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Also not living in NNJ helps. You want a 30-40% down payment around here, you won't have a house until you're 50, unless you're a DINK family both working for Goldman-Sachs or something.
Doable? Sure, if you want to put your life on hold until you can buy a house with a very high down payment. Advisable? No. Suppose you actually have the discipline and willingness to self-sacrifice to do all that. You pay your rent in the cheapest place that you can find, don't have any kids, stick with antenna TV and buy your food at Aldi (forget about going out). 15-20 years of that and you can buy a house with a huge down payment and start living. But if you can do that, you're better off buying that house as soon as you can come up with a minimum down payment. Now you're house poor, and maybe living the very same way -- but at least you have the house.
Incorrect assumption is 15-20 years and a 50 year old start date for life. First of all 20+15=35. And 35 is an excellent time to start a family and buy a home. But it won't take 15 years at all. A disciplined program of 2 incomes, no kids, and highly limited luxuries can get the job done in 6 or 7 years easily. Which puts most people in their upper 20's to near 30. Perfect time to buy the house with a big down payment and contemplate ths kids and the dogs in a strong financial position.
Incorrect assumption is 15-20 years and a 50 year old start date for life. First of all 20+15=35.
Fifty years old would be assuming a more normal life, not a life of austerity to get a low mortgage payment.
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And 35 is an excellent time to start a family and buy a home.
It's a terrible time to start a family. Far too late. Even ignoring the biological issues with older parents, they'd be in their mid-50s by the time their oldest child left college (this being NNJ I assume child will go to college).
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But it won't take 15 years at all. A disciplined program of 2 incomes, no kids, and highly limited luxuries can get the job done in 6 or 7 years easily.
Back to the 2 Goldman-Sachs incomes.
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Which puts most people in their upper 20's to near 30. Perfect time to buy the house with a big down payment and contemplate ths kids and the dogs in a strong financial position.
You haven't handled the other horn of the dilemma. If you're going for the austerity plan, why not buy the house right up front?
I bought my first home in 1980 putting 50 percent down when I was thirty. Two salaries, work additional hours and don't **** away what comes in on vacations, expensive cars and every toy that hits the market.. While it was a 70k home at the timer, the mortgage rate was around 12 percent. I made multiple payments and paid it off in slightly over 14 years.
I bought my first home in 1980 putting 50 percent down when I was thirty. Two salaries, work additional hours and don't **** away what comes in on vacations, expensive cars and every toy that hits the market.. While it was a 70k home at the timer, the mortgage rate was around 12 percent. I made multiple payments and paid it off in slightly over 14 years.
There is a lot to be said hard work and financial discipline, two necessary but unfortunately no longer sufficient factors in buying a starter home. These days, college kids graduate with a much heavier debt load than prior generations, while not earning substantially more income. In other words, tuition cost has risen much much faster than income. I would guess real estate prices have also risen much more than income.
Using your 1980 example.
Housing cost: $70k
Rutgers one year tuition+room/board: $6k
Entry level pay for college grad: $18k
2013:
That same house: $350k
Rutgers one year tuition+room/board: $25k
Entry level pay for college grad: $45k
Some of numbers here are my guess-timates, so I welcome corrections. That notwithstanding, the point is still valid: which is to say, holding behavior constant, it is far more difficult for young ppl to buy homes than ever before. The great massacre of the middle class is very real.
I bought my first home in 1980 putting 50 percent down when I was thirty. Two salaries, work additional hours and don't **** away what comes in on vacations, expensive cars and every toy that hits the market.. While it was a 70k home at the timer, the mortgage rate was around 12 percent. I made multiple payments and paid it off in slightly over 14 years.
$35,000 in 1980 is about $100,000 now. How many decent $200,000 homes do you see?
Wait for Obama to bomb Syria and for Iran to retaliate. The stock market will drop and housing prices will fall. Be patient and wait a few more weeks for the $h!t to hit the fan. Will be a good buying time while the Middle East is in turmoil and we await Iran's surrogates to attack us state side
Fifty years old would be assuming a more normal life, not a life of austerity to get a low mortgage payment.
Normal for an undisciplined, unfocused, and immature person. Most people are not like that. Most people could achieve the goal I mention in 6 or 7 years.
It's a terrible time to start a family. Far too late. Even ignoring the biological issues with older parents, they'd be in their mid-50s by the time their oldest child left college (this being NNJ I assume child will go to college).
Mid 50's is not old anymore. Not for anyone who takes care of themselves and does not smoke or drink to excess.
Back to the 2 Goldman-Sachs incomes.
Rubbish. 2 normal incomes of $40,000 to $80,000 will do just fine.
You haven't handled the other horn of the dilemma. If you're going for the austerity plan, why not buy the house right up front?
It's not an austerity plan. It's a focused plan to achieve a goal: wealth and homeownership without undue strain and without victimizing eveyone around you. Furthermore, living a focused and disciplined life is not work. It's fun and makes you feel fantastic. Achievement and accomplishment are ends in themselves. The hard work undertaken to reach the goal is fun even before realizing the goal, which becomes icing on the cake.
You know, you have a negative, even religious, view of man. You need to do something about that.
$35,000 in 1980 is about $100,000 now. How many decent $200,000 homes do you see?
Number one, there are plenty of decent $200,000 homes. They are starter homes, but they are out there. Furthermore, my target couple would save $25,000-$40,000 a year out of their $80,000 to $160,000 combined incomes. So they would have $175,000-$280,000 to put down. That would translate using a 40% down payment, to a home costing $437,500 to $700,000. More than enough. If they wanted to put down 50%, then the house would be $350,000 to $560,000. Again, more than enough.
And even if you want to go max negative on the ability to find two $40,000 jobs, which would be trivial for any decent smart kids, I can even knock it down to two paltry $30,000 incomes, totalling $60,000, and saving only $15,000 per year combined. Yielding $105,000 down and a $262,500 home with 40% down. So yes, even two miserables working in Shop-Rite in the dairy department can take part in the American Dream.
All it takes is a decision, and keeping one's eye on the prize. And by the way, getting together to meet a goal like this is great for a marriage with both individuals on the same page and taking the same train.
Purposely choosing to be broke in the quest for a greater good is hugely rewarding. Following this path will lead to actual home ownership, instead of effectively renting a house from a bank. And paying off the house before the age of 40 is quite realistic and is part 2 of this plan. Yielding a much more stress free financial life and the prospect of a decent retirement.
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