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  • Super Major Purchase.

    Sooo, i just got pre-approved for a home loan. Im 20, work a great job as an IT Specialist (Fancy for I do everything IT but dont have a degree for the Title "IT Administrator/Manager"). I make a heafty amount of income for my age, and living with my parents i've saved enough for a down payment on my own home.

    Single with a brand new '08 truck, i figured between working 60 hours a week, school, and my truck payment a house should be cake. So im taking the plunge.


    Anyone got any good advice, my mothers a great help, she's been keeping up with the market since i can remember, and owns 3 homes right now (Two vacation homes and their primary). I just feel i need an outside sources input, my mother can be very bias at times.

    Thnx,
    -Black_V!per.
    Oyee

  • #2
    Re: Super Major Purchase.

    It sounds like you have already made up your mind to do this. What kind of advice are you looking for? What is your mom bias about?

    Comment


    • #3
      Re: Super Major Purchase.

      This is going to be looooong:

      First off if you haven't already done so: sit down by yourself and think long and hard of your reasons to buy a house. Buying a car is nothing compared to signing away a large portion of your life for something that generally costs 3 times (or more) your current yearly salary.

      I've had two friends buy a home because they could, not because they really wanted to. The results were disastrous. They basically walked away from their homes with nothing to show.

      Are you ready to take care of a home? There's no landlord to call when the A/C goes out. Mom isn't there to do your laundry. When it hits the fan, you have to clean it up. This may sound like a "duh" moment, but people routinely don't think about it: you are on your own. I'm sure your family will help you, but at the end of the day, it's all on you.

      Now, if you're serious about this: what kind of home do you want? New? Sure, you can move right in, but you pay a large premium per Sq. Ft. Used? Generally cheaper per SF, but who knows what might be wrong. You'd do good to have a friend or family member who has bought a few homes to walk prospective houses with you. Otherwise, you'll spend a lot of time and money on inspectors.

      Decide on a style: do you want a "starter home?" These are generally model homes with 2-3 bedrooms, a living room, and not much else. In Texas, they are generally around 1600 Sq ft. Do you want something bigger? Do you need something bigger? Do you want to clean or pay someone to clean your bigger house? A huge large is nice, but someone has to mow it and landscape. You do not want to be the one guy in your neighborhood with the crappy yard. Oh and BTW: you will take crap for buying a house at your age and being single. Watch your butt: neighbors are generally dicks to young single guys. I learned this the hard way. They feel you haven't earned the "right" to own a home yet.

      Do you want a house that has great architecture? Makes good use of the space it has? A big garage? Backyard?These are all questions you need to sit down and think about and will need to inform your realtor about. Also, remember that your realtor works for you. He has dealt with nosy mothers before and he may come off as rude to your mother, but he's probably doing this because he feels your mother is buying your house for you. Make sure your mom understands that this is your show, but that her help is appreciated.

      Do not under any circumstances get an ARM (Adjustable Rate Mortgage). Set yourself a limit on a monthly payment and stick with it. Use a mortgage calculator to help you with the math. Remember, you'll need home-owners insurance as well. I doubt Arizona has any flood plains, so you shouldn't need flood insurance.

      Houses are about location. Do some research about the area you are considering moving to. What condition is the MUD (Utility district) or equivalent in? Is there a Property Owners Association? Are they active? What are the property taxes like?

      What are the crime rates and are there young kids already living there? If you plan to live in that house for 10 years, remember that those cute little kids will be growing into teenagers soon and will want cars, will get bored, and may cause issues.

      The housing market is in the crapper right now, it's a buyers market. Good for you, but if you're thinking short-term on this house, you may be in for some trouble if you want to make good on your investment.

      Do not let people push you around. Your family and friends will most likely run their mouths about "you need to do x, you need to do Y." They forget easily that this is about you, not them. Make sure that you only make choices you are comfortable with. I bought a house at the age of 23, and as a man who thrives on pressure, I found it odd that the weight of buying a home almost crushed me based on a hyper-active sister and a couple of friends who cared less about me making a good investment and more about having a cool place to party and crash so they didn't have to stay at their parents all the time.

      This is worth repeating: do not ever feel you have to go through with this because other people think you should. If there's any question about a home, your realtor, your sanity: error on the side of caution and back off to give yourself time to think. You live with your parents which is awesome. You pay no rent and have all the time to find the house you want. Use that time wisely and do not rush into anything.

      And good luck because if you go through half of what I did buying your first home, you're going to need it. Just a little taste: I made my first offer on my home on August 9th 2005. I closed January 1st 2006. Ever spent 5 months waiting for a phone-call?

      Comment


      • #4
        Re: Super Major Purchase.

        TheFeniX makes some good points. Excellent points (NO ARM!!). You also have your mom at bat for you which is good. She'll probably be your main source of advice, just don't let her push you into buying a home or run the show for you. :) Your meeting with your broker/lender and realtor should be just you and them. Just remember, pre-approved is not approved and secured. Some other points/questions:

        Have you ever lived away from home? Have you ever rented? A good history of living outside your parents home can affect the risk a lender puts on your loan.

        How much do you consider a "down payment"? Are we talking greater than $30,000? If you are unable to put down 20% of your home purchase you will pay a premium on mortgage insurance. If you take out an additional loan to cover what you don't have up to 20% of your home purchase you will take a major hit on interest payments and you wont be increasing the equity of your home via mortgage payments for at least three years.

        Originally posted by TheFeniX
        Do not under any circumstances get an ARM (Adjustable Rate Mortgage). Set yourself a limit on a monthly payment and stick with it. Use a mortgage calculator to help you with the math. Remember, you'll need home-owners insurance as well. I doubt Arizona has any flood plains, so you shouldn't need flood insurance.
        This is the meat of it there. The Federal Government is the only outfit in the US of A that can sell flood insurance--and you likely don't/wont need it.

        Buying a house is huge. Everything wont go the way you expect. Just be prepared and remember that you can always rent for a year or so and it's a MUCH easier way to get out of your parents house quick :) Put your Down Payment in bonds and low-risk investments for a few years while you rent and keep adding to your war chest. You'll not only have enough for a 20% down payment, you'll be able to afford a honeymoon too ;)
        ~~ Veritas simplex oratio est ~~
        No matter how far a wizard goes, he will always come back for his hat. --T. Pratchett

        <---- You know you're getting old when you rely on your forum meta-data to remind you how old you are.

        Comment


        • #5
          Re: Super Major Purchase.

          If and when you buy the house you are going to diminish one of the best innate assets given to a youthful person such as yourself...

          The glorious ability to just pick up and go someplace or do something else just because you want to.

          Of course buying a house now could be one of the wonderful youthful mistakes that make for a wiser future.
          Iím not racists, I have republican friends. Radio show host.
          - "The essence of tyranny is the denial of complexity". -Jacob Burkhardt
          - "A foolish consistency is the hobgoblin of little minds" - Emerson
          - "People should not be afraid of it's government, government should be afraid of it's People." - Line from V for Vendetta
          - If software were as unreliable as economic theory, there wouldn't be a plane made of anything other than paper that could get off the ground. Jim Fawcette
          - "Let me now state what seems to me the decisive objection to any conservatism which deserves to be called such. It is that by its very nature it cannot offer an alternative to the direction in which we are moving." -Friedrich Hayek
          - "Don't waist your time on me your already the voice inside my head." Blink 182 to my wife

          Comment


          • #6
            Re: Super Major Purchase.

            I owned a home at a young age (23), and sold it last summer and am renting again. I must admit, I like having a home, but renting makes for a much simpler life. If I buy again, I'm going to get something seriously undervalued and well below my means. Makes for lower stress. Whereas most people buy homes around 3x their annual income, I'd prefer to go with something around 70-100% my annual income. My gf bought a great home for around $60K. Took 3 years to find it, but man, what a bargain. It's not huge, and it's not in the nicest neighborhood, but I'd be perfectly happy living there. Especially for mortgage payments around 450 like she has. If we get married, I could have that place paid off in under a year, then we could save up and step up to the next grade home soon (WITH CASH). I'm never getting a mortgage again. Sound foolish? It's not. I'm eliminating my risk this way. I am almost debt free and vowed never to borrow again. It's actually pretty easy and I don't really have any financial stress anymore. Nothing wrong with renting. It's one of the great American myths that we just gotta get a home as soon as possible. Enjoy your freedom would be my suggestion.
            "Common sense is not so common." -Voltaire

            Comment


            • #7
              Re: Super Major Purchase.

              My mother who has lived in the same house for 30 years told me that people make the mistake of thinking their home is an investment rather than a place to live. No better case illustrates that more than the current sub-prime housing crisis where many buyers and lenders viewed homes as quick money rather than what it is: a place you sleep every night.

              Owning a house can be a pain in the ass. In many cases, it's not the owner that owns the house but the other way around. Then again, there are alot of negatives in renting. Make sure you do plenty of research before making that commitment.
              |TG-9th| TheFatKidDeath
              "Born to Party, Forced to Work."
              - Check me out on The Onion
              - I'm on the local news!

              Comment


              • #8
                Re: Super Major Purchase.

                Black, everyone here is giving great advice... but, I feel mine is greater. Ready?
                Dont buy a house.
                You are only 20 yrs. old and in the prime of your life... living in western America. Take the money you've saved and use it internationally. Travel. Move around for a while. Explore. America (especially right now) aint as cool as it used to be.

                Many people who know me here know that I'm a yacht captain and travel excessively all over the western hemisphere. I can tell you right now... I wish I'd done it when I was younger (moreso then I did). The things I've learned could've seriously helped me in my life currently (to the point where I'd be wealthier as well). It's invaluable. You cant put a price on it - bar none.

                If you lock yourself into a house, you're locking yourself into your job and maintaining that house. That's all fine and dandy if you're older, have a family, etc... but at 20? nah... unless you're looking at it as a pure investment. If you can handle it as an investment and still "see the world" then more power to you... otherwise, I'd advise against it. If you're looking to go to school while living in the house then it's smart to own the house instead of paying rent, obviously. (my roomate in college did this) He ended up paying for his entire education on the eventual sale of the house.

                STILL though, work and save as much as you can and then take sabaticals. Spend a season somewhere else besides America (I can rail off a million places for you if you'd like). You'll find you can live more comfortably, happier, and cheaper abroad (especially in Central America). You'll end up being more cultured and pick up another language... and maybe even find a wife you'd be much less likely to find in the U.S. Feel me?

                Think on it...
                I'll check on this thread later. :)

                Comment


                • #9
                  Re: Super Major Purchase.

                  Try to find a Buyer Broker in your area that has done it for a long time. If you go around calling the Listing agents off yard signs or the net you are going to get a lot of pressure and half truths. I've been a Buyer Broker going on 11 years and trust me, there is a difference. Ask the agent your talking to if they have their ABR (accredited buyer representative). It's not necessary but certainly shows their dedication to protecting buyers.
                  New to TG?

                  Comment


                  • #10
                    Re: Super Major Purchase.

                    Originally posted by Gambit7 View Post
                    Black, everyone here is giving great advice... but, I feel mine is greater. Ready?
                    Dont buy a house.
                    You are only 20 yrs. old and in the prime of your life... living in western America. Take the money you've saved and use it internationally. Travel. Move around for a while. Explore. America (especially right now) aint as cool as it used to be.

                    Many people who know me here know that I'm a yacht captain and travel excessively all over the western hemisphere. I can tell you right now... I wish I'd done it when I was younger (moreso then I did). The things I've learned could've seriously helped me in my life currently (to the point where I'd be wealthier as well). It's invaluable. You cant put a price on it - bar none.

                    If you lock yourself into a house, you're locking yourself into your job and maintaining that house. That's all fine and dandy if you're older, have a family, etc... but at 20? nah... unless you're looking at it as a pure investment. If you can handle it as an investment and still "see the world" then more power to you... otherwise, I'd advise against it. If you're looking to go to school while living in the house then it's smart to own the house instead of paying rent, obviously. (my roomate in college did this) He ended up paying for his entire education on the eventual sale of the house.

                    STILL though, work and save as much as you can and then take sabaticals. Spend a season somewhere else besides America (I can rail off a million places for you if you'd like). You'll find you can live more comfortably, happier, and cheaper abroad (especially in Central America). You'll end up being more cultured and pick up another language... and maybe even find a wife you'd be much less likely to find in the U.S. Feel me?

                    Think on it...
                    I'll check on this thread later. :)
                    Yeah, best advice yet. You're 20. Don't settle down.
                    ~~ Veritas simplex oratio est ~~
                    No matter how far a wizard goes, he will always come back for his hat. --T. Pratchett

                    <---- You know you're getting old when you rely on your forum meta-data to remind you how old you are.

                    Comment


                    • #11
                      Re: Super Major Purchase.

                      Originally posted by Gambit7 View Post
                      Black, everyone here is giving great advice... but, I feel mine is greater. Ready?
                      Dont buy a house.
                      There's no right or wrong answer to the question of: "Do I want to buy a home." You may enjoy travelling and seeing the world. You may enjoy not being tied down and having the freedom to pick up and take off to wherever you deem fit at any point in time.

                      Many people do not feel this way. Black has made a choice in his life and you do his decision no justice by saying "my advice is better." What Black_Viper can take from your post is that there are options other than "take the next step in my life and buy a home." Life isn't about doing whatever everyone else is doing, for sure. But if Viper feels the next step in his life is to own a home, then he needs advice to help get him going in that direction.

                      And for the record: my brother in law just bought his first home at the age of 38. Looking back he wishes he had bought much earlier in his life rather than renting all those years. Does that make his opinion any more valid than yours?

                      Comment


                      • #12
                        Re: Super Major Purchase.

                        Originally posted by TheFeniX View Post
                        There's no right or wrong answer to the question of: "Do I want to buy a home." You may enjoy travelling and seeing the world. You may enjoy not being tied down and having the freedom to pick up and take off to wherever you deem fit at any point in time.

                        Many people do not feel this way. Black has made a choice in his life and you do his decision no justice by saying "my advice is better." What Black_Viper can take from your post is that there are options other than "take the next step in my life and buy a home." Life isn't about doing whatever everyone else is doing, for sure. But if Viper feels the next step in his life is to own a home, then he needs advice to help get him going in that direction.

                        And for the record: my brother in law just bought his first home at the age of 38. Looking back he wishes he had bought much earlier in his life rather than renting all those years. Does that make his opinion any more valid than yours?

                        Well, black did ask for some opinions. It sounds like his mother may be pressuring him. Maybe not intentionally but we all know how mothers can be.

                        People don't often give their advise when they feel it is inferior to those around them. And at least two others agree that it is the best advice. (It is the same advice MOL that I gave him so I am, of course, biased.)

                        And quite frankly, if you have to ask others if you should buy a house you probably are not ready for it. Could be exceptions, to be sure. But even you cautioned against buying a house just because.

                        You either do it for an investment and are prepared to do the work this type of investment needs. Or you do it because you want a house that you can call home. Most 20yr olds don't really need that latter.
                        Iím not racists, I have republican friends. Radio show host.
                        - "The essence of tyranny is the denial of complexity". -Jacob Burkhardt
                        - "A foolish consistency is the hobgoblin of little minds" - Emerson
                        - "People should not be afraid of it's government, government should be afraid of it's People." - Line from V for Vendetta
                        - If software were as unreliable as economic theory, there wouldn't be a plane made of anything other than paper that could get off the ground. Jim Fawcette
                        - "Let me now state what seems to me the decisive objection to any conservatism which deserves to be called such. It is that by its very nature it cannot offer an alternative to the direction in which we are moving." -Friedrich Hayek
                        - "Don't waist your time on me your already the voice inside my head." Blink 182 to my wife

                        Comment


                        • #13
                          Re: Super Major Purchase.

                          I thinks it's great that someone 20 years old is mature enough to think about his future. However, it is a large commitment for someone so young nevermind 20 years older.

                          My questions would be:

                          1)Are you prepared mentally and physically for a commitment to a house? Ready to spend those Saturdays and Sundays working on your home?

                          2)Are you using all your savings for a down payment? What were to happen if you lost your job within a year of buying? Do you have a year of emergency savings in case you need to pay your mortage, insurance, gas, electricity, water, car loan, food, cable, etc while you search for employment?
                          |TG-9th| TheFatKidDeath
                          "Born to Party, Forced to Work."
                          - Check me out on The Onion
                          - I'm on the local news!

                          Comment


                          • #14
                            Re: Super Major Purchase.

                            "Your throwing your money away if your renting"

                            I hear this all the time. It's a terrible presumption. People say this only because they have been hearing it all their lives. Until one sits down at a computer and factors in all the costs involved it is impossible to come to this conclusion.

                            Amortization schedule ( It take 24 years to pay off 1/2 your 30 year mortgage)
                            Appreciation ( based on comps in that are for last 5 to 7 years.)
                            Gas
                            Car depreciation
                            Home Repair
                            Closing Costs
                            Insurance
                            How long you plan on staying there
                            Taxes in your area
                            Tax deductions
                            etc.. vs renting

                            For instance I rent an older house that appraises for 400k. I pay 1100 in rent and get to live in a great neighborhood in the middle of town. If I buy the house I would be paying about 3600 a month w insurance/taxes. If I were to buy a house for 180k in the suburbs the costs would eat up my investment gains and I would have to spend 2 extra hours a day driving. Plus they are building at such a feverish rate in Houston that unless the house is in the middle of town appreciation is minuscule.Plus in 20 years time the neighborhood will likely be an undesirable one. Just an example of how the old adage doesn't apply. There are many instances where it is a good investment, but its not across the board by any means.

                            Best thing you can do with your money at your age is invest in your education and max out your Roth IRA and other retirement accounts.

                            Comment


                            • #15
                              Re: Super Major Purchase.

                              I would question the need to buy a house when you attempt to get advice from people on a gaming forum. Now before you all jump me, I must say that all of you have valid points and have given excellent advice based on your personal opinions and experience. The issue I would have is in the very fact that you would allow these wildly varied statements to sway your decision to make such a large and life changing purchase. This is a really big deal, and not to be taken lightly. I would first sit down and talk with your parents and close friends and open some discussion on if you really need to buy a home. I personally would recommend renting first, just to test the water before jumping in head first, but my advice probably means a lot less than a lot of what is given above. If you do decide that buying a house is right for you, talk to a financial advisor about if this is a good idea in the current market, and in this point in your life. You seem to be fairly level headed but I know how I was when I was 20, and buying a home was the last thing I would have done. I inherited my house when I was 22 and was not prepared for all the maintenance, taxes, insurance and other hidden things that popped up later. Again, it's good that you are seeking advice, but I wouldn't look for anything life changing on the Internet.

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