CottageHore Posted January 4 Posted January 4 As we all know, the housing market is God awful and doesn’t seem to be getting any better any time soon. I moved back in with my parents a year ago because I’ve started going back to grad school. I spent the first year paying off all my debts and did just that. Of course, now I’m racking up more for school but wtf am I to do (that’s not an invitation for a “don’t go to college if you can’t pay out of pocket” platitude) Now, I’ve started saving for a home. In about 2 months I’ve managed to set aside over $6,600. However, my car could go at any time so I’m assuming I’ll have to spend what I’ve saved eventually anyway. - I’m 26 years old. - I’m single and that won’t change any time soon. I enjoy living at home but really want to own my own place, it’s time (and I hate the idea of renting ever again). - I make about $65,000 a year with benefits and also made a couple thousand a month from content creation over the past few months but I won’t account for that in my pay cuz it’s far too unreliable. - I’ve been able to and hope to be able to keep putting $1,000 aside each paycheck ($2,000 a month) for my house, but also I have to account for the fact that other expenses will arise, like a need for a new car. My initial goal was to have enough saved up for a 20% down payment on a home by October/November of 2024 but this looks less and less possible the more I think about it. Living with my parents is just fine but I really crave my independence again. I sometimes feel like a failure and I just want my own space and the fact that owning a home at 26 when I work so hard just seems bleak af but that’s how it is. I guess what I’m really seeking is any financial advice for saving up for a 20% down payment on a decent but very modest home and honestly just some reassurance. It sounds silly but I’ve been so depressed about this lately, it actually is beginning to scare me.
Babar2009 Posted January 4 Posted January 4 Try not spending as much on food and any luxuries. Can u cut down on your grocery bill?or where could u cut down? Live on beans n rice, pasta, fruit n veg mostly. Whatever is cheap. I think you need to be putting aside more in savings.meal prepping. Not going out as much, do it all on the cheap.
spree Posted January 4 Posted January 4 (edited) - credit score over 700 - at least 5% down (look into first time homeowners benefits) - proof of income - low debt ratio (which you seem to have) the biggest thing is being able to prove you can handle a loan. Having a great credit score, money in the bank, low debt, and reliable income are top priorities. You need all 4. I lucked out and bought in 2018 before Covid and the madness. My 1000 sqft house was 160k, and I put down 7k. I had great credit and low debt (student loans don't count), and I provided years of income. My credit was close to 800. I refinanced during Covid and went from a 5.4% to a 2.99% so I'm sitting pretty. In hindsight, it was the perfect time to buy. I was just sick of renting at my age. Little did I know everything would literally DOUBLE or TRIPLE in a few years. when my bf moves in I'll be paying 550 a month for my house. People are renting for over 2k near me for a 1 bedroom. Edited January 4 by spree 2
venuss Posted January 4 Posted January 4 You’re still very young but I understand the struggle (because I’m in the same situation). Save at least 5% + what others have said. If, and just if, you don’t see it happening for you this year, try investing accordingly your profile and short-medium goals. Just don’t let that money sit there while you wait.
CottageHore Posted January 4 Author Posted January 4 29 minutes ago, spree said: - credit score over 700 - at least 5% down (look into first time homeowners benefits) - proof of income - low debt ratio (which you seem to have) the biggest thing is being able to prove you can handle a loan. Having a great credit score, money in the bank, low debt, and reliable income are top priorities. You need all 4. I lucked out and bought in 2018 before Covid and the madness. My 1000 sqft house was 160k, and I put down 7k. I had great credit and low debt (student loans don't count), and I provided years of income. My credit was close to 800. I refinanced during Covid and went from a 5.4% to a 2.99% so I'm sitting pretty. In hindsight, it was the perfect time to buy. I was just sick of renting at my age. Little did I know everything would literally DOUBLE or TRIPLE in a few years. when my bf moves in I'll be paying 550 a month for my house. People are renting for over 2k near me for a 1 bedroom. My credit score is 785 I have proven I can handle a loan and have a reliable income. I guess the reality comes down to timing and luck then because I was too young and not in the position to be buying a home back in 2018/2019. Maybe I just swallow my pride and extend my time at my parents by at least half a year to increase my down payment. I fear putting only 5% down because I hear that’s how they **** you and then you gotta pay a PMI fee
CottageHore Posted January 4 Author Posted January 4 2 minutes ago, venuss said: You’re still very young but I understand the struggle (because I’m in the same situation). Save at least 5% + what others have said. If, and just if, you don’t see it happening for you this year, try investing accordingly your profile and short-medium goals. Just don’t let that money sit there while you wait. Would you suggest a high yield savings account or something else for my down payment savings account? It’s currently just in my bank’s savings and I don’t plan to keep it there but haven’t decided where to put it just yet.
Happylittlepunk Posted January 4 Posted January 4 I am not sure if this will help but I just want to point this out so you don’t feel like you’re behind or not doing well. There was a recent report by cnbc that showed the average American doesn’t buy a home until the age of 36 and the average American family with at least 2 kids are choosing not to purchase homes in order to use the extra money for there kids. you are only 26 years old I think you are doing very well compared to the average American at your age group. I know you want home ownership but if you are more concern having privacy should you try to get an apartment instead? You don’t need to live in a luxury apartment or expensive area. As long the place is decent and you can afford it and modest in generally why make things complicated?
spree Posted January 4 Posted January 4 (edited) at 2,000/month you'll have 6600 + 12000 after 6 months = 18,600? That's plenty to bargain with. Maybe just wait a little bit longer and have that nest egg and then start looking. It's a long process with the bank, so have your realtor ready and with listing websites provided so you can scope out the areas on your own. It's very cut-throat, so once you look at something and you like it, you have to be willing to act that very day or at most the next. Cash buyers will get you. I basically saw my place and said screw it cuz I was looking for months and just offered full asking. If you go anything under you are risking being outbid by cash buyers. *move-in ready places you have to act quickly. Fixer-uppers are usually on the market for a little while depending on what they need, so if it's one of those you don't have to act literally that day. Mine was move-in ready so I didn't want to wait. Edited January 4 by spree
Goaty Posted January 4 Posted January 4 31 minutes ago, CottageHore said: Would you suggest a high yield savings account or something else for my down payment savings account? It’s currently just in my bank’s savings and I don’t plan to keep it there but haven’t decided where to put it just yet. there are money market accounts that are yielding >5%. You should be parking this money in there. I keep my emergency fund in a Fidelity brokerage and it defaults into the money market account. If I ever need the money it's a simple transfer back to my bank account.
Better Mistakes Posted January 4 Posted January 4 It’s frustrating and I’m in the same position as you only in the UK. Let me tell you, the UK is far worse I have a $82,000 deposit saved and it’s still not enough because of either: house prices or the mortgage interest alone would still massacre me. For reference, I make around what you do a year too
glitch Posted January 4 Posted January 4 Can you buy with a friend? It's becoming more popular and it's a pretty good solution for a single person. You can get a proper agreement drawn up by a lawyer to protect you both should one person drop out or something else happens.
glitch Posted January 4 Posted January 4 Also you're not a failure. I'm the same age as you with a good job and in the same position. It's way more common than you might think. The only people my age I know who own their own property both work in finance and had to move really far out to be able to afford something. The situation is just bleak right now, which may not be super reassuring but my point is, it's not your fault!
EtherealCat Posted January 4 Posted January 4 stay with parents for as long as you can even though its not ideal renting as a single person is going to set you back massively its not worth it 4
Before Today Posted January 4 Posted January 4 Luckily in my country you're not expected to leave the house even after you graduate from college. It's the opposite really, it's very normal and people would ask why don't you live with your family (if you're from the same city). I stayed with my dad for like 2 years to save some money lol. But for certain reasons I moved out and currently live with my boyfriend. I could have saved the money instead of paying rent, but personally I needed space as an adult away from my family. AND, I got a job that covers my rent just fine. I'm not planning to buy a house any soon tbh, as I'm not sure if I will stay here :/
TaggedGalaxy Posted January 4 Posted January 4 You don’t have to put 20% down. I follow a lot of finance subreddits and most people don’t recommend putting 20% down unless the house is immaculate and needs no work done to it. Usually you can put anywhere from 3-5% down and use whatever you have saved left over for the 20% down payment to go toward repairs/upgrades that will increase the value of your house. You will have to pay a PMI but it’s usually a low dollar amount and if the upgrades you make to the house increase the value enough, you can shorten the length of time you pay that PMI. If you do purchase while interest rates are this high you should probably be ready to refinance when they drop again because these rates are way too high at the moment.
Totami Legend Posted January 4 Posted January 4 get into minimalism, that **** is doing wonders to my savings and life goals. Just stay with your parents and save money as much you can. Don't be in a hurry to buy a place, you're soooo young. Good luck sis! 2
Devin Posted January 4 Posted January 4 9 hours ago, spree said: - credit score over 700 - at least 5% down (look into first time homeowners benefits) - proof of income - low debt ratio (which you seem to have) the biggest thing is being able to prove you can handle a loan. Having a great credit score, money in the bank, low debt, and reliable income are top priorities. You need all 4. I lucked out and bought in 2018 before Covid and the madness. My 1000 sqft house was 160k, and I put down 7k. I had great credit and low debt (student loans don't count), and I provided years of income. My credit was close to 800. I refinanced during Covid and went from a 5.4% to a 2.99% so I'm sitting pretty. In hindsight, it was the perfect time to buy. I was just sick of renting at my age. Little did I know everything would literally DOUBLE or TRIPLE in a few years. when my bf moves in I'll be paying 550 a month for my house. People are renting for over 2k near me for a 1 bedroom. this.
CottageHore Posted January 4 Author Posted January 4 7 hours ago, flower moon said: - close your eyes - start dreamin
CottageHore Posted January 4 Author Posted January 4 5 hours ago, EtherealCat said: stay with parents for as long as you can even though its not ideal renting as a single person is going to set you back massively its not worth it Renting again is advice I always ignore. All that means is the $2,000+ I can now put aside each month will be going to rent and I’ll never see that money again so I think I need to just swallow my pride and be grateful I have parents I love enough to stay living with until I have the money 1
CottageHore Posted January 4 Author Posted January 4 1 hour ago, TaggedGalaxy said: You don’t have to put 20% down. I follow a lot of finance subreddits and most people don’t recommend putting 20% down unless the house is immaculate and needs no work done to it. Usually you can put anywhere from 3-5% down and use whatever you have saved left over for the 20% down payment to go toward repairs/upgrades that will increase the value of your house. You will have to pay a PMI but it’s usually a low dollar amount and if the upgrades you make to the house increase the value enough, you can shorten the length of time you pay that PMI. If you do purchase while interest rates are this high you should probably be ready to refinance when they drop again because these rates are way too high at the moment. Thanks for the sound advice these are all good points. And yes, also refinancing is quite a process and costs a bit of money I feel like people love to pretend it’s just an hour at the credit union rearranging numbers like
ATRL Moderator feelslikeadream Posted January 4 ATRL Moderator Posted January 4 10 hours ago, CottageHore said: Would you suggest a high yield savings account or something else for my down payment savings account? It’s currently just in my bank’s savings and I don’t plan to keep it there but haven’t decided where to put it just yet. Omg, move that money TODAY. If you're afraid of money markets, a high yield savings account is still gonna be far better than your bank. I use Ally—very user-friendly and the current interest rate is 4.35%. I don't have a ton of money in there, but I earned $2k in interest last year, which is FAR better than the $10 I would have made with my bank's interest rate
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