I'm a financial planner, and I can tell you buying a home in your 20s or 30s may not be the great investment you think (Newark: fit in, insurance)
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This. You need to weigh cost of the home vs cost to rent something close to the equivalent (unless you want to be the 35yr old living in your parents’ basement). Btw nothing wrong w. living w/ parents if no alternative, but there’s something to be said about living out on your own too.
Also if you’re going to weigh cost of home vs renting cheap apt, need to assign value to having greater space, yard, better schools etc for the home if those apply, as well as tax deduction for RE taxes (altho less of a benefit now). The article’s analysis is too bare bones and simplistic.
This, also, make sure you buy something you can afford. Dont over do your budget. You lose a lot of money selling. I don't care what anyone says. You are actually paying the real estate agent. Just because you don't see it come out of your equity doesn't mean its not actual money you are spending.
Yes, selling and buying again costs a lot of money. You have to get the house ready to sell (there's always something to do). Realtor, lawyers, and of course the NJ transfer tax. Cost of moving. Then cost of buying again. Inspections, more lawyers.
Of course the article has some truth to it. The average American makes a lot of financial decisions that aren't very smart--new cars every few years, vacations more than they can afford, general waste and over consumption just to consume. The average American has 0 retirement savings and is $300 away from complete financial disaster. If someone is buying in a market where prices are relatively flat, and they aren't putting much down on the loan--it's risky. Pure and simple. Financially smart people will run numbers and take a risk if it's a calculated risk. But the average American isn't all that smart when it comes to financial matters.
For us--in Hoboken, since that has come up a lot in this random thread---we are able to live simply and frugally here with 2 kids. Buying here when we did has been a great financial decision, with a much better outcome than renting would have gotten us. Our mortgage/tax/HOA/Insurance payment each month is far below current rental prices or even what we'd be paying in any suburb we'd care to live in. But half of that is luck. We bought at a good time. We refinanced at the absolute lowest interest rate. We haven't had to sell (yet) during an economic downtown. We've had steady raises and haven't inflated our lifestyle. We have no other debt, so we've been able to make double and triple payments for some time and we'll have it all paid off before we reach the 10 year mark. Neither of us has been laid off or suffered a major illness. It's always a combination of financial acuity and good luck.
Real estate is never a sure thing. Don't put all your eggs in one basket. Make sure you are paying the least amount of interest you can manage on your home loan, and don't neglect your retirement accounts and your non-retirement investments.
Of course the article has some truth to it. The average American makes a lot of financial decisions that aren't very smart--new cars every few years, vacations more than they can afford, general waste and over consumption just to consume. The average American has 0 retirement savings and is $300 away from complete financial disaster. If someone is buying in a market where prices are relatively flat, and they aren't putting much down on the loan--it's risky. Pure and simple. Financially smart people will run numbers and take a risk if it's a calculated risk. But the average American isn't all that smart when it comes to financial matters.
For us--in Hoboken, since that has come up a lot in this random thread---we are able to live simply and frugally here with 2 kids. Buying here when we did has been a great financial decision, with a much better outcome than renting would have gotten us. Our mortgage/tax/HOA/Insurance payment each month is far below current rental prices or even what we'd be paying in any suburb we'd care to live in. But half of that is luck. We bought at a good time. We refinanced at the absolute lowest interest rate. We haven't had to sell (yet) during an economic downtown. We've had steady raises and haven't inflated our lifestyle. We have no other debt, so we've been able to make double and triple payments for some time and we'll have it all paid off before we reach the 10 year mark. Neither of us has been laid off or suffered a major illness. It's always a combination of financial acuity and good luck.
Real estate is never a sure thing. Don't put all your eggs in one basket. Make sure you are paying the least amount of interest you can manage on your home loan, and don't neglect your retirement accounts and your non-retirement investments.
Also
Buy a house you can afford, not one that someone says you can afford.
Stop trying to live like your parents who bought their house along time ago. Your parents probably didn't live the live style they have now when they purchased their first home.
Take out a 30 year mortgage but pay it off in 15 years. It's not that hard.
No sense in arguing with an ignorant internet troll that likely has never visisted the Ironbound section of Newark.
Yes anyone that spends more than 30% of their income on housing is it very intelligent when it comes to finances. Living in the moment to live in Hoboken or JC is plain stupid. These will be the same people that reach age 60 and aren’t ready for retirement because of bad decisions they made along the way.
Is Newark an ideal place to raise a family? No of course not. But neither is Hoboken or JC. If I am 26-30 years old and had the option of a rental @ $1500-$1800 in the Ironbound or $3000 in JC or Hoboken, I’d take the Ironbound everyday. That’s an extra $18,000 per year in my pocket. That over 5 years is a down payment for a house in the burbs. What did I give up? I still can make it to NY in 20 mins, have coffee shops and restaurants all over.
And you need to just stop saying all of Newark is terrible, you sound ignorant.
its funny how you keep going back to the cost. you are freely admitting that these other places are better than newark, its just that you dont think its a wise financial move.
most of us could save more money if we leaved in less desirable places. but we dont always do what maximizes savings because we want to have a high quality of life. you can count your pennies accumulate while dodging gunfire over there in newark. when i walk my dog, i like to hear the crickets chirping not the sounds of gunshots and crying women.
I like how someone used this as a sales pitch to invest in Newark/Ironbound. Both areas suck to normal people, and hate travelling through both those areas. Personally, not a fan of Hoboken, JC or Newark but out of those only Hoboken is worth living in. You have a good chance of being robbed in Ironbound and parts of JC.
I like how someone used this as a sales pitch to invest in Newark/Ironbound. Both areas suck to normal people, and hate travelling through both those areas. Personally, not a fan of Hoboken, JC or Newark but out of those only Hoboken is worth living in. You have a good chance of being robbed in Ironbound and parts of JC.
Sounds like you just don't like cities so for someone like me, your opinions are irrelevant. I live in JC, work in Newark, I love the Ironbound, and I'd never live in Hoboken and generally have no interest in going there.
Saying you have a good chance of being robbed in JC and that's why you won't live there is like saying you have a good chance of being robbed in the Bronx so I'd never buy a place in TriBeCa. You have a good chance of being robbed on Skid Row, so I'd never buy a place in Bel Air.
So when people talk crap about Newark it is generally acceptable? When someone shares positive first hand experience about a community is an advertisement?
The Ironbound has pretty much the same crime ratios per capita as Harrison, Belleville or any neighboring town. Less than Jersey City, by far.
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