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Unless your salary jumps to six figures in 2 years you maybe forced to sell or live on ramen.
If you may $62k, your take home pay after tax is no better than $3k month. That monthly mortgage will take more close to 50% of your paycheck.
This is not including expenses you gotta pay for your home. The biggest reality is how can you afford the property taxes.
Assuming a modest $6k in property tax, that will add another $500 to your monthly mortgage bill without any deductions.
Why can't people just rent? Renting is not terrible as long as you got a great lease.
Because renting is paying someone else's mortgage for them. And here on LI, if you're not a snob, you can get a decent house for under 300k, if you're willing to do some work or live in one of the less desirable neighborhoods. And to top it off, with 90k down like the op the mortgage and taxes on a 275k house will b e about 2k per month. That's less than the monthly rent of a decent apartment here.
Unless your salary jumps to six figures in 2 years you maybe forced to sell or live on ramen.
If you may $62k, your take home pay after tax is no better than $3k month. That monthly mortgage will take more close to 50% of your paycheck.
This is not including expenses you gotta pay for your home. The biggest reality is how can you afford the property taxes.
Assuming a modest $6k in property tax, that will add another $500 to your monthly mortgage bill without any deductions.
Why can't people just rent? Renting is not terrible as long as you got a great lease.
Because renting is the equivalent of throwing money down the toilet... And also what Apple Juice said. If you are going to pay someone else's mortgage you might as well just pay your own.
Because renting is the equivalent of throwing money down the toilet... And also what Apple Juice said. If you are going to pay someone else's mortgage you might as well just pay your own.
...except that my rent is about half of what I'd spend on a mortgage and taxes on a comparably sized place in the same neighborhood, I pay no property taxes, my heat and landscaping are included in the rent, and if anything breaks, it's fixed within 48 hours at my landlord's expense and inconvenience (admittedly, I have a very good landlord and a very good lease).
Yup, it's totally a better deal for me to spend twice as much money each month, plus property taxes, plus utilities, plus savings towards a reserve fund for when things break, for a place that's the same exact size and quality as where I live now just so I can claim the "privilege" of home ownership.
...except that my rent is about half of what I'd spend on a mortgage and taxes on a comparably sized place in the same neighborhood, I pay no property taxes, my heat and landscaping are included in the rent, and if anything breaks, it's fixed within 48 hours at my landlord's expense and inconvenience (admittedly, I have a very good landlord and a very good lease).
Yup, it's totally a better deal for me to spend twice as much money each month, plus property taxes, plus utilities, plus savings towards a reserve fund for when things break, for a place that's the same exact size and quality as where I live now just so I can claim the "privilege" of home ownership.
In your situation that may be ideal. In the OPs situation for his price range an apartment will cost more than a mortgage for a space of comparable size, at least in nassau county. I'm in a similar situation to the op and I'm selling my house and moving to another. We contemplated renting in between moves or just permanently. However, when we began looking at apartments we found that a nice apartment with 2 or more bedrooms will cost at least $2500/month. This is more than our mortgage will be on our new house. In practical terms, unless you're looking in a much higher price bracket, buying can be a much more econonomical way to go.
...except that my rent is about half of what I'd spend on a mortgage and taxes on a comparably sized place in the same neighborhood, I pay no property taxes, my heat and landscaping are included in the rent, and if anything breaks, it's fixed within 48 hours at my landlord's expense and inconvenience (admittedly, I have a very good landlord and a very good lease).
Yup, it's totally a better deal for me to spend twice as much money each month, plus property taxes, plus utilities, plus savings towards a reserve fund for when things break, for a place that's the same exact size and quality as where I live now just so I can claim the "privilege" of home ownership.
Buying can actually end up being cheaper in many cases.
...except that my rent is about half of what I'd spend on a mortgage and taxes on a comparably sized place in the same neighborhood, I pay no property taxes, my heat and landscaping are included in the rent, and if anything breaks, it's fixed within 48 hours at my landlord's expense and inconvenience (admittedly, I have a very good landlord and a very good lease).
Yup, it's totally a better deal for me to spend twice as much money each month, plus property taxes, plus utilities, plus savings towards a reserve fund for when things break, for a place that's the same exact size and quality as where I live now just so I can claim the "privilege" of home ownership.
And you're building zero equity.
Renting can be a great way to save money while you work toward homeownership but as a long term thing especially in LI where it's so expensive its better to own.
When you are retired you will still be paying rent that's equivalent to a mortgage payment while others can live in their homes just paying taxes and homeowners or can sell the home and take the proceeds and downsize.
And you can never be thrown out of your house if you pay the mortgage. Your landlord can decide tomorrow to sell the house and throw you out. Or not renew a lease.
Renting can be a great way to save money while you work toward homeownership but as a long term thing especially in LI where it's so expensive its better to own.
When you are retired you will still be paying rent that's equivalent to a mortgage payment while others can live in their homes just paying taxes and homeowners or can sell the home and take the proceeds and downsize.
And you can never be thrown out of your house if you pay the mortgage. Your landlord can decide tomorrow to sell the house and throw you out. Or not renew a lease.
All of this. Thumbs up. Well said.
Owning is so satisfying. I love the feeling of building equity and working toward something. I miss it :/
My husband and I bought our home with similar savings in the bank as you, but we earn considerably more. We found a 3br/2bath house under $400K in good condition that only needed some minor work that is mostly cosmetic. We put 20% down, got a 3.5% interest rate through a credit union. We live comfortably -- we don't have as much disposable income as we did when we were renting, but we have still gone on vacations and out to dinner and stuff like that.
That being said, I think the advice about renting being "a waste of money" is outdated. I mostly hear it from people in their late 20s/early 30s who won't move out of their parents' house. You're paying for a roof over your head -- a very mature thing to do.
I also hear it from friends who are now house poor. I never wanted to be house poor. I think my husband and I are in a much better financial situation because we rented for 5 years instead of rushing to buy something small as soon as we got engaged. I have friends in that situation who bought tiny starter houses thinking they'd sell later and now they can't. I have friends who own houses who have no money to do anything else other than sit and stare at each other in their house -- or they have to put everything else on a credit card. Is that really a better financial decision than renting?
Renting can be a great way to save money while you work toward homeownership but as a long term thing especially in LI where it's so expensive its better to own.
When you are retired you will still be paying rent that's equivalent to a mortgage payment while others can live in their homes just paying taxes and homeowners or can sell the home and take the proceeds and downsize.
And you can never be thrown out of your house if you pay the mortgage. Your landlord can decide tomorrow to sell the house and throw you out. Or not renew a lease.
Why would you assume my plan is "rent always"? It isn't, and that wasn't my point. My point was that I could utterly break my back spending twice as much to own rightthisveryminute, OR, I could take the money I'm NOT spending on taxes, upkeep, etc., and build up a large down payment so that when I do buy something, it's not going to cost me as much to own it (and I'm not going to have to settle as far as where I live or the quality of my future home). I've run the numbers, and it's cheaper in the long run for me to rent for 2-3 years while saving up a 20 or 30% down payment than it would be to slap down $15K on a $350K shoebox in a town I don't like and then spend the next ten years paying PMI, plus 20 more with a monster mortgage. (And don't forget the taxes! Because I definitely want to spend $10K+ every year on top of mortgage, PMI, utilities, and upkeep costs to live in a shoebox in a town I don't like!)
And JDawg, I don't know where you were looking, but I found dozens of 2 bedroom apartments for under $2K when I looked last year, nearly all of which were nice enough to live in comfortably as a pair of young professionals. I live in one of them now. Additionally, absent a large down payment, I've yet to come across a home in an area I'd want to live in that'd cost me less than $2800 a month with taxes and PMI factored in, so my calculation is obviously different from yours.
Does owning make sense for some people? Absolutely. My point was that all of this "OMG you're flushing your money DOWN THE TOILET if you ever rent under any circumstances EVER" hysteria is unwarranted. I know it's shocking and confusing for many Long Islanders, but believe it or not, sometimes, for some people, renting actually - gasp! - makes more financial sense than buying.
Equity is the owner's value in an asset or group of assets. You can build assets without owning a house.
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