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If you only have 3500 in savings in total I would be worried about the potential items breaking in the house and not being able to afford repairing them. Example - AC, heat, water heater, etc.
At his income level the mortgage interest deduction is not much of a factor.
As a renter he will have basically no upkeep or maintenance to worry about or pay for.
You should not consider a hypothetical Ms. Right in the decision to purchase real estate.
It is certainly not a no-brainer.
It may not be much of a factor but even if he saves a hundred bucks a month while building equity it makes more sense than renting. Speaking of not much of a factor, that would be upkeep and maintenance on a townhouse.
If you only have 3500 in savings in total I would be worried about the potential items breaking in the house and not being able to afford repairing them. Example - AC, heat, water heater, etc.
Agreed.
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Thank you all for the input. I haven't actually handed over the earnest money yet; my realtor actually just called me to say that I need to hurry up with that and find an attorney to hold it by tomorrow to stay within the contract so that's another $1000 up front. I hate that I keep getting so hot and cold about it. I wish I could just see a clear and obvious decision and stick with it!
Thank you all for the input. I haven't actually handed over the earnest money yet; my realtor actually just called me to say that I need to hurry up with that and find an attorney to hold it by tomorrow to stay within the contract so that's another $1000 up front. I hate that I keep getting so hot and cold about it. I wish I could just see a clear and obvious decision and stick with it!
Good luck, whatever you decide.
I will say that I don't think anyone should buy property unless they really have a desire or need to own property.
If you have done fine renting, ask yourself why you are buying. Is it just because your parents and others tell you that you should? We heard the "low interest rates" thing for 2 years while we shopped for houses. Rates were still very good when we finally put in an offer.
Interest rates go up and they go down and that's just sorta the way of the world. Yanno?
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I have wanted to own a house for a long time. I've always followed real estate, even as a kid. I watch the shows about real estate (not house-hunters which is fake, but the more realistic ones like property virgins, my first home, my first place, etc on TLC and Discovery Channel). That's the thing; I wonder if I'm just so excited about the idea of buying a house now that I may be able to that I'm rushing it.
In short; I definitely look forward to homeownership; I'm just not sure if now is the right time.
My parents and some close friends I've told about this have all said it's "a no-brainer" and at times, I agree with them and think "this is a great thing for me". And then other times I think "this is insane, I'm not ready for this much of a commitment yet".
I hate that I keep getting so hot and cold about it. I wish I could just see a clear and obvious decision and stick with it!
I think these feelings are really quite common. Buying your own home is a big decision, it is a big commitment and you obviously realize this and don't take it lightly. That's good, but it also means you have conflicting feelings. It may help to look at this as a commitment for the next 5-10 years - this probably will not be your home for the rest of your life. It sounds like you have thought about this a lot and have your financial life in order and know what you need to do to make this work. It sounds like the townhome is in a great location where you could either sell it or rent out the entire home when your life takes you in another direction. If you wait until the perfect time (whatever that means) to buy a home, that time may never come because there is always a certain element of risk when taking a big step like this. Of course, there are better times than others to buy a home, but it sounds to me like you have a solid approach for figuring this out. Unfortunately, life doesn't always hand out an obvious answer and you just make the best decision you can.
Interest rates of course will go up and you will kick yourself for not taking advantage of these low rates now. Those of us who have been around and buying real estate for decades can't remember such low rates. I have rental property which is keeping me in fine style in my retirement. Only wish I had more but at this stage of the game it is not worth the hassle.
First off, you are ABSOLUTELY asking the right questions and you are looking at this the right way. Here's my two cents. :-)
Interest rates are extremely affordable right now; and, you have the opportunity to build for yourself equity that will come in handy when you want to move -- or, you could end up holding this property for rental income.
One thing to consider is whether you are handy (or can learn to be handy) and could perform minor repairs yourself, or if you think you'll need to hire someone when things go wrong. (And they will!) If you can, or if you can make this a learning opportunity, perhaps with your dad's help, I'd feel better about your prospects.
The roommate idea is a must-do in this situation and a chance to essentially have someone else help you build your ownership in the property. Great plan there.
Besides the $3,500 in savings, do you (a) have an emergency fund in place, and (b) are you contributing to a 401(k) or 403(b) savings account at work at the level needed for your employer to provide a retirement savings contribution? I don't think either is a deal-killer for not doing the house; but, I would feel better if you did have these. (If your folks were inclined to try to help you with the house, you might suggest that they purchase US Treasury I Bonds in your name instead -- it makes a great emergency fund option, indexed for inflation, that you can touch after the first year. And if you aren't saving for retirement, note that delaying to your mid-30s, like many of us did, could halve the savings you have in retirement.)
On net, I think you'll do fine with the townhouse. The price is low, rates are low, and Carrboro is very much in-demand -- you should always be able to rent or sell a property like this. Plus, you've got your dad close at hand and in town, which could be a big help.
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