Please convince me that buying a house will not be my financial ruin

Why not see what you can afford with a 20% down payment on a 15-20 year mortgage at a low interest rate keeping it to 30% of pre-taxed income? It sounds like he's in the right frame of mind "not keeping up with the Joneses".

People with a lot of debt can't manage that and should follow Ramsey's guide prior to purchasing a home. The math proves it. Don't think of the home as the end of your financial peace. Follow the plan, get your house paid off and start stacking (investing) cash like crazy. Think BIG! Not all wealth is the same and doesn't have to be. It's YOUR wealth/future that matters. What will be your legacy to your family? I don't mean how much money will they inherit.

The biggest issue right now is whether you have job security and whether you will see your income grow in your profession. If you are going to be basically making the same amount ten years from now and are in profession that does not have good job security, you should sit this one out until you have saved up enough to put 20% down and then have a good chunk of savings to cover repairs, etc. But if you are secure in your job and will see your income grown, it is not a bad time to buy a house. Interest rates are insanely low. Inventory is generally low because no one is taking any chances by moving. But it is also generally a buyer's market because even fewer people are looking to buy. The big risk is that everything could go to sh$t this fall/winter if the virus explodes. So, at a minimum, it might be best to see if we survive the winter before taking a leap.

The main benefit of buying a home v renting is that you are betting against inflation. Rent will always be going up with inflation over time. But your mortgage is fixed for the next 30 years. When I bought my house 10 years ago, my family income was about a third of what it is today. My house cost about half of what it is worth today. My mortgage payment went from about 30% of take home income to about 15%. I also have over $250k in equity. Over the long run, owning a home pays off in a big way if you can stay in once place and have steady employment.

No offense taken. But did I offer any advice? Not really. I'm basically saying "don't be like me!"

Yes absolutely take a 15 year if you can afford it. I bought. my current house with a 30 year, then refi'ed into a 15 year last year...roughly the same payment but it'll be payed off much sooner.

Sometimes it's a little harder to do on your first home, though, especially if you're trying to keep your overall payment down.

It depends on if you plan on staying in the area for long term. If you’re going to be there for over 5-7 years, buy it. There are things that suck from purchasing a home, but if you’re staying in the same area for a while, it’s better to buy. Even if prices go down, you can ride it out. If you lose your job and have to move suddenly, look to rent the place.

When I buy, I have always purchased something reasonable where I can easily rent.

I think of buying a house is part of my investment portfolio and with any investments, there will be risks but usually, if you look at it in long term, it will work out.

If you're in it for long term, can afford the payments, have stable employment then buy the house. I've owned 6 houses in my lifetime and still own 2 of them. I wish I still owned every single one of them. Hell, I bought a condo in AZ in 2006 and lived right through the big ole crash that took the price of the condo to 50% of what I paid for it! But it was rented, cash flow positive and I just rode it out. It's now back to being 25% over what I paid for it and I've had that rental income the whole time. 50 focking % of what I paid for it and I'm still fine some 10 years later.

Buy vs rent is essentially a bet on the value of real estate over the medium term. If you're bullish about house price appreciation in the area you live then buy, if not then don't.

If the poster has to ask LetsRun.com for financial advice then they cannot afford it.

Go to a financial planner, pay them, they will tell you how to spend your money wisely.

This isn't hard, the poster cannot afford the home.

bojack wrote:

If the poster has to ask LetsRun.com for financial advice then they cannot afford it.

Go to a financial planner, pay them, they will tell you how to spend your money wisely.

This isn't hard, the poster cannot afford the home.

The more I actually crunched the numbers and overcome my irrational fears, the more I realize that I can afford it. But thanks for the thoughts. How's the corral these days?

Buying a house is stressful, so don't let that alone put you off a decision.

It's perfectly fine to reach out to anyone for advice on a major decision, to make sure you are not overlooking anything.

My advice (from a financial advisor) is to follow the Rule of 90. Take 90, subtract your age, and that's the percent of your net worth you should have in your house. It applies therefore, to any age. This makes sure that you don't have all your eggs in one basket at the end of your life.

Hire a reputable home inspector who will provide a comprehensive assessment of the condition of the house and estimated maintenance costs over the next 20 years.

We paid $270K for our house in 1999. Still living here 21 years later. Zillow has the current market value at $545K.

Good Luck.

Gazelle like intensity?

sub sub elite local hobby jogger wrote:

bojack wrote:

If the poster has to ask LetsRun.com for financial advice then they cannot afford it.

Go to a financial planner, pay them, they will tell you how to spend your money wisely.

This isn't hard, the poster cannot afford the home.

The more I actually crunched the numbers and overcome my irrational fears, the more I realize that I can afford it. But thanks for the thoughts. How's the corral these days?

Good, it's a big step and it requires thought. It's a good decision.

Eh jail is tough but they allow me some internet access so I can't complain. Mr. Peanutbutter visits every day and it's annoying.

You are kidding yourself. There are no current bargains, unless you are looking at Detroit or central Kansas.

Buy a home that you really like and feel that you can stay in or keep for about ten years and it will be a good deal and decision.

It could work out over a shorter time frame but you’re pretty much guaranteed to come out ahead in ten years or more simply by the amortization and conservative gain in value.

Liking it is key.

Buy the home you like more, not the better bargain.

You have to live there.

X-Runner wrote:

Buy a home that you really like and feel that you can stay in or keep for about ten years and it will be a good deal and decision.

It could work out over a shorter time frame but you’re pretty much guaranteed to come out ahead in ten years or more simply by the amortization and conservative gain in value.

Liking it is key.

Buy the home you like more, not the better bargain.

You have to live there.

I agree that liking the house is key. If you can live there for longer the better. Or be able to rent it out easily.

pr100 wrote:

Buy vs rent is essentially a bet on the value of real estate over the medium term. If you're bullish about house price appreciation in the area you live then buy, if not then don't.

Not necessarily. Buying the house could be a better deal than renting even if it does not appreciate relative to inflation.

Also, unless you want to work until age 65 or older to retire, you have to take some risks with investments. Like buying a house when it can be little bit of a stretch and being leveraged. Or being comfortable with investing in the market. Especially when the market is falling. Or you’ll be complaining that everything is expensive like Ghost of Igloi waiting and waiting for the price to drop to some magical number and you may sit on the sideline and years keep going by.

Depends on your location, earnings growth potential, personal preferences, etc. Etc. Many of the benefits of home ownership accrue over time. If you think you might be relocating in less than 4 or 5 years the turnover costs may outdo financial benefits.