what is the best time to become an home owner?
I am only 18 years old and i am getting together my10 year plan i have been accepted to college, i plan to b a pre-med student, and i already have boyfriend dat i have had for five years who i plan to marry.... with no children yet
I would say that the sooner the better in order to start building up equity. However, getting a good rate is worth waiting a year or two for. If you're poor, start small but it is probably best to go for a 15 year mortgage because you'll pay so much less over the life of the loan. Put as much as you can afford as a down payment and that will help with the rate too.
There are arguments for and against buying soon. The problem with buying right now is that you don't know where you're going to end up permanently, especially with going into medicine where most areas take some shopping around for a hospital, and where you may end up switching colleges at least once. Not knowing the size of your future family can be a big issue too...my ex bought his house at 19, figured it was enough room, and bought it. Even before our son was born it was obvious that there wasn't enough room in the place, and now he lives in it with his girlfriend and two kids where both of the kids have to share the living room for a bedroom. It can be argued that it would be a good time for a starter home and then go from there, but most economists are estimating that it will be a couple of years before the housing market hits bottom, and then a few years after that before the market catches up with all the surplus in order to start seeing any rise in property values. In other words, if you did end up moving or having a kid before you intend (as many of us have discovered, "planned parenthood" is an oxymoron), then you might find yourself stuck in a house that doesn't work for what you need.
The best time is:
The moment all the documents have been signed.
While you are at college take an option out on the property you like at a fixed price, knowing that it will be affordable after graduation; but make sure that it is a transferable option that allows you to onsell it if you decide not to proceed on it.
When you can conceivably afford to become one is the best answer I can come up with. I bought my first piece of real estate when I was 26. One rule I would follow is the 80/20 rule. If you can afford a $100,000 house, look for an $80,000 one. If you can afford a $200,000 house, look for a $160,000 one.
The 80/20 rule should really be applied to all finances in your life, and I'm a firm advocate of it, especially in light of what happened recently with the recession, and how much of that was as a result of too many people overextending themselves, and spending money they did not have.
The 80/20 rule basically says you only spend and live on 80% of your net income. I say net, because you never see gross. So, base it on your net. The other 20% goes in the bank, or in other investment vehicles such as the stock market (but ONLY IF you understand how the stock market works—don't gamble with your 20%). My suggestion, however is to DEFINITELY learn about it. Buy some books on it. Figure it out. The stock market has had its ups and downs, but it's still one the best percentage gainers your savings/portfolio will ever have.
It stands to reason that if you follow the 80/20 rule with your income, and extend that to your spending habits (buying 80% of the house or car you can afford to buy), it will compound the 80/20 rule, and down the road you will come to realize that you are living on less than 80% and putting away more than 20%.
Living your financial life in this way means you will be better prepared for dips and unexpected situations such as job losses, or recessions. You will require less credit. You will have more personal freedom, will likely not have to work as hard or as many hours. You will be in control of your life and your finances. And you will probably be able to absolutely consider early retirement as a viable option.
People think that saving means you will have to sacrifice. In reality, the opposite is true. The less you save, the more you have to earn, and the longer you will have to work. It means, you will have to sacrifice MORE the less you save.
Too many older people today have to keep on working because they're not done paying for stuff. Keep that in mind as you're young enough to be in the best position to get on the right path NOW.
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