Being single, young, and buying a house

[Tanach]

So, I'll be starting work soon out of college and I don't really want to throw money out on rent. Bottom line, I'm thinking about buying a house.

I'll be making a little over 50k from salary, and I've made and avg of 2k/mo over the last year from that game that some of you play (although I don't really want to count much on that when taking into account a 15-30 yr mortgage)

and I'm looking in the 250 price range and plan to put down 25k. I have a newish car, so I won't have car payments. Also it's actually probably going to be a condo.

I guess I'm wondering has anyone else here done this and does it seem like a good idea?

(Yes, I feel OOT is the best place to go for this type of advice.)

~Jack

[jakethebake]

Where will you be living? And condos in general are crappy investments. Yes, they've been good in a few places in recent years, but longer-term they've been crappy. Even if we see a soft landing for the real estate market, I predict the condo market in several places will see a severe correction.

[morgan180]

excellent idea. just don't get a 30 year fixed. get a 7/1 or 5/1 ARM (interest only is a good option too) it will get you a better rate and you'll probably move before it goes adjustable. it will open up more cash for you instead of paying down a 30 year mortgage for a property you'll barely remember in 30 years.

[morgan180]

[ QUOTE ]
Where will you be living? And condos in general are crappy investments. Yes, they've been good in a few places in recent years, but longer-term they've been crappy. Even if we see a soft landing for the real estate market, I predict the condo market in several places will see a severe correction.

[/ QUOTE ]

yes the market you'll be living in is a huge factor.

[2planka]

I would caution against buying right away. Have fun. Blow your money on silly stuff for a few years, or save as you go. No reason to saddle yourself with a mortgage until you're (a) financially capable, (b) confortable with where you are in terms of location and lifestyle, (c) over the college thing.

Don't get me wrong, saving for and buying property is a very good thing. I just don't think you should rush into it. Enjoy yourself. Be irresponsible while you still can.

[jakethebake]

What's that new avatar, kilgore?

[OtisTheMarsupial]

I bought a condo almost a year ago and then fell in love. The condo is too small for the both of us, besides, IMHO, it's best to start a relationship on equal footing. So, I'm selling and we're buying a new place together.

Moral of the story, try to imagine what could happen in the future that might affect this large decision and then work it into your plans.

What I did: I made a deal with my realtor that if I wanted to sell within a year (if I regreted my decision to buy or for some reason needed more space...) she would buy it back from me at the price I paid less costs (costs added up to what I would have paid in rent). So, if I can't find a good buyer, I can at least sell back to my original realtor without losing anything.

Just something to consider. Good luck /images/graemlins/smile.gif

[djoyce003]

you are looking at a 2200 mortgage payment including insurance and taxes, plus condo fees. Your salary of 50k is only 4k per month before taxes. You are going to be dead ass broke dude. Your poker income will make this moderately affordable but I'm not sure i'd want to saddle myself with this. If that poker money dries up or you hit a bad streak, you are in a mess I think. My wife and I collectively make around quadruple what you do and I wouldn't want that payment.

[2planka]

It's Kurt V.

Thanks for noticing, Pops.

[Tanach]

[ QUOTE ]
Where will you be living? And condos in general are crappy investments. Yes, they've been good in a few places in recent years, but longer-term they've been crappy. Even if we see a soft landing for the real estate market, I predict the condo market in several places will see a severe correction.

[/ QUOTE ]

It's actually a townhouse not a condo, I'm just retarted.

Also the area it's in is downtown of a city that is sort of being revived. It's going to be a nicer area in the comming years.

Thanks for the advice guys, keep it comming.

~jack

[jakethebake]

[ QUOTE ]
It's actually a townhouse not a condo, I'm just retarted.

Also the area it's in is downtown of a city that is sort of being revived. It's going to be a nicer area in the comming years.

Thanks for the advice guys, keep it comming.

~jack

[/ QUOTE ]

Townhouses and condos are different because you own land with the townhouse. What city?

[2planka]

[ QUOTE ]
2200 mortgage payment including insurance and taxes, plus condo fees

[/ QUOTE ]

$2200 seems a tad high, u nless you're taking into consideration that the OP is a recent grad with little work exp. and sub 700 credit. Then I would guess the juice makes his payments higher.

[andyfox]

Biggest mistake I made was not investing in property when I was young. It would have made things difficult economically at that time, given what the costs would have been compared to my income, but it's rare for anyone to do badly if they invest even somewhat wisely. With today's still low interest rates, and adjustable mortgages, you can probably qualify, although I don't think you'll be able to convince them that your poker income will count.

[jedi]

I was 23 when I bought my first house, 210K while I was making 48K/yr. Needed a little bit of help from my parents for a down payment, and was living on Ramen for a while afterwards (house still doesn't have much furniture), but once I got roommates to help pay the mortgage, it became easier to manage financially.

Do it.

[Bulldog]

You can't afford that. Here is a little quick math:

250,000 price

25,000 cash

less 6,500 for closing costs and prepaid items

231,500 loan

at 6% over 30 years, that's $1,538/month for principal and interest

tack on taxes, insurance, and PMI, and you are looking at $1,800-$2,000 monthly, or 43-48% of your gross income. You'd much rather be in the 28-36% range. You'll probably have a monthly condo association fee on top of that.

[Jeffage]

If you've paid taxes on it for a number of years, I think you could include it. One year or so? Probably not. I'm not sure about this though.

Jeff

[Tanach]

[ QUOTE ]
you are looking at a 2200 mortgage payment including insurance and taxes, plus condo fees. Your salary of 50k is only 4k per month before taxes. You are going to be dead ass broke dude. Your poker income will make this moderately affordable but I'm not sure i'd want to saddle myself with this. If that poker money dries up or you hit a bad streak, you are in a mess I think. My wife and I collectively make around quadruple what you do and I wouldn't want that payment.

[/ QUOTE ]

I don't know where the hell you got this number from.

I figured it around 1500.

[Mr. Zero]

[ QUOTE ]
You can't afford that. Here is a little quick math:

250,000 price

25,000 cash

less 6,500 for closing costs and prepaid items

231,500 loan

at 6% over 30 years, that's $1,538/month for principal and interest

tack on taxes, insurance, and PMI, and you are looking at $1,800-$2,000 monthly, or 43-48% of your gross income. You'd much rather be in the 28-36% range. You'll probably have a monthly condo association fee on top of that.

[/ QUOTE ]

What I was going to write verbatim.

Someone mentioned that they prefer a 5 yr ARM right now. I disagree. If you think there's ANY chance that you'll be in the property for more than five years, the spread between a 30 yr. fixed and the 5 yr. ARM (5 7/8 vs. 5 3/4)isn't worth taking the risk that rates will increase substantially within the next five years. Because they likely will.

[Tanach]

[ QUOTE ]
You can't afford that. Here is a little quick math:

250,000 price

25,000 cash

less 6,500 for closing costs and prepaid items

231,500 loan

at 6% over 30 years, that's $1,538/month for principal and interest

tack on taxes, insurance, and PMI, and you are looking at $1,800-$2,000 monthly, or 43-48% of your gross income. You'd much rather be in the 28-36% range. You'll probably have a monthly condo association fee on top of that.

[/ QUOTE ]

Yea, this is around what I figured.

I should also mention that I have another small income (about 500/mo and growing) from that which shall not be mentioned. (not poker, the other thing.)

[Tanach]

Also condo fees = 100/mo.

[cadillac1234]

If you plan on staying in a location for 5 or more years and have the ratios plus income it is worth buying esp if your are single since the interest will likely be your only tax write-off.

Be careful of buying a condo in a less than 5 year old development however since a lot of time those developments get embroiled in litigation against the contractors and effect short-term value and buyer financing options.

[2planka]

One question: Why are you so bent on buying at this point in your life?

[ddollevoet]

What city?

[Tanach]

[ QUOTE ]
Be careful of buying a condo in a less than 5 year old development however since a lot of time those developments get embroiled in litigation against the contractors and effect short-term value and buyer financing options.

[/ QUOTE ]

I'm not sure what you mean by this. I do know that the city is very happy they are being built however. (if that matters)

[Tanach]

[ QUOTE ]
What city?

[/ QUOTE ]

Chicago western suburb

[Tanach]

[ QUOTE ]
One question: Why are you so bent on buying at this point in your life?

[/ QUOTE ]

I wouldn't say I'm bent on it, but it's an option I'm seriously considering since I don't like the idea of paying rent for 5 years with nothing to show for it.

[2planka]

[ QUOTE ]
Chicago western suburb

[/ QUOTE ]

Don't buy a condo in Cicero, dude.

[Tanach]

[ QUOTE ]
[ QUOTE ]
Chicago western suburb

[/ QUOTE ]

Don't buy a condo in Cicero, dude.

[/ QUOTE ]

Lol. I know that much.

[turnipmonster]

it seems like you're not really making enough money to buy a place for that price, but of course it's up to you to do the math and see if it works. if it does work, go for it.

[Patrick del Poker Grande]

[ QUOTE ]
I should also mention that I have another small income (about 500/mo and growing) from that which shall not be mentioned. (not poker, the other thing.)

[/ QUOTE ]
You're new on the man-whoring scene?

[Tanach]

[ QUOTE ]
[ QUOTE ]
I should also mention that I have another small income (about 500/mo and growing) from that which shall not be mentioned. (not poker, the other thing.)

[/ QUOTE ]
You're new on the man-whoring scene?

[/ QUOTE ]

Hey, fat chicks need love too, but they gotta pay!

[cadillac1234]

[ QUOTE ]
[ QUOTE ]
Be careful of buying a condo in a less than 5 year old development however since a lot of time those developments get embroiled in litigation against the contractors and effect short-term value and buyer financing options.

[/ QUOTE ]

I'm not sure what you mean by this. I do know that the city is very happy they are being built however. (if that matters)

[/ QUOTE ]

Generally speaking, there will be some sort of building defect during construction either affecting some of the units or the common areas. There are a lot of attorneys who specialize in these lawsuits against the builders. They rile the HOA up and then the units get locked into a major, drawn out legal battle with the construction firms. Sometimes the suits are warranted and major defects are fixed a lot of other times the HOA gets locked into a 5 year battle over cracked sidewalks. Of course we all know who wins in the end.

It's a pretty common occurance in CA it may be less so in your area. I would definetly look into the possibility of it happening however.

[Boris]

Arent we proud of ourselves?

[Patrick del Poker Grande]

I'm going to pile on with those warning against going in on a $250k+ mortgage straight out of school on a $50k salary. $50k sounds like a load of cash to someone just coming out of school, but believe me it's not and you're really going to be saddling yourself with a big responsibility that leaves you with not much cash and a lot less free time than you're used to. Don't forget you have to furnish this place, you'll be responsible for repairs and updates, lawn care, etc. It's not cheap and it's time consuming.

That said, if you can swing it and if you can get a roommate to eat a lot of the cost of your mortgage, this can work out very nicely for you. A rommate can be a ton of hassle, though, and you can't be totally sure you'll have a rent check coming in every month unless it's a good friend.

[drewjustdrew]

[ QUOTE ]
You can't afford that. Here is a little quick math:

250,000 price

25,000 cash

less 6,500 for closing costs and prepaid items

231,500 loan

at 6% over 30 years, that's $1,538/month for principal and interest

tack on taxes, insurance, and PMI, and you are looking at $1,800-$2,000 monthly, or 43-48% of your gross income. You'd much rather be in the 28-36% range. You'll probably have a monthly condo association fee on top of that.

[/ QUOTE ]

My calculator works a little differently. Using your terms, P&I would be $1388. Now add $150 for PMI and you are at $1538. Since he is so secretive about his location, I will assume 2% property taxes of $5,000 ($416 per month), $100 association fee, minimal Condo Insurance of approx $25 per month.

Also consider though that he will be able to itemize deductions on his federal taxes giving him a refund of approx. 15% * ($5000 taxes + $13812 interest) = $2822 ($235 per month). Plus additional deduction for state taxes if he has state taxes.

So his net pmt is approximately $1844 or less (state depending)if he considers the tax benefits.

Edit: City determined during my writing. Taxes hold around 2% most likely. 3% additional state tax benefit on the $5000 ($12.50 per month!!!). Good luck neighbor.

[Bulldog]

[ QUOTE ]
I should also mention that I have another small income (about 500/mo and growing) from that which shall not be mentioned. (not poker, the other thing.)

[/ QUOTE ]

You cokequestion's dealer?

[Tanach]

[ QUOTE ]
Arent we proud of ourselves?

[/ QUOTE ]

No, I'd post this on my real account if I was.

[djoyce003]

[ QUOTE ]
[ QUOTE ]
you are looking at a 2200 mortgage payment including insurance and taxes, plus condo fees. Your salary of 50k is only 4k per month before taxes. You are going to be dead ass broke dude. Your poker income will make this moderately affordable but I'm not sure i'd want to saddle myself with this. If that poker money dries up or you hit a bad streak, you are in a mess I think. My wife and I collectively make around quadruple what you do and I wouldn't want that payment.

[/ QUOTE ]

I don't know where the hell you got this number from.

I figured it around 1500.

[/ QUOTE ]

$1500 is just your mortgage...you also have taxes, insurance, etc....that is how I came up with 2200...it's not far off trust me...i'm buying a house as we speak.

[Tanach]

There is no maintenence on the outside.

I've also set aside 6 months salary + 10k to furnish.

[Tanach]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
you are looking at a 2200 mortgage payment including insurance and taxes, plus condo fees. Your salary of 50k is only 4k per month before taxes. You are going to be dead ass broke dude. Your poker income will make this moderately affordable but I'm not sure i'd want to saddle myself with this. If that poker money dries up or you hit a bad streak, you are in a mess I think. My wife and I collectively make around quadruple what you do and I wouldn't want that payment.

[/ QUOTE ]

I don't know where the hell you got this number from.

I figured it around 1500.

[/ QUOTE ]

$1500 is just your mortgage...you also have taxes, insurance, etc....that is how I came up with 2200...it's not far off trust me...i'm buying a house as we speak.

[/ QUOTE ]

Oh, I realize that total would be around that. He said mortgage payment would be around that. There in lies the confusion.

[Tanach]

[ QUOTE ]
[ QUOTE ]
I should also mention that I have another small income (about 500/mo and growing) from that which shall not be mentioned. (not poker, the other thing.)

[/ QUOTE ]

You cokequestion's dealer?

[/ QUOTE ]

You found my real account!

[djoyce003]

he said townhouse, so he's gotta have homeowners...add on 200/month for that. This sort of payment would cripple me if I didn't have my wifes income too (at least it would feel like it) and I make nearly double him...this is a really bad idea. Course I have hobbies fishing/golf, etc. either way he won't have much disposable income after factoring in all the additional expenses of home ownership.

[Sponger15SB]

[ QUOTE ]
I should also mention that I have another small income (about 500/mo and growing) from that which shall not be mentioned. (not poker, the other thing.)

[/ QUOTE ]

Yeah ok, you sell drugs. No need to hide it.

[drewjustdrew]

[ QUOTE ]
he said townhouse, so he's gotta have homeowners...add on 200/month for that. This sort of payment would cripple me if I didn't have my wifes income too (at least it would feel like it) and I make nearly double him...this is a really bad idea. Course I have hobbies fishing/golf, etc. either way he won't have much disposable income after factoring in all the additional expenses of home ownership.

[/ QUOTE ]

I own a regular house and I only pay about $700 per year in Chicagoland, not $2400, and my house is more than $250K by quite a bit. You should find a new agent if he is charging you that much.

When I lived in a townhouse, I only had to buy condo insurance since the building was covered by the association dues. If the building is not covered, then yes, he will owe more that $25. I would guess about $45-$50 unless he goes to your guy.

[djoyce003]

we are getting hammered in texas.....our quote is 1800/yr and we shopped it...but then again we have hurricanes.

[Indiana]

Hey Jack, want some real good advice? Don't buy, just rent. Owning real estate is not a great investment these days and you will not make much when you sell unless u've lived there for 5+ yrs. Plus, if you find a girl and get married (dont do that either) then you will have to move and its gonna be expensive. Also, renting is a lot less hassle than ownership. When you own, you've constantly gotta worry about upkeep and fixing stuff. I was much happier as a renter, and the worst thing to do in your new life will be to tie yourself to a large purchase.

Indy

[Indiana]

By the way, I saw u said 10K to furnish your new place. That will be skimpy in my opinion. My mattress alone costs 2600. If you are gonna get furniture, I would go directly through an outlet in High Point NC and not buy up in the midwest retail market. I saved 8K this way. Total furniture in my place is over 25K right now...and I still need more.

Indy

[drewjustdrew]

[ QUOTE ]
we are getting hammered in texas.....our quote is 1800/yr and we shopped it...but then again we have hurricanes.

[/ QUOTE ]

I guess that makes sense. But yeah, much less in illinois. Now that I think about it, it might be closer to $800 per year.

[Patrick del Poker Grande]

I'm actually going to agree with Indiana on something here. $10k is not much to furnish a house. Well, maybe a small 1-bedroom condo/townhouse. Figure $3k-$5k per room.

[astroglide]

[ QUOTE ]
So, I'll be starting work soon out of college and I don't really want to throw money out on rent. Bottom line, I'm thinking about buying a house.

[/ QUOTE ]

this made me laugh because of the "bottom line" part considering how succinct the initial sentence was.

i am not hungry but i want something sweet. bottom line, i'm going to eat some candy.

[Maulik]

[ QUOTE ]
I'm actually going to agree with Indiana on something here. $10k is not much to furnish a house. Well, maybe a small 1-bedroom condo/townhouse. Figure $3k-$5k per room.

[/ QUOTE ]

$3-5k/ room is ridiculous. What the hell are you buying, even if you are furnishing a bedroom with solid cherry I doubt you'll be spending $5k.

A solid cherry desk is probably $1-2k at MOST at Mastercraft.

[Patrick del Poker Grande]

[ QUOTE ]
[ QUOTE ]
I'm actually going to agree with Indiana on something here. $10k is not much to furnish a house. Well, maybe a small 1-bedroom condo/townhouse. Figure $3k-$5k per room.

[/ QUOTE ]

$3-5k/ room is ridiculous. What the hell are you buying, even if you are furnishing a bedroom with solid cherry I doubt you'll be spending $5k.

A solid cherry desk is probably $1-2k at MOST at Mastercraft.

[/ QUOTE ]
Dining room furniture is disgustingly expensive. My table and only 4 chairs were over $2k and we still need at least a couple more chairs at $200-$250 apiece. Add on to that other crap like hutches or whatever the hell else. I don't even know the names of all the stupid crap you're supposed to have in there. If you're furnishing a living room, that's a couch and/or loveseat and/or recliner, plus coffee table, plus endtables, plus entertainment center. Bedroom sets aren't cheap if you're getting anything worth having - bed set, dresser, side tables, plus or minus other things depending on your closet. Plus stupid [censored] like curtains, lighting, etc. in every room. It adds up fast. Then, you're probably going to paint, maybe you need to replace carpet, baseboards... It never ends.

$5k is definitely high and you can probably get lower than $3k, but it's definitely not hard to get over $3k in a room.

[turnipmonster]

it really depends on how you're furnishing, I mean the guy is like 22 years old or something and probably isn't going to get a complete bedroom set and nice dining room table.

--turnipmonster

[Patrick del Poker Grande]

[ QUOTE ]
it really depends on how you're furnishing, I mean the guy is like 22 years old or something and probably isn't going to get a complete bedroom set and nice dining room table.

--turnipmonster

[/ QUOTE ]
Well yeah, if you're going to live college style, then you can get by with a folding chair and a pinewood table for $50. If you're going to spend $250k on a decent place to live, you should furnish it properly.

[drewjustdrew]

I am guessing he is buying a $250K house as an investment more than a decent place to live.

Cheap crap furniture here! (http://www.ikea.com/ms/en_US/)

[lu_hawk]

DON'T GET AN 'EXOTIC' MORTGAGE

[Paluka]

[ QUOTE ]
Biggest mistake I made was not investing in property when I was young.

[/ QUOTE ]

results oriented!

[chesspain]

[ QUOTE ]
My wife and I collectively make around quadruple what you do and I wouldn't want that payment.

[/ QUOTE ]

So the two of you earn approx. 200K per year, yet you are so risk averse that believe that you can't afford a thirty year mortgage for 225K?

And you actually play a gambling game called poker?

[Al P]

A friend just bought a $225K house on a 50K salary with 10K down. $1600/mo for loan + PMI + property taxes. Basically after all the bills they have zero money to save for retirement and zero money to spend on anything but necessities but they have a nice brand new pre-fab house (barf).

[Indiana]

Dude,

furniture is expensive as hell!! and cherry wood??? You would need 50K to furnish your condo in cherry wood. That stuff is reeeeeealy expensive. I did spend a lot on my chit cause i roll like that and draped my house in Nautica brand name chit. But even if you go lower and get the average stuff i cannot see 10K being close. budget for 20K min to properly furnish a place. and by the way....condos rock!!! I will never in my life own a house where I have to care for the lawn, roof, painting, etc....

Indy

[newfant]

You should probably run a spread sheet (owning v. renting) to see how the two compare. I did this once, and I think what you'll find is that you need to live in a place for more than 2 years (at least) for buying to make sense (unless you get substantial appreciation). With the spreadsheet, you can play around with different rates of appreciation and depreciation.

Interest on a $250000 mortgage at 5.5% is $13,750 a year at the start. I imagine you could rent a decent place in Chicago for the interest you will be paying. If you rent, you won't be paying the interest, fees, closing costs, and insurance and won't have any depreciation risk. If you buy you will gain the benefits of any capital appreciation, you will be building equity and you will get the mortgage deduction on your taxes.

A $250,000 mortgage seems like quite a bit on a $50K salary. That size mortgage would likely be tough to afford without a rent-paying roommate. This calculator will tell you how big of a chunk that size mortgage will take out of your actual take-home pay.

http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp

[drewjustdrew]

[ QUOTE ]
You should probably run a spread sheet (owning v. renting) to see how the two compare. I did this once, and I think what you'll find is that you need to live in a place for more than 2 years (at least) for buying to make sense (unless you get substantial appreciation). With the spreadsheet, you can play around with different rates of appreciation and depreciation.

Interest on a $250000 mortgage at 5.5% is $13,750 a year at the start. I imagine you could rent a decent place in Chicago for the interest you will be paying. If you rent, you won't be paying the interest, fees, closing costs, and insurance and won't have any depreciation risk. If you buy you will gain the benefits of any capital appreciation, you will be building equity and you will get the mortgage deduction on your taxes.

A $250,000 mortgage seems like quite a bit on a $50K salary. That size mortgage would likely be tough to afford without a rent-paying roommate. This calculator will tell you how big of a chunk that size mortgage will take out of your actual take-home pay.

http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp

[/ QUOTE ]

Just a comment, otherwise I agree with your points:

not gaining the benefits of any capital appreciation = depreciation risk

[Phat Mack]

[ QUOTE ]
Also condo fees = 100/mo.

[/ QUOTE ]

I'm getting lost here; I don't know if it's a condo or a town house. Generally speaking, stand-alones are a better investment.

Condos can be traps. Examine all the rules and by-laws. Ask to see the last two or three years' minutes from the meetings.

[lgas]

I bought a townhouse when I was 21 for the same reason you mentioned -- I didn't like the idea of throwing away money on rent when I could be building equity -- especially with the way the real estate market was at the time in my area (Northern Virginia).

The short version is that it turned out to be a lot more expensive than I anticipated over the years (I was making $70k/yr and paid $191k for my place) -- there was always some unexpected expense... but in the end, I sold it 7 years later for a huge profit and I think it was a great learning experience and I feel really lucky to have had the chance to own a house so early in life.

If I had it to do all over again I would definitely do a few things differently (like buy a cheaper place but fill it with nicer stuff instead of the other way around, also, as it turned out, I hated living in a town house and would definitely have preferred a crappy single family to the nice townhouse), but I would definitely still buy some kind of place as early as possible (or at least practical).

[newfant]

[ QUOTE ]
[ QUOTE ]


You should probably run a spread sheet (owning v. renting) to see how the two compare. I did this once, and I think what you'll find is that you need to live in a place for more than 2 years (at least) for buying to make sense (unless you get substantial appreciation). With the spreadsheet, you can play around with different rates of appreciation and depreciation.

Interest on a $250000 mortgage at 5.5% is $13,750 a year at the start. I imagine you could rent a decent place in Chicago for the interest you will be paying. If you rent, you won't be paying the interest, fees, closing costs, and insurance and won't have any depreciation risk. If you buy you will gain the benefits of any capital appreciation, you will be building equity and you will get the mortgage deduction on your taxes.

A $250,000 mortgage seems like quite a bit on a $50K salary. That size mortgage would likely be tough to afford without a rent-paying roommate. This calculator will tell you how big of a chunk that size mortgage will take out of your actual take-home pay.

http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp




[/ QUOTE ]

Just a comment, otherwise I agree with your points:

not gaining the benefits of any capital appreciation = depreciation

[/ QUOTE ]

No. Money not used to pay off a mortgage can be invested in other areas.

[siccjay]

[ QUOTE ]
I'm actually going to agree with Indiana on something here. $10k is not much to furnish a house. Well, maybe a small 1-bedroom condo/townhouse. Figure $3k-$5k per room.

[/ QUOTE ]

I just bought a 3brd house and I promise I will furnish it for way less than this. ALL DONATIONS EXCEPTED /images/graemlins/grin.gif

[Sooga]

I'm 26, and I've been throwing money away on rent for about 5 years. Personally, I don't mind. Rent's not that obscene compared to my salary+poker, so my savings is gradually building up so that I can hopefully purchase my first house (not condo/townhouse) probably by the time I'm 30.

Also, I've moved 2 times in the past 5 years because of job changes, and if I had to sell the place instead of just leaving it, it would have been a huge pain in the ass. I think I will continue to rent until I get a job that I know I'll stay at for the rest of my career.

As for one last thing, I really enjoy not having to pay for any maintenance issues concerning my apartment. If I have a plumbing problem, it's fixed. If my garbage disposal stops working, it's fixed. Sure, I'd rather have equity in a home instead of throwing money away on rent, but it's not all bad.

[newfant]

[ QUOTE ]
If I had it to do all over again I would definitely do a few things differently (like buy a cheaper place but fill it with nicer stuff instead of the other way around, also, as it turned out, I hated living in a town house and would definitely have preferred a crappy single family to the nice townhouse), but I would definitely still buy some kind of place as early as possible (or at least practical).

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This is results-oriented. What if you had experienced no captial appreciation or only slight appreciation? Would you have still felt like the townhouse was a good buy?

There's no reason to believe that real-estate appreciation in the future will be like it was for the last few years. Many people thought the stock market boom would never end but it did. Real estate will likely experience some kind of correction in the future, although it is hard to say whether it will happen next year or in 20 years.

[JaBlue]

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What's that new avatar, kilgore?

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How can you not know?!

His handle is in homage to Kurt V too

The important thing is that you've recognized that paying rent is throwing away money. Some hucksters will try to persuade you that there is a cost to the required down payment, in terms of foregone returns, and that the bulk of your mortgage payments will service interest rather than building equity. In fact, the Wall Street Journal recently ran a story about how the cost of renting is "supposedly" cheaper than the cost of buying in certain cities, Chicago included. When you read these stories, you've really got to take a look at the writers' incentives - why is it that they don't want you to buy? Eventually you'll realize their logic is flawed - they're comparing what you'll pay in rent vs. what you'll pay to buy a comparable home over a given period. Obviously, that's not an appropriate comparison.

Look around you - virtually everybody that has purchased a home has built substantial equity, while virtually nobody who rents has any meaningful net worth. As an analogy, you wouldn't ever consider leasing a car instead of buying it, right? Why would you do it with a home?

[handsome]

FWIW, my mom bought a co-op (shares, rather) in Queens, NY about three years ago for $200k. She just sold it this summer for $380k. I find it pretty amazing that she profited, even after common charges, maintenance and upkeep costs.

I don't know how mortgages work but I do know that some people make a good living buying and renting/selling real estate. They're called "landlords." If you expect a piece of property to rise in value like my mom's co-op did, I say go for it.