works. Someone else is either taking on the risk(another lender, county program, etc) or you are paying for it in fees. Period.


Lan Mandragoran

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Re: Advice on first home
« Reply #13 on: August 02, 2017, 07:13:39 AM »
Another option you may want to consider is purchasing a multi family home, living in one unit and renting the other(s). This is achievable with an FHA loan, as low as 3.5% down.


1+ for househacking. One of the most simple and effective ways I've found to increase wealth is any form of house hacking (buying a house or multi family and renting out part of it).

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Lmoot

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Re: Advice on first home
« Reply #14 on: August 06, 2017, 06:52:11 AM »
What is the rush? You're at the age when you'll be changing jobs/life plans/etc a lot. At least wait until you have 20% to put down and you're sure you'll be in the area for 5+ years.

-W

Too many assume this about young people. There are still those of us that like to put down roots. It sounds like they recently moved/will be moving to an area they have thoughtfully considered. Not everyone wants to plan around a life with that many changes. Some people enjoy the switch up but many consider that lifestyle to be exhausting and unnecessary.

nick663

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Re: Advice on first home
« Reply #15 on: August 06, 2017, 07:15:58 AM »
You mention "terrible" average incomes in the area... what does the rent vs buy math say?  What is propping up those house prices?  I would be concerned with the market being in a bubble based on what you said.

I agree with what was said above about being patient.  You just moved to a new area and really don't have the finances in place to make a commitment of that magnitude yet.  Also ask yourself where you guys will be in 5 or 10 years... If the answer is anywhere but the house you're looking at buying keep renting.
What is the rush? You're at the age when you'll be changing jobs/life plans/etc a lot. At least wait until you have 20% to put down and you're sure you'll be in the area for 5+ years.

-W

Too many assume this about young people. There are still those of us that like to put down roots. It sounds like they recently moved/will be moving to an area they have thoughtfully considered. Not everyone wants to plan around a life with that many changes. Some people enjoy the switch up but many consider that lifestyle to be exhausting and unnecessary.
I think most of us have life experience behind those suggestions.  I bought my first house at 25. 8 years later I've changed jobs twice (below average compared to most people I know) and have sold that house to relocate 300 miles away.

APBioSpartan

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Re: Advice on first home
« Reply #16 on: August 06, 2017, 07:33:25 AM »
My wife and I have been scoping out this area (Asheville) and vacationing here for the last 3 years.  We know that it's the area for us and, employment permitting, the area that we want to settle at for a very long time.  However, you all are correct that this area is in a housing bubble.  There is lots of tourism and a huge housing shortage which is causing the housing prices to surge.  Part of me finds ease in that that our property value would increase after we purchase it.  The other part of me finds concern that it will pop.

For reference, we spend about $1,300/mo to rent a modest 2BR apartment in a nice, walkable location.  The second bedroom is used for my home office.
« Last Edit: August 08, 2017, 06:33:12 AM by APBioSpartan »

Lmoot

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Re: Advice on first home
« Reply #17 on: August 06, 2017, 09:05:51 AM »
You mention "terrible" average incomes in the area... what does the rent vs buy math say?  What is propping up those house prices?  I would be concerned with the market being in a bubble based on what you said.

I agree with what was said above about being patient.  You just moved to a new area and really don't have the finances in place to make a commitment of that magnitude yet.  Also ask yourself where you guys will be in 5 or 10 years... If the answer is anywhere but the house you're looking at buying keep renting.
What is the rush? You're at the age when you'll be changing jobs/life plans/etc a lot. At least wait until you have 20% to put down and you're sure you'll be in the area for 5+ years.

-W

Too many assume this about young people. There are still those of us that like to put down roots. It sounds like they recently moved/will be moving to an area they have thoughtfully considered. Not everyone wants to plan around a life with that many changes. Some people enjoy the switch up but many consider that lifestyle to be exhausting and unnecessary.
I think most of us have life experience behind those suggestions.  I bought my first house at 25. 8 years later I've changed jobs twice (below average compared to most people I know) and have sold that house to relocate 300 miles away.

 I get that, but times are different, and that has more of an impact than age. People get divorced now at a much higher rate than they used to, and that affects people of all ages. We have a more mobile and less "loyal" workforce (and hiring force), jobs are more fluid with mass layoffs. Someone's age should never be taken into consideration when deciding to purchase a house, IMO.  When I got my first full-time job after graduating, my plan was to be there for at least five years, and I was, almost to the day. I bought my house at 25, based on this plan. We do have some control over our future, and the option to follow through.  There is no arbitrary age someone must reach before they seriously consider putting down roots, or buying a house, which I don't necessarily think equates to putting down roots as there are several options for getting out of a house.

 I am not saying that you think someone must be a certain age, but you just touched on a pet peeve of mine as a young homebuyer. I am capable of making future plans as anyone else, and no one else is more or less susceptible to unexpected changes in their lives than I am. 

waltworks

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Re: Advice on first home
« Reply #18 on: August 06, 2017, 09:43:41 AM »
I had a lot of plans for the future when I was 25 (and 15, and now!) too. Guess how many of those plans panned out the way I thought?

The odds are if you are starting your first real job and just got married, things will change a LOT before you really end up somewhere you'll stay long term. Sure, you might be the exception. But you probably aren't, no matter how perfect the job/situation/future plan seems now.

-W


Lmoot

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Re: Advice on first home
« Reply #19 on: August 06, 2017, 10:13:26 AM »
I had a lot of plans for the future when I was 25 (and 15, and now!) too. Guess how many of those plans panned out the way I thought?

The odds are if you are starting your first real job and just got married, things will change a LOT before you really end up somewhere you'll stay long term. Sure, you might be the exception. But you probably aren't, no matter how perfect the job/situation/future plan seems now.

-W

 And many times those plans change because the pros of pursuing them outweigh the cons of pursuing them (like having to sell a house earlier than anticipated to pursue an unexpected but better opportunity)....but you still have a choice in many cases. New jobs and marriage don't "just happen". You make a decision to pursue it if it becomes an option. I am not saying that plans don't change, but if I have a plan, I take actions today that support that plan. I don't sit around and wait to see if something else happens instead.

 I am not talking about people who recognize and admit they don't know what the future brings, and are just waiting to see how things pan out. Or the kid that just graduated and got his first job and knows from the get-go that they don't want to be in this position/company for too long and have goals that could carry them away (living somewhere else, getting married, working in another industry they would have to relocate for), and they know they would be open to those opportunities.

I made plans when I was 30, now I am 33 and have not followed through with many of them....if I did I'd be back in school in a different city. And not at a different job in the same city. That can happen to anyone at any age. I am not arguing that plans don't change, I am arguing who they do and don't change for. My argument is they can change for anybody, so if you already have a plan in place what's the point of doing nothing, to see if something else comes along? If that something else can change too?  I'm not trying to brain tease, but I just never got that age argument. I am just as waffling today if not more than I was in my 20s. If anything the older I get the more restless I get and am more apt to make rash decisions, like quitting my job and traveling overseas for two months, which I did as a 30th Birthday present to myself.

I don't think I am some unicorn. Many people from my graduating class have stayed in the area, and are raising families here.
« Last Edit: August 06, 2017, 10:18:06 AM by Lmoot »

nick663

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Re: Advice on first home
« Reply #20 on: August 06, 2017, 10:57:18 AM »
My wife and I have been scoping out this area and vacationing here for the last 3 years.  We know that it's the area for us and, employment permitting, the area that we want to settle at for a very long time.  However, you all are correct that this area is in a housing bubble.  There is lots of tourism and a huge housing shortage which is causing the housing prices to surge.  Part of me finds ease in that that our property value would increase after we purchase it.  The other part of me finds concern that it will pop.

For reference, we spend about $1,300/mo to rent a modest 2BR apartment in a nice, walkable location.  The second bedroom is used for my home office.
"Employment permitting" is a major caveat.  What does the job market look like for your career outside of your current employer?  And what is the long term trend? (Job market growing in the area or contracting)  Will you be happy long term in that industry or will your interests take you elsewhere?  How about schools and play areas for the kids? (if that is in your long term plans)  I'm not asking for the answers but those are all things that should be cosidered.

$1300 sounds cheap relative to the numbers you were giving for purchase.  Does the rent vs buy calculation make sense?

nick663

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Re: Advice on first home
« Reply #21 on: August 06, 2017, 11:09:23 AM »
I had a lot of plans for the future when I was 25 (and 15, and now!) too. Guess how many of those plans panned out the way I thought?

The odds are if you are starting your first real job and just got married, things will change a LOT before you really end up somewhere you'll stay long term. Sure, you might be the exception. But you probably aren't, no matter how perfect the job/situation/future plan seems now.

-W

 And many times those plans change because the pros of pursuing them outweigh the cons of pursuing them (like having to sell a house earlier than anticipated to pursue an unexpected but better opportunity)....but you still have a choice in many cases. New jobs and marriage don't "just happen". You make a decision to pursue it if it becomes an option. I am not saying that plans don't change, but if I have a plan, I take actions today that support that plan. I don't sit around and wait to see if something else happens instead.
The problem is decisions can have an adverse impact on those future plans.  If the housing market drops 25% tomorrow OP is stuck in that house for the foreseeable future.  They can't pursue job opportunities in other areas, move to a better school district for kids, etc.  It's a big deal and should be thought through completely and there are still unknowns.

I also think college does a really poor job preparing people for the job market.  You mention employees aren't loyal?  I'd argue the source of that is the majority of employers aren't loyal.  I've had raises of 15k+ every time I've switched jobs because employers (generally speaking) only value experience outside of the company.  This can be a rude awakening to a 25 year old that thinks they landed a "good job" and will be with that company forever.

tralfamadorian

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Re: Advice on first home
« Reply #22 on: August 06, 2017, 11:44:03 AM »
Another option you may want to consider is purchasing a multi family home, living in one unit and renting the other(s). This is achievable with an FHA loan, as low as 3.5% down.


1+ for househacking. One of the most simple and effective ways I've found to increase wealth is any form of house hacking (buying a house or multi family and renting out part of it).

Another + to househacking.  I purchased a copy of the new biggerpockets book, "Set for Life", for my employee when she graduated from college.  I read it first and was very impressed with the overall mustachian ideals along with the easy to follow househacking explanation directed to folks exactly in OP's situation. 

Househacking would also solve the concerns raised by nick663.  If the market drops and the OP wants to move, it doesn't matter.  If the house would be at least cash flow neutral, they could move and purchase another one without the first home affecting their DTI. 

Lmoot

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Re: Advice on first home
« Reply #23 on: August 06, 2017, 11:54:02 AM »
I had a lot of plans for the future when I was 25 (and 15, and now!) too. Guess how many of those plans panned out the way I thought?

The odds are if you are starting your first real job and just got married, things will change a LOT before you really end up somewhere you'll stay long term. Sure, you might be the exception. But you probably aren't, no matter how perfect the job/situation/future plan seems now.

-W

 And many times those plans change because the pros of pursuing them outweigh the cons of pursuing them (like having to sell a house earlier than anticipated to pursue an unexpected but better opportunity)....but you still have a choice in many cases. New jobs and marriage don't "just happen". You make a decision to pursue it if it becomes an option. I am not saying that plans don't change, but if I have a plan, I take actions today that support that plan. I don't sit around and wait to see if something else happens instead.
The problem is decisions can have an adverse impact on those future plans.  If the housing market drops 25% tomorrow OP is stuck in that house for the foreseeable future.  They can't pursue job opportunities in other areas, move to a better school district for kids, etc.  It's a big deal and should be thought through completely and there are still unknowns.

I also think college does a really poor job preparing people for the job market.  You mention employees aren't loyal?  I'd argue the source of that is the majority of employers aren't loyal.  I've had raises of 15k+ every time I've switched jobs because employers (generally speaking) only value experience outside of the company.  This can be a rude awakening to a 25 year old that thinks they landed a "good job" and will be with that company forever.

There will always be a gamble when dealing with the unknown, like the future. What I'm saying is this is a married couple, whos current plan is to buy a house in a specific location. And then someone mentions because of their age they need to wait. That's what I took issue with. Just because someone is younger, if they have a plan, I don't think it should be assumed as less intentional or serious than someone a decade older. Plans changed because they change, not because someone is of a particular age. 

I guess I just don't see the point of holding off for all the what if's, if you already have a vision in place. I can understand if your future is avoid you haven't filled, but they have a desire, and stated that desire, and are being told that desire will likely change because of their age, which is simply not true. The middle-age schoolteacher can get divorced, the electrical engineer could get a cancer diagnosis a year before he retires, a small family needs to move in elderly parents earlier than expected and find a bigger place.

I mentioned employers as well. There definitely has been a shift in work culture, from back when companies would hire and retire workers.
« Last Edit: August 06, 2017, 11:56:48 AM by Lmoot »

waltworks

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Re: Advice on first home
« Reply #24 on: August 06, 2017, 05:05:33 PM »
Being younger, and recently married, and currently not having any children means LIFE WILL CHANGE A LOT.

It is a virtual certainty. Very, very few people in this situation in life would be well advised to buy a house. OP could gamble on being 1) lucky with appreciation if they need to move, or 2) fortunate enough to have all their plans work out just how they expect. They are welcome to do so, but when all the people who are older say "don't do it, my life didn't work out according to a script" it's worth listening.

-W

Cwadda

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Re: Advice on first home
« Reply #25 on: August 07, 2017, 10:04:56 AM »
I had a lot of plans for the future when I was 25 (and 15, and now!) too. Guess how many of those plans panned out the way I thought?

The odds are if you are starting your first real job and just got married, things will change a LOT before you really end up somewhere you'll stay long term. Sure, you might be the exception. But you probably aren't, no matter how perfect the job/situation/future plan seems now.

-W

 And many times those plans change because the pros of pursuing them outweigh the cons of pursuing them (like having to sell a house earlier than anticipated to pursue an unexpected but better opportunity)....but you still have a choice in many cases. New jobs and marriage don't "just happen". You make a decision to pursue it if it becomes an option. I am not saying that plans don't change, but if I have a plan, I take actions today that support that plan. I don't sit around and wait to see if something else happens instead.
The problem is decisions can have an adverse impact on those future plans.  If the housing market drops 25% tomorrow OP is stuck in that house for the foreseeable future.  They can't pursue job opportunities in other areas, move to a better school district for kids, etc.  It's a big deal and should be thought through completely and there are still unknowns.

I also think college does a really poor job preparing people for the job market.  You mention employees aren't loyal?  I'd argue the source of that is the majority of employers aren't loyal.  I've had raises of 15k+ every time I've switched jobs because employers (generally speaking) only value experience outside of the company.  This can be a rude awakening to a 25 year old that thinks they landed a "good job" and will be with that company forever.

There will always be a gamble when dealing with the unknown, like the future. What I'm saying is this is a married couple, whos current plan is to buy a house in a specific location. And then someone mentions because of their age they need to wait. That's what I took issue with. Just because someone is younger, if they have a plan, I don't think it should be assumed as less intentional or serious than someone a decade older. Plans changed because they change, not because someone is of a particular age. 

I guess I just don't see the point of holding off for all the what if's, if you already have a vision in place. I can understand if your future is avoid you haven't filled, but they have a desire, and stated that desire, and are being told that desire will likely change because of their age, which is simply not true. The middle-age schoolteacher can get divorced, the electrical engineer could get a cancer diagnosis a year before he retires, a small family needs to move in elderly parents earlier than expected and find a bigger place.

I mentioned employers as well. There definitely has been a shift in work culture, from back when companies would hire and retire workers.

Lmoot,
I'm again going to bring up a house hack on a 2-4 unit property. The reason I do this is because even if your plans change, you're still left with an investment property that is an asset. You're only required to live in it for 12 months.

tralfamadorian

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Re: Advice on first home
« Reply #26 on: August 07, 2017, 12:12:45 PM »
but when all some the people who are older say...

FTFY

Lmoot,
I'm again going to bring up a house hack on a 2-4 unit property. The reason I do this is because even if your plans change, you're still left with an investment property that is an asset. You're only required to live in it for 12 months.

Agreed.  I'm not sure why some folks on this thread are just talking over the heads of those recommending the option of house hacking. If purchased correctly, it's a fantastic wealth builder.

MountainTown

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Re: Advice on first home
« Reply #27 on: August 07, 2017, 07:44:37 PM »
Maybe cuz buying a multi-family unit is not for everyone. In certain localities, financially it may be a really risky endeavor. Not to mention it is another PT job. Everyone who advocates house hacking glosses over that part. I'm sure it's worth it--but it is work, it is risk, and it's perhaps not for your typical homebuyer. I think it's great that this forum opens people's mind(s) to a more creative way though.

Lmoot

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Re: Advice on first home
« Reply #28 on: August 08, 2017, 12:02:10 AM »
Maybe cuz buying a multi-family unit is not for everyone. In certain localities, financially it may be a really risky endeavor. Not to mention it is another PT job. Everyone who advocates house hacking glosses over that part. I'm sure it's worth it--but it is work, it is risk, and it's perhaps not for your typical homebuyer. I think it's great that this forum opens people's mind(s) to a more creative way though.

I agree. I usually don't mention roommates or income property as an option unless the OP indicates they are open to it (and this coming from someone who owns a rental property).  Not only does it come with its own set of risks, and additional duties, it is usually a completely different lifestyle as well. And a lot of places, multiple unit dwellings are only found in certain neighborhoods, or in more urban areas.  But it is definitely something to consider if the OP is open to it. I personally have never had a desire to live near my tenants, so I plan to only have non-owner occupied income properties.

Lmoot

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Re: Advice on first home
« Reply #29 on: August 08, 2017, 12:02:51 AM »
Being younger, and recently married, and currently not having any children means LIFE WILL CHANGE A LOT.

It is a virtual certainty. Very, very few people in this situation in life would be well advised to buy a house. OP could gamble on being 1) lucky with appreciation if they need to move, or 2) fortunate enough to have all their plans work out just how they expect. They are welcome to do so, but when all the people who are older say "don't do it, my life didn't work out according to a script" it's worth listening.

-W

I guess we will have to agree to disagree.

former player

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Re: Advice on first home
« Reply #30 on: August 08, 2017, 02:08:46 AM »
I'd like to take issue with the notion of a "starter" home.  Very often these are the types of homes that would have been a "lifetime" home for someone in the past: this idea of "trading up" gets a lot of people into financial difficulties, and then they end up with something totally unsuitable because they think it's what they should have.  If OP looks at that "starter" home with different eyes it's a potential "lifetime" home, and the chances of making a good purchase at that price point increase because they are less likely to overlook the issues that can't be changed.  Location, and position within that location, are everything, as almost anything else can be changed if necessary.  Looking past the superficial (particularly "outdated" décor or lack of cleaning) is essential.

I think OP sounds in a good place to buy: good income, familiar with the area, looking to settle long-term.  Yes, life can change but I'm not a fan of putting things off just for that reason - if you are expecting things to change not buying makes sense, but that's not the case here.  This does depend on the jobs being solid into the future, of course.
Be frugal and industrious, and you will be free (Ben Franklin)

Cwadda

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Re: Advice on first home
« Reply #31 on: August 08, 2017, 08:53:39 AM »
Maybe cuz buying a multi-family unit is not for everyone. In certain localities, financially it may be a really risky endeavor. Not to mention it is another PT job. Everyone who advocates house hacking glosses over that part. I'm sure it's worth it--but it is work, it is risk, and it's perhaps not for your typical homebuyer. I think it's great that this forum opens people's mind(s) to a more creative way though.
Landlording in general isn't for everyone, let alone house hacking. But I want to point out that house hacking, especially with a multi family, is very aligned with key tenets of Mustachianism.
On the real estate front, house hacking is your fastest path to FIRE. It's not for your typical homebuyer. But then again, being Mustachian isn't typical for the average person.

Quote
I agree. I usually don't mention roommates or income property as an option unless the OP indicates they are open to it (and this coming from someone who owns a rental property).  Not only does it come with its own set of risks, and additional duties, it is usually a completely different lifestyle as well. And a lot of places, multiple unit dwellings are only found in certain neighborhoods, or in more urban areas.  But it is definitely something to consider if the OP is open to it. I personally have never had a desire to live near my tenants, so I plan to only have non-owner occupied income properties.
By certain neighborhoods, do you mean low income? There are plenty of multi families in areas that are considered nice. Also, FHA financing only requires owner occupancy of 12 months.

If you want the flexibility of living in an area short-term while building wealth, the multi family house hack makes sense. When you move, you can find a very reputable property manager and continue to build wealth with the house as an asset. Putting money in your pocket every month. Buying a "starter home" is a liability. It costs you money every month.

For the posters above, I don't think we actually disagree on much, but it's good everyone is pointing out the various angles.
« Last Edit: August 08, 2017, 08:55:10 AM by Cwadda »