This I disagree with. I bought my first house when I was 21. I stayed in it about ten years, then bought my second house. I didn’t get too much equity in my first house, but managed to pull enough out of it for 20% down on the second one.
That one I paid off before I was forty. The “mortgage” is now going into college funds for the kids.
Honestly, it doesn’t take that much time and mental energy. Before home ownership I often lived in situations where you spent a lot of time harrassing the landlord if you needed something done. Or in poorly maintained units that hadn’t been painted. KIDS take a ton of time and energy, but the house - pretty low maintenance. My first house was a city house with a postage stamp yard - took fifteen minutes to mow it.
Home ownership is a lot like that retirement fund - an early start is going to get it paid off that much faster.
You’re saying that the best plan is to have a paid off house as soon as possible. I say the same thing but the OP can do if faster by waiting.
I agree that for people who are unable to save much a house is a good retirement plan. Not everyone, at such an early age, has such a good salary.
The OP is saving so much right now that he doesn’t need a house to make his retirement account. If he waits a couple of years he will have at least another 25,000 to put down on the house which will save him around 40,000 in loan payments. That’s a lot more than he can save any other way or make up in home appreciation in any regular situation. Again there are always exceptions.
Oh Heck, it’s not such a bad idea to finance a capital aquisition like an auto. But yes, you’re rigth dealers will take advantage of you. What sort of dealer did you go to?
I’m in a similar financial situation, but a few years older with a bit more saved up, and I live in Santa Barbara, where rents are higher and you can’t buy a shack for less than $350K.
However, even if I lived somewhere where houses were cheaper, I’m not sure I’d want to buy a house. Buying a house greatly increases your risk. You think that you don’t want to move and that your job is stable, but how sure can you really be? If you end up wanting or having to move in a few years, you may end up having to take a loss on your house. As others pointed out above, residential housing is not a particularly good investment. On average, it basically tracks inflation. To the extent that housing seems like a good investment, it’s usually due to a failure to consider all the costs involved. Personally, I think that the current economic climate, and the unknown way in which the government is very likely going to be mucking with the housing market for years to come, with all the unintended consequences thereof, I’d be even more nervous about highly leveraging into that investment.
In your case, it looks like the financial hit is unlikely to be major either way. The difference between buying and renting is small, and both options are small compared to your income. So the real question is: do you want the lifestyle of a house? Do you enjoy things like yard work and home renovation? Do you get a sense of satisfaction out of owning your home? Does it fulfill part of your life plan to buy a house at a young age? If you decide that you really do want to own, I also suggest waiting another year or two. Not just because you’ll have a bigger financial cushion but because it’s a really big decision, and taking some extra time won’t hurt.
I hope this doesn’t sound patronizing, but most people do a lot of growing up in their twenties. I’m only a few years older, but already I look at the world and where I want to be in it much differently than I did a few years ago. I’m really glad I didn’t buy a house then.
I think waitnig a few months won’t hurt you. From all signs, no one is going to turn this economy around in the next 6 months, there is still too much turmoil. Give yourself that 6 month cushion, and get looking around maybe the 4 month mark. Given the average days on market for homes, no one should balk at a closing date 30 to 45 days out if you find the perfect house sooner than you expect.
No, I’m actually saying that the faster you build equity, the less you need to worry about house payments when you retire. Paying off a house early is something that you may or may not want to do. Buying a house with a 30 year mortgage when you are 40 years old is going to mean you still need mortgage cash flow into retirement.
And you might be able to do that faster by waiting, most people I know don’t have the self discipline to do it, but I suspect the OP might.