Buying a home idea--financial reality check please? Life Advice in general?

I’m just wondering if my meandering ideas even seem feasible.

I’m considering buying a house of my own. Plain and simple, I live with the parents and it’s about time (late 20s in age, so even though we get along fine, it’s probably beyond time). No specific properties picked, I’m just thinking up a plan. The low property values (in my rural area) and low interest rates have me thinking I need to hop to action.

I have a steady job, 5+ years. It’s basically unskilled factory work, which sucks, but it is a relatively steady job with decent pay. The idea of working here 15-30 years (or a job like it) is a downer to say the least. I’ve considered and tried college, which is hard, but in a fun way. But despite years of classes in piecemeal bits I still don’t know what I’d like to pursue, which is why I never went full time in the first place.

I have no idea what my credit score is. I’ve only had one loan in my life, for a moderately priced used vehicle, which was a loan through my small local bank, and paid on time every time, for a year or so, until I just paid it off outright to save interest.

I have no credit cards (which I’ve avoided like the plague), nor debt. I’m single, so no partners to help (I’ll admit another detail that’s put me “off” of this idea for years).

Right now, I have 10K set aside (in a CD) that I would like to consider as potential “emergency money”, in place of a credit card. I also have a 401K (been put into with a matching percentage as soon as I could). It’s there, but I don’t think it’s necessary for anything and would rather not have to.

At this point I probably have enough saved (besides the emergency) for roughly 20% down on a home loan (depends on the size of course).

I certainly think I’m in a reasonable situation (and much better than most) for buying a home. But I wonder if my lack of credit score will hinder me (since they no longer give out loans like candy!) or will the down payment annul that problem?

I also wonder if my “emergency fund” would be better suited as more down payment to knock down the loan amount? To be honest, that idea makes me really leery, but I don’t know the pros/cons of it.

Any opinions on this mess I just typed, good or bad, are appreciated. Or thoughts of anything else I might need to think about.

Thanks.

If I had a do-over I wouldn’t buy a home until I was married and about to have kids. Or at least, I’d buy something cheap like a condo, that wouldn’t break me if I wanted to unload it but couldn’t do so for a while.

Seriously, ownership is overrated. Ignore the people who tell you that “renting is throwing your money away”. You know what’s throwing your money away? Losing a whole down payment plus everything it costs to keep a house from month to month.

I will second that buying does not really sound like the best move for you at this point in your life, although I think moving out is probably a good idea.

If you aren’t wedded to the idea of living in that area and working at the factory all your life, owning a property will be just one more thing adding to the inertia of staying. If you are looking for an SO, having some flexibility in living arrangements would also seem like a bonus as well.

If you live in a truly rural area, yes properties can be cheap, but they can also be hard to sell. My in-laws own some property in a rural area along the VT/NY border and while there over the summer I saw a metric shitload of for sale signs. I couldn’t help but wonder who was going to be buying them all? In your case, if your factory is the major/only employer in your area and it closes, you will be doubly fucked: no job prospects and your home value will plummet.

The credit thing would likely be an issue. From what I have heard, a down payment isn’t a bonus anymore. It is expected, so having no credit history but a down payment may not get you far.

It sounds like you are pretty disciplined with your money, so it might be a good idea to get a credit card to build up some history. Just use it to buy your groceries, gas, or whatever else you would buy anyways and pay it off each month. They are useful tools as long as you use them wisely.

Do you actually want a home or do you just want to move out?

If you think you will want to stay in the area for a long time, then you could buy a home. But if you plan to go to school and then your schooling/career might take you elsewhere, well, note that it’s super hard to sell a house these days.

Nothing wrong with getting an apartment instead.

That being said, you absolutely need to hang on to your $10k when buying a house. 20% down and a not-bad credit history could get you in the door easy. They aren’t going to be swayed by a higher % of downpayment.

You will find that you will spend $10k in the first year or two just getting the house right.

When you move out, house or apartment, you have to buy your own toilet paper, window cleaner, trash cans, sofa, etc. When you move into a house, no matter how good the house is you’re going to have to fix some stuff and/or buy some stuff to make it right. I spent about $10k on my house within the first two years, mostly on the front end with furnishings and paint, and there is absolutely nothing expensive or extravagant about the stuff in my home.

Don’t go broke buying a home. Once you have the home, you still gotta live in it, and live life.

If you don’t really like your current job, then it’s possible - and even likely - that future education and/or job and/or romantic interests may be more easily pursued if you can move. Owning a house that you have to sell first makes it harder to move and can often be a huge obstacle. This alone makes me think you’re a better candidate for renting than for buying.

You are entitled to one free credit check per year. Equifax, Experian and Transunion are the big three. The relevant Google search has been left as an exercise for the OP.

May I ask why you’re avoiding them like a dreaded disease when having one and using it responsibly would help build your credit history? Having a credit card doesn’t necessarily mean being in debt - just pay the sucker off each month. You buy shit anyway, right? (Groceries, gas for your car or fare for public transportation, the occasional new pair of socks…)

OP, you’re doing great. If you can afford the down payment & would like to own a house, go for it.

No real need to go building up credit by opening up a credit card, though. Avoiding them like the plague is a good idea. There are mortgage companies and community banks who will take a look at your situation & can give you a loan on great terms without a credit score in the high 700s. Provided, of course, that you don’t have a bad credit history. It sounds to me as if you just lack much of a credit history, which is indicative of very intelligent behavior.

ETA: Don’t spend the emergency fund on the down payment.

If you don’t think you will be staying in the same area for a while then buying a house probably isn’t a great idea. Unless you like the idea of renting the place out once you leave it. That could be a great source of income IF you are interested enough to do the work involved in a rental property.

It sounds like you have managed to save a lot more cash than a normal late 20’s adult. It might be time to easy up a little on your expectations of how much cash reserve you need. A credit card is much like a cash reserve, if you can avoid overuse, and it looks like you can avoid overspending well enough.

You have a 401(K) (put as much as possible here) , $10K in CDs and also enough for a 20% down payment on a house? Did I get that right? You problem isn’t that you don’t have credit, it is that you are saving too much in mediocre places. Some of that money could be working harder for you and one way it could do that is in a house. If that works for you.

Sounds like you’ve done pretty well financially so far. I would suggest looking for an awesome deal because right now is a buyers market. As long as you have 20 to 30% to put down, you should get a descent rate. A home is an investment, as long as you are buying right.

My advice: DO move out, don’t start accumulating furniture.

It is a huge mistake to start building up your furnishing, requiring more and mroe space to be rented and paid for, before you decide which home you’d like to buy.

Rent a furnished room, buy only a bed of your own. Get a good mattress, few things in life will contribute more to your well-being.

Then make an effort to dedicate x numebr of years to the accumulation of wealth. Just keep socking it away.

And do get a credit card. Use it to pay as many of your expenses as you can, and then pay it off each month. I have learned the hard way that taking pride in living within your means can cost you big time when you need a car or want a home.

If you buy a home or rent a place for a year, then it will be that much harder to go back to school.

As for school, just finish up a liberal arts undergrad degree. It is easy to specialize post-grad when you decide what you want to do. Without that undergrad, most avenues are closed to you, and it’s hard to even explore the options.

Hmm. Owning a house means you are tied to that location. But you are a young guy with a good head on your shoulders and nothing else tying you down, and tha sounds like a hell of a location to be tied to. My advice–do something interesting for a few years. Work on a cruise ship, or join the Peace Corps, or join the Army, or go crab fishing in Alaska.