buying a house

[lunatic59]

21 and looking to buy a house together? I feel like I want to say you should wait a while but to each his own.

Oh, I don't know ... I find it a bit refreshing that some people can feel that committed at such a young age. My wife and I bought our first house together before we were married and that was 26 years ago. Without knowing Gallandof personally it's hard to judge whether it's a good plan or not.

According to current statistics the divorce rate for couples in the 20-25 age group is highest at just about under 40%, and statistically speaking all first time marriages have only a 50/50 chance of not ending in divorce. Even so, I say go for it. A lifetime of love is worth the statistical risk.

BTW, in the event of divorce, she gets the house so make sure she likes it

 

[NYCHitman1]

I have no problems with buying a home at 21, but you shouldn't buy a home with someone you're not married to ever. Also, you shouldn't buy a home if you have any debt.

Well, I do suppose that us readers don't exactly have all the insider info so we don't know much. I just know that if it were me, I would not be purchasing a house w/o further commitment.

Oh, I don't know ... I find it a bit refreshing that some people can feel that committed at such a young age. My wife and I bought our first house together before we were married and that was 26 years ago. Without knowing Gallandof personally it's hard to judge whether it's a good plan or not.

According to current statistics the divorce rate for couples in the 20-25 age group is highest at just about under 40%, and statistically speaking all first time marriages have only a 50/50 chance of not ending in divorce. Even so, I say go for it. A lifetime of love is worth the statistical risk.

BTW, in the event of divorce, she gets the house so make sure she likes it

I'm currently engaged and we're both only 23 but perfectly happy. My fiancee and I have a beautiful 18-month old daughter as well so I suppose my situation is a bit different. I was just throwing my two cents out there.

Sooooooo true about the house in the event of a divorce, lmfao!

EDIT: Just wanted to add that if you love her and you can trust her, go for it.

 

[lunatic59]

I have no problems with buying a home at 21, but you shouldn't buy a home with someone you're not married to ever. Also, you shouldn't buy a home if you have any debt.

Buying a property with someone you are not married to (and have no intention of being so in the future) is tantamount to entering a business partnership as a landlord, even if you are your own tenants. Two people can combine incomes and increase their buying potential, but more importantly the type of neighborhood where they can afford to live and thus improve living conditions dramatically. It could be a good situation, but it never seems to work out that way, does it?

 

[A.Nonymous]

Buying a property with someone you are not married to (and have no intention of being so in the future) is tantamount to entering a business partnership as a landlord, even if you are your own tenants. Two people can combine incomes and increase their buying potential, but more importantly the type of neighborhood where they can afford to live and thus improve living conditions dramatically. It could be a good situation, but it never seems to work out that way, does it?

Not in my experience. In my experience it usually ends looking like either a car wreck or a train wreck. Sometimes it even looks like a car wrecked into a train and a plane crashed on top of everything. Most of the time though it's way, way worse than that.

 

[gallandof]

weve been dating since october of 2005 living together for 2 years at my place (live with grand parents) and weve been thinking of finalyl getting our own place. I am completely against renting of any sort just doesnt seem worth it to us. we have close the 35k in the bank most of which would be going to a house purchase and refurnishing.fixing up a house when we do decide on one.

 

[NYCHitman1]

weve been dating since october of 2005 living together for 2 years at my place (live with grand parents) and weve been thinking of finalyl getting our own place. I am completely against renting of any sort just doesnt seem worth it to us. we have close the 35k in the bank most of which would be going to a house purchase and refurnishing.fixing up a house when we do decide on one.

More power to you, man. Good luck with everything. Just be sure to do all your research and ish before you two jump the gun.

 

[lunatic59]

Not in my experience. In my experience it usually ends looking like either a car wreck or a train wreck. Sometimes it even looks like a car wrecked into a train and a plane crashed on top of everything. Most of the time though it's way, way worse than that.

Hmmm, you'd be "the glass is half empty" type. And by that I mean the glass is half empty because a rat drank half your beer after it crawled out of the dumpster. Of course your other option is the glass is half full because that same rat drank all your beer and pissed half of it back into the glass.

And I thought I was a pessimist

 

[A.Nonymous]

weve been dating since october of 2005 living together for 2 years at my place (live with grand parents) and weve been thinking of finalyl getting our own place. I am completely against renting of any sort just doesnt seem worth it to us. we have close the 35k in the bank most of which would be going to a house purchase and refurnishing.fixing up a house when we do decide on one.

Don't put both of your names on it unless you're married. That's my advice.

 

[lunatic59]

weve been dating since october of 2005 living together for 2 years at my place (live with grand parents) and weve been thinking of finalyl getting our own place. I am completely against renting of any sort just doesnt seem worth it to us. we have close the 35k in the bank most of which would be going to a house purchase and refurnishing.fixing up a house when we do decide on one.

I'd definitely recommend the fixer-upper, if you are so inclined. We bought our first house without a Realtor as part of an estate sale so there was no commission and only a few hundred for our lawyer to accompany us to write up the sales contract and accompany us to closing. We bought the house as-is which can be a big risk, especially if you don't have any remodeling/mechanical skills. However, we got a good deal and we lived there for 18 years. If you're inclined, I posted before and after pictures in an album under my profile.

Android Forums - lunatic59's Album: House

 

[gallandof]

my close family are all actually traddes workers, so we have a licensed HVAC worker, carpenter, elcetrician and plumber who all offered to help with fixing up. obviously theyd still charge but i trust them seeing as they are family.

@lunatic, really like the little porch and addition to the house, gives it a lot more character

 

[A.Nonymous]

my close family are all actually traddes workers, so we have a licensed HVAC worker, carpenter, elcetrician and plumber who all offered to help with fixing up. obviously theyd still charge but i trust them seeing as they are family.

@lunatic, really like the little porch and addition to the house, gives it a lot more character

Ah, famous last words.

 

[Vihzel]

I could not disagree with this advice more or more vehemently. You could not pay me enough to have a credit card. I cut all mine up about 3-4 years ago now and wouldn't go back. It's a myth that you need a credit score to get a home loan. Just pay cash for your car and you don't need credit for it either. You don't need credit. It's not worth making payments to someone for the rest of your freaking life instead of saving up money for yourself.

You don't NEED credit, but it certainly can be incredibly helpful and save you money... the key thing is to pay it off in full every month. Having an excellent credit score helps with insurance rates, lease rates, employment options, buyer protection, renting, utilities, and so forth. If you like to lease luxury cars... then a good credit rating is important. My cousin who went to Wharton advised me on getting a credit card when I first entered college and did and have been building up my credit ever since. I have a good credit rating and have paid $0 in interest. I have my credit card tied to my checking account (which always stays above a certain amount) to prevent any overcharges on my credit card. I'm safe.

I don't know how comfortable you would be with having to pay a security deposit to a company that they kept for a whole year because of the lack of a credit score. When I rented my first apartment, I had to make a $250 deposit to the electric company, $550 deposit to the apartment complex. Aside from those, I had to make a $400 deposit to Verizon to own my own cell phone contract. That right there is $1200 immediately gone for companies to hold for a year due to the lack of a credit score. I would prefer to have that money in my account.

Obviously a credit card would perhaps not be the best thing for an irresponsible person. I've met too many people who are having trouble with their banks because of their spending habits.

Also... my parents borrow millions from banks when starting up new businesses... I can't see how they would have managed to start up our new businesses on cash considering that their start up costs are in the millions. They have excellent credit so they get great rates. Of course they're going to lose money to the bank by paying on interest but when it's to start up a successful business.. they're not complaining. They've been doing this for the past 20 or so years now.

 

[A.Nonymous]

All I know is that all the money that I could be paying to various banks and lending agencies I put in my retirement account instead. To me, I'm better off.

 

[CRAZYISH]

you are lucky u have the moneys to buy a house . ive been living in a box for 3 yrs now no heat no water and no bathroom, ive been eating out of garbage cans also. but try TD-bank low mortgage rates and the best customer service

 

[lunatic59]

Also... my parents borrow millions from banks when starting up new businesses... I can't see how they would have managed to start up our new businesses on cash considering that their start up costs are in the millions. They have excellent credit so they get great rates. Of course they're going to lose money to the bank by paying on interest but when it's to start up a successful business.. they're not complaining. They've been doing this for the past 20 or so years now.

It's called the "cost of money" when you need capital to operate. If that million is going to net them a million plus then they are obviously doing it right.

We have always watched our credit prudently and invested fairly well ... enough to put our son though college without him having to incur any debt. I think the current educational system spitting out graduates with $40k-$80k in loans on day one is an abomination, but I digress. We ended up borrowing the money for his education because we could get it at less than 3% while out investments were earning a good bit more. It wasn't logical to liquidate those assets and short ourselves on the income. The money/credit concept can be a bit much to wrap your head around but understanding it will benefit you in the long run.

 

[CRAZYISH]

It's called the "cost of money" when you need capital to operate. If that million is going to net them a million plus then they are obviously doing it right.

We have always watched our credit prudently and invested fairly well ... enough to put our son though college without him having to incur any debt. I think the current educational system spitting out graduates with $40k-$80k in loans on day one is an abomination, but I digress. We ended up borrowing the money for his education because we could get it at less than 3% while out investments were earning a good bit more. It wasn't logical to liquidate those assets and short ourselves on the income. The money/credit concept can be a bit much to wrap your head around but understanding it will benefit you in the long run.

wow nice maybe they can help me get out my box!!!!!!!!!!!!!!!!

 

[Vihzel]

The money/credit concept can be a bit much to wrap your head around but understanding it will benefit you in the long run.

I feel like instead of my school requiring that everyone take a certain math class, even for piano majors... they should require everyone to take some kind of personal finance class. That would be FAR more helpful than taking a standard math class because it would directly relate to our lives. I hardly even remember what I did in that math class! Grr *end rant* hehe

That whole concept can be daunting and confusing... which can easily trick anyone who isn't really knowledgable in that area, which is a huge amount of college students.

 

[A.Nonymous]

I wish I knew what I know now about personal finance when I was in high school. I'd be much, much richer now that's for sure.

 

[Eugene]

There are other things tied to your credit score besides loans, thinks like insurance for your car or house, you get a lower rate if you have a better credit score as that is one of the risk assessment factors they use. Some jobs, even though I work in IT and don't touch money a credit check was part of the hiring process to work at $big-bank$.
I was 21 and my wife 18 when we bought our first house, only mistake we made was listening to her parents tell us we could get a bigger house for our money in this neighborhood so we were forced to move later.
Start now building a relationship with two banks. Choose two, have your paycheck direct deposited into both, you can make one be the bill pay bank and one be the play money back or split it however you want. Then open a saving account in each and start transferring a little at a time to it, most banks will let you setup an auto transfer. Then get a credit card with one or both and buy something not too big that you need and pay a little bit on it each month until its paid off then buy somehting else. If you have a credit card and us it and pay it off each month your credit scroe goes up a little bit but not as fast as if you carry a small balance since they make some ore profit off that small balance. Thats how I got mine up nice and high then either bank I asked for loans they were happy to help and I was able to make them compete against each other for the best deal. The trick is to build that bank relationship, don't get a random credit card from an offer in the mail (in fact opt out of those, look for the directions at the bottom of your credit report), don't get store cards, etc.

 

[pool_shark]

I could not disagree with this advice more or more vehemently. You could not pay me enough to have a credit card. I cut all mine up about 3-4 years ago now and wouldn't go back. It's a myth that you need a credit score to get a home loan. Just pay cash for your car and you don't need credit for it either. You don't need credit. It's not worth making payments to someone for the rest of your freaking life instead of saving up money for yourself.

Not everyone has the financial means to pay cash for everything. I definitely couldn't pay cash for my house.
I had to put a new roof on 2 years ago, didn't have the $5800 cash to put up for it.

 

[A.Nonymous]

Not everyone has the financial means to pay cash for everything. I definitely couldn't pay cash for my house.
I had to put a new roof on 2 years ago, didn't have the $5800 cash to put up for it.

I borrowed for my house since it's easily the biggest thing most people will buy in their lifetimes. I have saved up money and could pay $6k to put a roof on it if I had to. It's a rainy day and that's what a rainy day fund is for. Borrowing on cars is just stupid IMO. They go down in value like a rock. There is 0 ROI.

 

[jamor]

some quick background info, while I dont have a credit card, I have had a few loans that I paid off relatively quickly. (student loans close to 40k paid off in <1yr, new car at 8k paid off withing 6 months) average income between the two of us is about 120k average. we are 21 so i dont know if that hurts us or not.

[FONT=&quot]Well that's definitely a good start. You probably have a good credit sore and the income will help a lot in getting approved.

While I hate credit card banks, how easy it is to get over your head in them, and the idea behind that they jack up the % if you miss payments.. the truth of the matter is they help tremendously in building up your credit if you can be responsible with them. Even if your credit card sits at zero balance each month your credit is improving. [/FONT]Just choose a reputable bank. The longer you have a certain card, the higher your credit goes. If you pay it off in full each month, it will be even better. If you pay it off in half every month, it's still going to go up. If you let it sit at zero and hide the card, it will go higher but more slowly since length of ownership is calculated in the credit score.

It's all about showing your loan officer how responsible you are with loaned money.

Back in the day anyone could get a mortgage and banks didn't care if any joe shmoe came in for one. They gave away mortgages like candy on Halloween and it is the exact reason we are in a depression today. All of those joe shmoes foreclosed on their houses.

See Fannie Mae, Freddie Mac / subprime mortgage crisis.

I borrowed for my house since it's easily the biggest thing most people will buy in their lifetimes. I have saved up money and could pay $6k to put a roof on it if I had to. It's a rainy day and that's what a rainy day fund is for. Borrowing on cars is just stupid IMO. They go down in value like a rock. There is 0 ROI.

You pretty much just made the case as to why good credit is needed.

It's not always wise to put all of your money into one asset. You can 't diversify or leave a money cushion (rainy day fund) or building your credit.

If you have good credit you can finance a car at a low rate and still keep a rainy day fund. If you buy a $12,000 car and that's all you had, bye bye rainy day fund.

You can buy a used car for a great deal and sell it a couple years later for not much less if you buy the right car and don't put 20,000 miles a year on it.

Having good credit can be very very beneficial. From being able to rent a decent apartment, to having lower interest rates on a car and mortgage, and so on.

 

[A.Nonymous]

You pretty much just made the case as to why good credit is needed.

It's not always wise to put all of your money into one asset. You can 't diversify or leave a money cushion (rainy day fund) or building your credit.

Why not? My money isn't all in one asset. I think of the rainy day fund as an insurance policy. It's there to ward off disasters. It's not an investment, nor is it a huge chunk of my financial life.

If you have good credit you can finance a car at a low rate and still keep a rainy day fund. If you buy a $12,000 car and that's all you had, bye bye rainy day fund.

First of all, I wouldn't buy a car with my rainy day fund. If I did, it would be because my car had completely died and wasn't worth fixing. If I did have to buy a car I'm not going to buy a $12k car. I'd buy a $1-2k beater car and drive it while I saved to buy something better.

You can buy a used car for a great deal and sell it a couple years later for not much less if you buy the right car and don't put 20,000 miles a year on it.

Which is exactly what I would do. Buy a beater used car and save up money to buy something nicer.

Having good credit can be very very beneficial. From being able to rent a decent apartment, to having lower interest rates on a car and mortgage, and so on.

I've rented before and they never ran my credit. I don't borrow money for cars or anything else so I couldn't care less about the interest rates. You can get a good interest rate on a mortgage with 0 credit. One of these days there will be a class action suit against people who charge more for insurance just because of a credit score. Just saying.

I know a guy who is a multi-millionaire. He hasn't borrowed money in 20-30 years so his credit score is 0. If he walked into the local Ford dealer and tried to borrow money to buy a new Mustang, they would not loan him a red cent. However, he could whip out his checkbook and write a $35k check and buy the car with cash and it wouldn't hurt him. But they wouldn't loan him a dime for it. Does that really make any sort of logical sense? Is his credit score really a measure of how successful he is financially? All your credit score measures is your ability to borrow and repay money. That is not a measure of financial success at all.

 

[Vihzel]

Is his credit score really a measure of how successful he is financially? All your credit score measures is your ability to borrow and repay money. That is not a measure of financial success at all.

Exactly. That's what loaners care about. Better the credit score = better the trust = better the rate. If you have 5 million dollars but a bad credit score, does that put more trust into a bank loaning you money versus someone who has 500,000 dollars but an excellent credit score?

If you can afford to purchase a 1 million dollar house or start up a 3.5 million dollar business in cash, then great for you. If you can't, then that's where the credit score comes in to help you out. My parents are my example.

You can perhaps get a "good" rate on a loan with 0 credit... but how much better would it be if you credit scores were 800+?

It never hurts to have a good credit score. This world lives on credit.

 

[Kamdon]

Me and mine JUST went through this, so I have a recent experiance to share with you.

Here is a FHA loan

The FHA loan is a fixed rate mortgage that is designed especially for the first time home buyer of moderate or low income. Guaranteed by the Federal Housing Administration, these loans can be easier to qualify for than a traditional FRM and allow a smaller down payment than most other home loans, generally about 3 percent. Interest rate are usually lower than standard fixed rate loans, and programs are available for the purchase of single family homes or multi family ones, as long as they are to be owner occupied.




This is the route we went through. The down payment on 132k was around 7k at closing. We got a 4.25% fixed rate loan. Payments escrode is almost $900


Hope this helps

Just to add to this, combind we make almost $200k a year. So our income is still considered MODERATE. But I have a friend who only makes $40k a year and he used the same type of loan to purchase his home