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When to Purchase a Home

CynadoAlley

CynadoAlley

Well-Known Member
Nov 28, 2010
2,462
78
48
Siouxland
Lately I've been thinking more and more about real estate with each rent check I give to my landlord. I've always looked at real estate online as a hobby, and seeing the calculated mortgage rate being less expensive than what I'm paying for rent in a property I'll never own can start to make a guy wonder. Personally, my ultimate goal is to be on an acreage someday, and while affording one currently is pretty much out of the question, it seems to me that a house in town for the time being would make more financial sense than throwing away rent.

Having started the process of purchasing a business after graduating from ISU this past May, I obviously have plenty of priorities taking up my income. Having "just" graduated and dealing with plenty of expenses as is, I know that purchasing a home is not on the top of my priority list. I'm just curious to hear when you all decided that it was time to stop renting (whether it be an apartment or other form of rental) and start seriously looking into buying a home.
 
Get something you can afford that will suit your needs now. Build some equity and then use that equity to get your dream acreage.
 
I agree with Bos - while I do NOT recommend getting a townhouse (from personal experience), I would say that getting a modest single-dwelling home earlier rather than later is a good investment. Small projects can often build equity, and then you can use that to purchase a larger home down the road.

Plus, it makes you look responsible to potential mates. ;)
 
Angie said:
I agree with Bos - while I do NOT recommend getting a townhouse (from personal experience), I would say that getting a modest single-dwelling home earlier rather than later is a good investment. Small projects can often build equity, and then you can use that to purchase a larger home down the road.

Plus, it makes you look responsible to the ladies. ;)
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One of my biggest regrets was not getting a small house in Ames when I lived there. Wasted so much money in rent for ****** apartments. At least my last few years there. Coming right out of highschool probably wouldnt have worked out well, but as I got older, it would have made more sense.
 
Do you feel like settling down where you are now? That's the biggest question.

My wife and I probably would've bought a house a while ago except we had some credit issues to overcome first. I'm glad we waited because we had a few things change in our lives that caused us to move somewhere outside of where we thought we would live.
 
Just moved out of the house i bought after college. I purchased an acre just outside of town and built the Mrs. not a dream house - but everything she will need for the next 20 years.

Just make sure you buy a first home in a quiet / safe neighborhood - resale is dependent. Also, try to find someone selling a house by owner - they are probably more willing to give you a better deal since they are not paying a realtor 7%.
 
1) I wouldn't buy any house you can't put 20% down on: PMI's the worst
2) Keep in mind on a 30 year note you'll be paying down very little principal initially, so if you have to sell within a few years, any of that will easily get wiped out (and then some) with broker fees (unless the value miraculously goes up during that short period)
 
djcubby said:
Do you feel like settling down where you are now? That's the biggest question.

My wife and I probably would've bought a house a while ago except we had some credit issues to overcome first. I'm glad we waited because we had a few things change in our lives that caused us to move somewhere outside of where we thought we would live.
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Yes, I'm back in my hometown taking over the local seed dealership and helping on the family farm.
 
A realtor slipped a flyer under our apartment door when we were in our mid-20s listing the reasons to buy a home rather than rent. We made an appointment with him to discuss what we needed to do to be ready to buy in 14 months. A week later, we had purchased our first home. The guy was pretty good!

I'm down to 24 payments left on our current home. It's getting close enough to being paid off to be a reality soon.
 
The time we did buy a home was a wreck for us, but that was solely from trusting the wrong people and the wrong job. We were financially crushed by that one.
That one kept us from buying one here, where we should have years ago. Barring some kind of major surprise (like a Nigerian prince thing being real), it's not happening anytime soon.

Sounds like you're in a good spot with the intent of settling down. It's probably worth a very serious look at buying. I can't quite describe how wasteful I think renting is (as I get ready to pay the rent again).
 
Buy what you can AFFORD on a 15 year mortgage. It may be a significantly lower standard of living that you would like but you also aren't paying out the ace for interest.

Edit: and put 20 percent down or whatever your lender will want to avoid PMI
 
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I think that I will be renting for years to come. It boils down to how long you think you will be in not that city or area, but in that specific dwelling. If you will stay in a house that you buy for five or more years, then go ahead and do it; otherwise, renting provides more flexibility for moving both to other cities as well as to other dwellings in the same city and is less risky (i.e. if the housing market turns south and you're stuck with a house you can't sell when you want to).

I will be living in 5 cities in 4 different states over the course of a four-year period, though, so my experience is not typical and my advice may not be suited to your situation.
 
Don't buy a house your can "grow in to." Know what toy want/need/can afford now and buy that only if it makes sense.

Buying for what you think you might need when you get married or have more kids or whatever is pointless in my opinion. You don't know what you want or need until you live it.
 
Also remember there is allot more then just the mortgage payment when owning a house. You have to cover the cost of upkeep, taxes, insurance, and everything else that comes with it. That amount is either forgotten in allot of equations or severely underestimated. Like stated before save up enough to avoid PMI and only take a 15 year loan if you decide to do it. If you take a 30 year loan and only pay the minimum payment you will not be building very much equity over roughly the first 15 years.
 
Whatever you feel is enough for a downpayment and emergency savings....add more. Little 'projects' pop up all the time. Need new carpet, replace a toilet, deck is falling apart, new hot water heater, car breaks down etc...you see where I am getting at. I know before we bought our first house we thought we were ready. There are so many things you do not think of and so many things that pop up. We were very blessed that nothing major came up those first couple of years or our lives would be very different today, most likely a foreclosure or something. Our income was ok but we had so much debt.
 
twojman said:
Whatever you feel is enough for a downpayment and emergency savings....add more. Little 'projects' pop up all the time. Need new carpet, replace a toilet, deck is falling apart, new hot water heater, car breaks down etc...you see where I am getting at. I know before we bought our first house we thought we were ready. There are so many things you do not think of and so many things that pop up. We were very blessed that nothing major came up those first couple of years or our lives would be very different today, most likely a foreclosure or something. Our income was ok but we had so much debt.
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yep. We just moved into a home we built after renting for 5 years.

Renting is not throwing away money. However, if you can buy for a monthly payment significantly lower than what your rent is, have a significant % to put down, and would be able to maintain a decent -sized emergency fund, it's worth looking into. But don't jump into buying a house simply because you think you should.
 
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