So, I’m a 21 year old female. I finished Uni a while ago, have very little student debt (had scholarships), own a good car (owned, as in, no payments), and I have been working at the same job for a year, I’m happy with it.
I am actively working towards the goal of living completely debt free. I hate debt. I live frugally, and I am happy. I have the material things I want. I put money in a savings every month and an IRA every year. I am trying to work as hard as possible right now (12 hours or so a day), so that I can enjoy the rest of my life later.
That leaves housing. A mortgage has always been my bane. The thought of getting locked into a huge debt for 30 years kills me. At the same time, I’m simply paying someone elses mortgage right now, thus living in denial of sorts.
Houses are getting really cheap around here, and I’ve toyed with the thought getting one for awhile. People keep telling me I’m too young to get a house, and that I should enjoy the ‘renting’ years. I don’t know what that means. I do enjoy my life. I can’t enjoy my life while paying a mortgage instead of rent?
Two days ago I was driving home and I passed a house that is for sale. The bank just took it over after the owners failed to sell it and now it sits there.
I love this house.
It sits on an acre of land and the house is almost 2000 square feet. The entire yard in front of it is open and fluffy green, while the entire back is surrounded by huge, towering trees. It is a ranch, and it is in good shape. It has a huge front porch, new roof and siding, the furnance is only 4 years old, and the wiring was just redone.
I pulled up records online, and houses in this area of the same size and caliber were going for $125,000+ easily a few years ago. The house is on the market for $48,000. The bank is trying to get rid of it before the copper gets stripped or something bad happens to it from sitting.
I do a lot of work for Habitat for Humanity, and I started envisioning all the stuff I could do to it. I’d build a deck on the back that wraps around to the front porch. The kitchen floor’d get tiles put down; I’d rip out the cupboards, sand them down to their beautiful oak and stain them; build a shed outside the house; tear out the plaster in the dining room and put up some drywall; etc.
I imagine, should the housing market ever go back up, I could easily get three times what I’d pay for it, especially with the good land.
Then the ‘con’ side of me kicks in. What if after I buy it, the furnance blows up, or a tree falls on the house, or foundation cracks, or… You get the point.
I could put $12k on it as a down payment, meaning the monthly payment would be a little over $200 a month, or less than half of what I am paying in rent. If I paid what I am paying in rent, I could have it paid off in less than 8 years.
All this for an almost new house on an acre of beautiful land in a perfect neighborhood that is 15 minutes from the city.
I did out the math, and adding things like property tax, trash and water, home insurance, etc. I’d be about breaking even on the housing costs over renting.
I’m not seeing a negative side, which leads me to believe that I am missing something.
So, for those of you who have purchased a house, am I being young, naive, and stupid? Is there some glaring hole in my logic? If I go to the bank today and get the mortgage, would I be making a huge mistake? Am I acting impulsively and not looking at getting a house the way I should? Is there really an upside to paying rent (aside from the manager doing work, etc)?
Thanks, and sorry about the long post.