Should I buy a house?

[tonybormin]

Situation: I'm 22 years old, out of college for 9 months, completely broke and want to buy a house. Sounds good right? I just started a great job with a financial company that starts me small but is scheduled to have me bringing in a six-figure base plus commission within two years. I am not married but expect to be in roughly two years.

I've been bouncing around, living in a few different places since graduation but went back to my parent’s house when I started my job because it has the shortest commute. In may a few of my buddies, who currently have an apartment together, are looking to move out and find something a little nicer than what they have now. Outside of Chicago they are willing to pay $1200-1300 a month for an apartment. This surprised me and got me thinking that if they are going to put up that much for an apartment together why shouldn't I put that money towards a house in my name and have something to show for it? Charging them to live with me would soften the blow of a mortgage, plus by the time I would kick them out to get married I should be making more than enough to handle it on my own.

Does this sound crazy to anyone else? Granted I think I would be the youngest guy I know with a mortgage but in my mind it seems like a smart decision. Of course I say that knowing nothing of mortgages, real estate, or just the day-in/day-out expenses of owning a home.

Any thoughts on the matter would be appreciated. Thanks for your time.

[Tien]

Yes you should.

Having someone pay your mortgage for you is always a good idea.

[meditate89]

odds of you getting fired= ?
what kind of price range are you looking at? 250k?

the completely broke part doesn't sound promising... I wouldn't feel comfortable owning something w/o at least a years mortgage payments in a MM account, but then again i probably don't have the same kind of job security as you hopefully do.

You might have more leverage in terms of negotiating a better interest rate if you had 10% down... but you can probably find a bank to write you a 100% loan with these market conditions if you look enough. A few years of employment history might help get you a lower rate- but I'm not expert.

There's some thread around here about mortgages with a bajillion replies, might want to ask for advice in there if you haven't already.

edit: make sure your woman likes the house, you don't really want to sell it in two years =)

[maxtower]

#1. Don't count your chickens before their hatched. Why don't you wait until you know what you'll be making?
#2. Don't get married at 24. Thats too young. You'll be losing half your house later.
#3. Having your friends pay half your mortgage is a great idea if you get a house.

[Pendimethalin]

Renting to friends can be really tricky. How well do you know these friends? How do they typically treat their own stuff? If they abuse their own stuff it’s likely they may not treat your house as you’d want it to be treated. Because remember you’re the one on the line for it not them. Also what if one/all of them got laid off and could no longer afford to pay rent? Could you afford to make the payments by yourself while looking for other renters? If the answer is no…then you can’t afford to buy a house right now and buying one would probably be a bad idea.

[dazraf69]

[ QUOTE ]
#2. Don't get married at 24. Thats too young. You'll be losing half your house later.

[/ QUOTE ]

Just wanted to re-itterate this

[captZEEbo]

[ QUOTE ]
Renting to friends can be really tricky. How well do you know these friends? How do they typically treat their own stuff? If they abuse their own stuff it’s likely they may not treat your house as you’d want it to be treated. Because remember you’re the one on the line for it not them. Also what if one/all of them got laid off and could no longer afford to pay rent? Could you afford to make the payments by yourself while looking for other renters? If the answer is no…then you can’t afford to buy a house right now and buying one would probably be a bad idea.

[/ QUOTE ]there's some good points in here, especially the part about if one/all pdecide to stop paying will it be okay?

[PaperClip]

Not right now [img]/images/graemlins/smile.gif[/img]

No need to read, it is BBG top story today... Basically, housing starts were weak.

Sorry for the long text, its quite interesting though.

Page 1 of 4
BN 10:34 U.S. Economy: Home Starts Plunge to Lowest Since 1997 (Update2)


(Updates homebuilder index in fifth paragraph.)

By Joe Richter
Feb. 16 (Bloomberg) -- Homebuilders in the U.S. started
work last month on the smallest number of new houses since
August 1997 as a glut of unsold homes and colder weather
discouraged new projects.
Housing starts slumped 14.3 percent to an annual pace of
1.408 million, less than forecast and down from December's 1.643
million rate, the Commerce Department said today in Washington.
A separate report from the Labor Department showed producer
prices fell by the most in three months on lower energy costs.
The figures show that even as sales have stabilized,
residential construction will remain a drag on the economy after
builder inventories reached a record last year. Federal Reserve
Chairman Ben S. Bernanke told lawmakers this week that the
weakness in homebuilding may extend through much of the year at
the same time inflationary pressures begin ``to diminish.''
``The notion that home sales have hit bottom may be
credible, but construction spending may continue to contract for
some time,'' said Jim O'Sullivan, senior economist at UBS
Securities LLC in Stamford, Connecticut. ``Inflation numbers
have been pretty tame in recent months, and there's nothing in
today's data to suggest that's changing.''
Treasury yields declined after the figures suggested Fed
policy makers will keep interest rates unchanged through the
first half of 2007. The benchmark 10-year note rose 3/32,
pushing down the yield 1 basis point to 4.69 percent, at 10:21
a.m. in New York. The Standard and Poor's Supercomposite
Homebuilding Index of 16 builder stocks, declined 1.5 percent.

Economists' Forecasts

Economists surveyed by Bloomberg News had forecast starts
to fall to a 1.60 million unit pace from an originally reported
1.642 million pace the prior month, according to the median of
75 estimates. Forecasts of starts ranged from 1.50 million to
1.72 million.
Building permits declined 2.8 percent to a 1.568 million
pace. Permits were expected to drop to 1.59 million, according
to the median estimate.
The Labor Department said prices paid to producers dropped
0.6 percent last month, reflecting a decline in energy costs.
Excluding fuel and food, wholesale prices 0.2 percent for a
second month.
The effects of a decline in energy costs that helped boost
consumer confidence to a two-year high in January may be wearing
off. The Reuters/University of Michigan index of confidence fell

-----------------------------====================------------------------------
Copyright (c) 2007, Bloomberg, L. P.

Page 2 of 4

more than forecast this month. The gauge dropped to 93.3 from
January's 96.9. Economists had forecast a preliminary February
reading of 96.5.

Single-Family Homes

Single-family home starts dropped 11.2 percent last month
to a 1.108 million rate, also the weakest since August 1997,
today's report showed. Work on multifamily homes, such as
townhouses and apartment buildings, declined 24.1 percent to an
annual rate of 300,000.
Construction in the West fell 28.5 percent to an annual
rate of 301,000 last month, the slowest since December 1996. The
decline in the West from December was the biggest since January
1979.
Starts also dropped 15.2 percent in the Midwest to a
195,000 pace, the weakest since January 1991, and decreased 11.8
percent in the South to 716,000. Beginning construction in the
Northeast rose 8.9 percent.
The number of homes under construction fell 2.4 percent in
January to a 1.218 million pace, today's report showed. Housing
completions declined 1.2 percent to an annual rate of 1.88
million. The number of housing units authorized, but not yet
started, increased 2.9 percent to 194,400.

Fourth Quarter

Home construction fell at an annual rate of 19.2 percent
last quarter, the most since 1991, after contracting at an 18.7
percent pace in the previous three months, according to a
government report Jan. 31. The decline subtracted 1.2 percentage
points from fourth-quarter growth.
The slowdown coincided with a rise in the number of unsold
homes. Builders have made limited progress in bringing down
inventories the past few months. The number of new homes for
sale, which reached a record 573,000 in July, declined to
537,000 in December.
Sellers of previously owned homes are lowering prices to
drum up demand. The median price of a previously owned, single-
family home fell in 73 of 149 metropolitan areas in the fourth
quarter, a National Association of Realtors report showed
yesterday.

Biggest Since October

Last month's decrease in housing starts, the biggest since
October, followed a 5 percent increase in December that
economists including Michael Moran of Daiwa Securities America
Inc. say may have been caused in part by builders taking
advantage unusually warm weather.

[Scorpion Man]

[ QUOTE ]
Situation: I'm 22 years old, out of college for 9 months, completely broke and want to buy a house. Sounds good right? I just started a great job with a financial company that starts me small but is scheduled to have me bringing in a six-figure base plus commission within two years. I am not married but expect to be in roughly two years.

I've been bouncing around, living in a few different places since graduation but went back to my parent’s house when I started my job because it has the shortest commute. In may a few of my buddies, who currently have an apartment together, are looking to move out and find something a little nicer than what they have now. Outside of Chicago they are willing to pay $1200-1300 a month for an apartment. This surprised me and got me thinking that if they are going to put up that much for an apartment together why shouldn't I put that money towards a house in my name and have something to show for it? Charging them to live with me would soften the blow of a mortgage, plus by the time I would kick them out to get married I should be making more than enough to handle it on my own.

Does this sound crazy to anyone else? Granted I think I would be the youngest guy I know with a mortgage but in my mind it seems like a smart decision. Of course I say that knowing nothing of mortgages, real estate, or just the day-in/day-out expenses of owning a home.

Any thoughts on the matter would be appreciated. Thanks for your time.

[/ QUOTE ]

No.

[jacksquat]

lots of good points/questions brought up here. i would add that this is a great time to buy (especially a new home) as all of the builders are offering good incentives to move inventory.