So I'm getting tired of living in an apartment building and throwing my money away. I would like to buy house but just being out of college a year and half, I couldn't afford a large down payment, as I've been trying to pay off my student loans as much as possible while building up a savings. Since my interest on student loans is higher than I return a savings account. With historically low interest rates now is the time to buy. Would buying a house even with a small down payment be worth it when compared to rent? I wish I could know how much house I could get without actually taking a hard credit inquiry. I've considered a town house but the resale market is just not there and then you have to mess with the HOA b/s. Most don't have a back yard either. I've weighed the pros and cons of rent vs mortgage but I would like to hear some peoples experiences on this.
Rent or buy a house?
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Buy if you can. Lock in a historically low interest rate. Don't pay usurious rates though. Many people buy houses with long term student loan debt; you don't know if you don't ask. Might be good to get accounts at a credit union, they are nicer than banks. Then in six months (or hey, one week) ask them about first time buyer programs.
You have to pay stupid fees like PMI but it still beats renting. I'd get an average "starter home" like a ranch or "shotgun house" (can shoot a gun through the front door, down the hall, and out the back door). Then if your life situation changes it will be easy to unload or rent out.
You have to pay stupid fees like PMI but it still beats renting. I'd get an average "starter home" like a ranch or "shotgun house" (can shoot a gun through the front door, down the hall, and out the back door). Then if your life situation changes it will be easy to unload or rent out.
I'd buy over renting if st all possible. Rent never comes back to you whereas paying into a mortgage can come back in the end. Make sure the market you are buying in has already bottomed out and not going lower,so you don't lose when you chose to sell
I don't know about your area, but I live in a cooperative where you own a share. Taxes, maintenance, heat, and water all included in a low 'rent.' Once you pay the initial cost off, you save a lot over having an apartment, don't have to worry about home repairs or taxes, and still get a decent amount of space.
Now is the time to buy. No need to buy a home with a HOA.
What does your wife say ?
What does your wife say ?
If there is a fair chance you are going to have to relocate to another town for job every couple of years you're probably better off renting. If you are most likely to stay in same area for at least 5-10 years, buying might be better for you financially. Having a house to dispose of when you get transfered can be a heavy anchor if you get stuck having to pay at the same time for two homes in different towns!
WiskyBadger
Site Donor 2025
My fiance and I bought a house this last summer. Best decision we have ever made. Considering the rates and our mortgage being just a little more than our rent was. We went through the credit union that we are a part of, we were both tired of dealing with local banks. Credit Union is definitely the way to go.
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Buy for sure. Best thing we did. Bought a fixer upper...and it's getting better every day.
Not worried about selling it...I could already flip it for a profit if i needed too. But I'd rather enjoy the affordable mortgage I have...(rent is getting silly around here..)
Not worried about selling it...I could already flip it for a profit if i needed too. But I'd rather enjoy the affordable mortgage I have...(rent is getting silly around here..)
Too difficult to generalize. True, its fundamentally a good time to buy, but that doesn't answer the real question. Is it time for YOU to buy.
A house is shelter, not an investment. Are you still transient? Unmarried? If so, it may not be such a good idea. Where do you live? Its a good time to buy almost everywhere, but in California you can rent some pretty high dollar real estate from would-be Donald Trumps for not so much money, (relative to the cost of the house).
Homeownership offers a lot of psychic benefits that you may overlook. It sounds crazy, but having access to my own private washing machine was huge to me. When our child was born, our social situation improved a lot as soon as we bought. We lived in a town where people generally bought houses in that situation and people were not willing to commit as friends while we lived in an apartment.
If you buy, In my experience its better to favor the place that has good location (closer to your work, better school district, better neighborhood) over the place that has more space.
Whatever you do, keep the truck. You will find plenty of good uses for it if you buy a house.
A house is shelter, not an investment. Are you still transient? Unmarried? If so, it may not be such a good idea. Where do you live? Its a good time to buy almost everywhere, but in California you can rent some pretty high dollar real estate from would-be Donald Trumps for not so much money, (relative to the cost of the house).
Homeownership offers a lot of psychic benefits that you may overlook. It sounds crazy, but having access to my own private washing machine was huge to me. When our child was born, our social situation improved a lot as soon as we bought. We lived in a town where people generally bought houses in that situation and people were not willing to commit as friends while we lived in an apartment.
If you buy, In my experience its better to favor the place that has good location (closer to your work, better school district, better neighborhood) over the place that has more space.
Whatever you do, keep the truck. You will find plenty of good uses for it if you buy a house.
I have bought and sold three places in the past and have no regrets, all good investments.
Right now, in Canada, if you can choose, renting for the next year or two is best.
In the States I'd definitely buy with confidence.
Right now, in Canada, if you can choose, renting for the next year or two is best.
In the States I'd definitely buy with confidence.
Check on here and get a Fannie Mae foreclosure for as little as 3% down. http://www.homepath.com/
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Buy. OLD school math is that a 100,000 house costs 1,000 a month to buy (or a 85,000 house is 850/month to buy). Drop two zero's. This old rule was for a 8 or 9 percent interest rate and included taxes, insurance and interest. This very low interest rate means you could take on a larger loan but ... think about it. It's a [censored] of a lot of money.
Another old rule is to multiply gross salary by 3 and don't buy more house than that. I.E. if you are making 40k, don't buy more than a 120k house.
We got tired of paying $350/month rent and purchased our first house for $35,000. I used a military va loan and had no money down. The truth of it with these never-been-so-low interest rates do your best to buy.
Stay away from town homes, condo's or the ilk unless you can buy the whole block.
New rules today are:
1. Don't believe the realator when they tell you what you can afford. Don't go to that realator's suggested bank.
2. Get pre-approved by your bank. Bank at a small local bank. Don't believe the bank when they tell you what you can afford. No more than 3x you or your wife's salary. OR not AND.
3. WAIT and find the perfect house. Don't buy the first one you see. Take 3 weeks and just look at what is out there. GET PRE APPROVED. Walk around the neighborhood of the house you are looking at at different times of the day & week.
4. Don't mess this up. Patience. Don't buy the first thing you see.
5. Fixing roofs always cost over $10,000. Stay away from wet basements. Run away from foundation problems. Just say NO to anything in the flood plane. When you get serious, You can ask the neighbor "I'm thinking about buying that house - is it a good house?" When we asked those neighbor's smiled big. We became friends later.
6. The ideal house has a lousy lawn and needs a coat of paint. (because no one else will look at it and it costs almost nothing to fix). Run down houses need a good inspection.
7. Small lawn. Garage for the car.
8. You can get foreclosed upon. Don't take on more than you can afford assuming something will go wrong in your future.
Another old rule is to multiply gross salary by 3 and don't buy more house than that. I.E. if you are making 40k, don't buy more than a 120k house.
We got tired of paying $350/month rent and purchased our first house for $35,000. I used a military va loan and had no money down. The truth of it with these never-been-so-low interest rates do your best to buy.
Stay away from town homes, condo's or the ilk unless you can buy the whole block.
New rules today are:
1. Don't believe the realator when they tell you what you can afford. Don't go to that realator's suggested bank.
2. Get pre-approved by your bank. Bank at a small local bank. Don't believe the bank when they tell you what you can afford. No more than 3x you or your wife's salary. OR not AND.
3. WAIT and find the perfect house. Don't buy the first one you see. Take 3 weeks and just look at what is out there. GET PRE APPROVED. Walk around the neighborhood of the house you are looking at at different times of the day & week.
4. Don't mess this up. Patience. Don't buy the first thing you see.
5. Fixing roofs always cost over $10,000. Stay away from wet basements. Run away from foundation problems. Just say NO to anything in the flood plane. When you get serious, You can ask the neighbor "I'm thinking about buying that house - is it a good house?" When we asked those neighbor's smiled big. We became friends later.
6. The ideal house has a lousy lawn and needs a coat of paint. (because no one else will look at it and it costs almost nothing to fix). Run down houses need a good inspection.
7. Small lawn. Garage for the car.
8. You can get foreclosed upon. Don't take on more than you can afford assuming something will go wrong in your future.
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Consider a USDA loan. I purchased my house.....zero down, no PMI. Really easy. No crazy home inspections either.
I bought my house for $80k....house payment, insurance, and taxes come to $580/month.
This is a 3 bedroom, 2 bath. Older home. 1800 square feet. Live across the street from a large lake.
USDA says it's for rural development, but almost every home qualifies except in a downtown large city.
I bought my house for $80k....house payment, insurance, and taxes come to $580/month.
This is a 3 bedroom, 2 bath. Older home. 1800 square feet. Live across the street from a large lake.
USDA says it's for rural development, but almost every home qualifies except in a downtown large city.
i own a house that is paid off and i still throw $25,118 away every year on taxes!
Renting is sometimes the way to go!
Lucky you don't live in NJ
Renting is sometimes the way to go!
Lucky you don't live in NJ
Originally Posted By: crazyoildude
i own a house that is paid off and i still throw $25,118 away every year on taxes!
Renting is sometimes the way to go!
Lucky you don't live in NJ
You must own a massive house or insane taxes. 1500-3000/ yr here depending on value and which town.
i own a house that is paid off and i still throw $25,118 away every year on taxes!
Renting is sometimes the way to go!
Lucky you don't live in NJ
You must own a massive house or insane taxes. 1500-3000/ yr here depending on value and which town.
It depends on where you're looking to live.
If I remember correctly you're in Des Moines and I would not invest in real estate in other than a few select areas. The southside used to be pretty decent, but it's gone downhill in the last 20 years or so except for a few isolated areas. There are areas just west of downtown that are trendy, but you have to choose carefully because it's a fine line between the areas that are increasing in value and the areas around Drake (my alma mater) that are low and will probably never increase.
If I were in your shoes, I'd look toward Pleasant Hill-there are some great starter homes there, along with Altoona and Carlisle. All three areas are an easy commute to Des Moines but the quality of life is much better. You could look to the west side, but prices are significantly higher for the same amount of home, while towns to the east (Pleasant Hill and Altoona) are on the increase.
Another thing to consider are property taxes-getting out of Polk County can cut your property taxes in half. Our home is in Jasper County, and our property taxes (along with insurance) are significantly lower than Polk County.
I'm assuming your Sioux Falls transfer is off the table and the Central Iowa area is going to be permanent. As far as renting vs. buying? It's a no brainer, especially in this area. Home prices bottomed some time ago and are starting back up. Markets are back to their pre-crash levels, but prices haven't fully recovered so it's a good time to buy. If you buy right, you'll get the benefit of the upswing in home prices as well as low finance rates.
There's nothing better than owning your home.
If I remember correctly you're in Des Moines and I would not invest in real estate in other than a few select areas. The southside used to be pretty decent, but it's gone downhill in the last 20 years or so except for a few isolated areas. There are areas just west of downtown that are trendy, but you have to choose carefully because it's a fine line between the areas that are increasing in value and the areas around Drake (my alma mater) that are low and will probably never increase.
If I were in your shoes, I'd look toward Pleasant Hill-there are some great starter homes there, along with Altoona and Carlisle. All three areas are an easy commute to Des Moines but the quality of life is much better. You could look to the west side, but prices are significantly higher for the same amount of home, while towns to the east (Pleasant Hill and Altoona) are on the increase.
Another thing to consider are property taxes-getting out of Polk County can cut your property taxes in half. Our home is in Jasper County, and our property taxes (along with insurance) are significantly lower than Polk County.
I'm assuming your Sioux Falls transfer is off the table and the Central Iowa area is going to be permanent. As far as renting vs. buying? It's a no brainer, especially in this area. Home prices bottomed some time ago and are starting back up. Markets are back to their pre-crash levels, but prices haven't fully recovered so it's a good time to buy. If you buy right, you'll get the benefit of the upswing in home prices as well as low finance rates.
There's nothing better than owning your home.
Looking at it from just an investment standpoint may not work out.
We sold a house we lived in for a decade last year to because I changed jobs. I sold the house for more than I paid for it but not for more than I paid for the cost and interest. I also paid for all of the repairs, upgrades, and insurance. Technically I lost money on the house. I could have rented for the past 10 years and had more money in my pocket. I hate renting and am willing to pay what it costs to own a house.
A family member has lived in a house for 30 years. It's current value hasn't kept up with inflation.
We sold a house we lived in for a decade last year to because I changed jobs. I sold the house for more than I paid for it but not for more than I paid for the cost and interest. I also paid for all of the repairs, upgrades, and insurance. Technically I lost money on the house. I could have rented for the past 10 years and had more money in my pocket. I hate renting and am willing to pay what it costs to own a house.
A family member has lived in a house for 30 years. It's current value hasn't kept up with inflation.
JHZR2
Staff member
What kind of a job do you have and how steady is it? Id be attacking the student loans with a vengeance - once you make enough money the interest will not be tax-deductible, which is the case with the loans my wife has for her doctorate.
Still, that is "good" long term debt so Id not worry much about it in terms of how lenders look at you.
You need to run the calculations on how much you can afford. 25% of your take-home is a good target. Down payment comes in importantly here, because if you don't put down 20%, you will be paying PMI, which can cut into your buying power by a good $100/month from what I've seen, and that can be a lot.
I'd really look for a 15 year loan, and see how tough it would be to get 20% or as close to it as you can.
Keep in mind that for the long-term, you may not want to stay in your first place forever, especially if what you can afford isnt that high. So consider locations where renting is doable. You may want to be reasonably close to a college town or place where there is growing business. If you stay in the area and want to become a landlord to generate passive income, you may not want to be renting out in the boonies.
Still, that is "good" long term debt so Id not worry much about it in terms of how lenders look at you.
You need to run the calculations on how much you can afford. 25% of your take-home is a good target. Down payment comes in importantly here, because if you don't put down 20%, you will be paying PMI, which can cut into your buying power by a good $100/month from what I've seen, and that can be a lot.
I'd really look for a 15 year loan, and see how tough it would be to get 20% or as close to it as you can.
Keep in mind that for the long-term, you may not want to stay in your first place forever, especially if what you can afford isnt that high. So consider locations where renting is doable. You may want to be reasonably close to a college town or place where there is growing business. If you stay in the area and want to become a landlord to generate passive income, you may not want to be renting out in the boonies.
Originally Posted By: tom slick
Looking at it from just an investment standpoint may not work out.
We sold a house we lived in for a decade last year to because I changed jobs. I sold the house for more than I paid for it but not for more than I paid for the cost and interest. I also paid for all of the repairs, upgrades, and insurance. Technically I lost money on the house. I could have rented for the past 10 years and had more money in my pocket. I hate renting and am willing to pay what it costs to own a house.
A family member has lived in a house for 30 years. It's current value hasn't kept up with inflation.
Some I know bought their houses in 1970-1975 for around $70-80k in a nice area with very good schools in Irvine, their houses are worth $1.2-1.5 mils now. I think inflation is no more than 300% for the last 40 years.
It depends on location, the price in some area increase faster than other in a good time, it also decrease slower in bad time.
Looking at it from just an investment standpoint may not work out.
We sold a house we lived in for a decade last year to because I changed jobs. I sold the house for more than I paid for it but not for more than I paid for the cost and interest. I also paid for all of the repairs, upgrades, and insurance. Technically I lost money on the house. I could have rented for the past 10 years and had more money in my pocket. I hate renting and am willing to pay what it costs to own a house.
A family member has lived in a house for 30 years. It's current value hasn't kept up with inflation.
Some I know bought their houses in 1970-1975 for around $70-80k in a nice area with very good schools in Irvine, their houses are worth $1.2-1.5 mils now. I think inflation is no more than 300% for the last 40 years.
It depends on location, the price in some area increase faster than other in a good time, it also decrease slower in bad time.
Sometimes it cheaper to rent. Values have gone up more than rent has.
If you buy a house you need a down payment, maintainance and other cost. you are also not as free to move around if you wish to.
Renting advantages are the landlord fixes the house, pay the property tax etc. You can leave anytime you want.
People make a big deal about the mortgage deduction and such. Many do not know that your real savings is just your cost and tax bracket.
if you paid 10k in property tax and you are in the 20% bracket, you really only save 2k.
I am a landlord and home owner so i see it both ways
If you buy a house you need a down payment, maintainance and other cost. you are also not as free to move around if you wish to.
Renting advantages are the landlord fixes the house, pay the property tax etc. You can leave anytime you want.
People make a big deal about the mortgage deduction and such. Many do not know that your real savings is just your cost and tax bracket.
if you paid 10k in property tax and you are in the 20% bracket, you really only save 2k.
I am a landlord and home owner so i see it both ways
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