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Making this choice is personal to your needs/wants/ability/willingness. You’ve seemed to have done analysis and thought about it. If it makes sense to you then do it.
80k net worth at 21 doesn’t sound poor family to me.
@KPMG Parent’s combined income at $20-$30k a year for a family of four
@Bloomberg I know my own financial situation and financial situation growing up, but saying that having a certain net worth at my age “doesn’t sound poor” assumes that they think my life was privileged and disregards my hard work and sacrifices.
Seems like you understand your finances pretty well, and are buying an asset that is likely to grow. I’m sure jumping to a $3k mortgage after renting an apartment for half the price is a bit of sticker shock, but over a 5 to 7 year timeline, you’ll come out way ahead in almost every imaginable circumstance.
That’s the plan!!
$80k Networth and making $80k base (combined with my SO (DINK) we make $150k)
A house we’re looking at: Buying a home for $35k under the appraised value ($385k to $350k) in a prime location where all the homes are well over $400k (closer to over $500k). We would be in a tight position now (monthly mortgage is close to $3k while our take home is $9k after taxes) but I love the area and looking to rent it out in the future and build my portfolio.
Most of my money is currently in index funds/ETFs
We’re looking to use one income towards the house and anything leftover would go into a HYSA and one income to funnel into index funds/ETFs
Also - not planning on having any kids ever
Looks like a good deal. You always want to buy the ugliest house on the block. 34% of takehome is a stretch, but as incomes rise that goes way down - you'll see if 5 years. The key with buying a single family home is that in addition to your plan to live in it for the next 5 years, you have to have a plan for if you have to move soon. Would the house rent for enough to cover the mortgage?
I got locked in at a 5.99 rate and if rates go down and I refinance then the rent would definitely cover it but for now, I’m not sure. Rent in that area raised a ton though (I used to live in an apartment there for $1.3k and now the same unit is going for $1.6-$1.7k)
Be sure to have a solid emergency fund (6 months to be safe with a house). As a homeowner, things will come up. Is it a new house or old? Any known repairs or maintenance needed up front? How secure are y’all’s jobs? Are y’all expecting promotions / pay raises in the next 2 or so years? All things to consider.
Sounds like you have a good grasp of your risk / exposure to things that may come up. If you are comfortable with that, I think it will pay off in the long run. Sounds like a well thought out purchase. I would prioritize getting a full emergency fund of 6 months expenses once you close though.
Speaking as someone who bought earlier this year at 25. Buying with your early career income will help with lifestyle creep down the road.
Congrats!
I’m all for buying real estate - 4 properties in the last 3 years, 28. House might be a little pricey compared to your income but I’d probably go for it. You’ll look back in 3-4 years with some nice equity and thank yourself.
I would recommend renting a small 1 bed / 1 bath apartment or condo, let’s say for $1500/mo, and then investing $1500/mo in stock market index fund like FNILX or VOO/VTI to get 8-10% long term returns. Renting will give you flexibility to move to different cities if you or your SO want to get higher paying job or go back to grad school. Focus on maxing out retirement accounts, 401k and Roth IRA. Save for a house down payment for in a few years after you get married. If you buy a house now and then move again in the next few years, the closing costs for buying and selling the home will eat into your equity on the house. Later in life your opinion on children might change and you’ll want a house with more bedrooms, in a specific school zone, near specific hospital, close to a park, close to in-laws, etc.
I bought my first home (a condo) at 22 right out of college and it worked out fine. Honestly probably would have come out even financially if I’d put the down payment in the stock market and rented, but I liked owning my own place. I too imagined renting it out one day and did for a year or so when I got married and bought a townhome, but it turns out it was t a great rental - mainly broke even and condos don’t appreciate that well in Dallas - so ended up selling.
The big downside to buying especially so young is losing flexibility. Especially with a SO, a lot of job opportunities may come up and no matter what your desires will change over time which could impact your preferred living space and neighborhood and maybe even city/state especially if family issues arise and they don’t live nearby.
Also if you aren’t legally married I wouldn’t buy together without a partnership agreement outlining what happens if one of you wants out, dies, gets disabled or addicted to drugs, gets sued, defaults on the loan or falls off the face of the earth and so on. A lot can go wrong in relationships and divorce court is there to force the ironing out of details. If you aren’t married owning a home together can be a nightmare scenario if anything goes wrong.