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Buy as early as you can, enjoy the tax write off for mortgage interest, and pay it off as fast as possible. Rinse and repeat until you are in a home you can stay through retirement with no mortgage to pay.
With foreclosures though, unless you are a contractor, don't bother (assuming they need work as most do). You will typically spend as much or more to get it back to par as just buying one already in good shape if you have to pay someone to do the work. If you try and do it yourself, and have a real job on top of it, it will steal all your free time. Better to let that cash work for you in investments or paying down the mortgage. Some people love the work of fixing up homes, most only think they will.
This is absolute crap and shows that the poster has no clue about taxation.
If you take out a 180K loan, your interest per year will be about 7K only slightly above the 5K standard deduction. Given the home price, I am going to assume that your federal tax rate is around 20%. That means your interest deduction is only worth $400 (20% of the difference of 5K and 7K).
I agree with many of the posters that if you are going to buy, make sure it is in a good area. Much better to have the worst house in a good area than a good place in a bad area. No one wants to live in a bad area and always looking to get out putting a cap on prices.
Sounds like we have a bunch of people on the CD who bought early (including myself). I will still contend that getting a SFH is a bad idea. You should be focusing on your career, education and skills not dealing with plumbing, yards, roofs and other headaches.
Again, unless you are in a position to buy and turn it into a rental if needed. I think keeping your options open is a better idea. If you are planning on staying in the same area for at least 5 years then it isn't the worst thing.
Final note, the market is VERY VERY hot right now. Just maybe you wait for prices to fall back to reality. Talk to anyone who was caught in 2008 and forced to old on until 2015 just to break even.
In any event, sounds like you have your head in the right place. Good luck
This is absolute crap and shows that the poster has no clue about taxation.
If you take out a 180K loan, your interest per year will be about 7K only slightly above the 5K standard deduction. Given the home price, I am going to assume that your federal tax rate is around 20%. That means your interest deduction is only worth $400 (20% of the difference of 5K and 7K).
While I am certainly not an accountant, you cannot quantify that statement without knowing the OP's tax and employment situation. I own two businesses, and my health insurance premium write off alone puts me over the standard deduction. Once itemized above that level, adding another $7k is certainly not only $400 in their pocket.
Yeah our tax write off disappeared after we refinanced. Rate was so low and with only a principal around $100k that the standard deduction was better. Even though we also donated thousands of dollars worth of stuff as we pared down for our cross country move.
This is absolute crap and shows that the poster has no clue about taxation.
If you take out a 180K loan, your interest per year will be about 7K only slightly above the 5K standard deduction. Given the home price, I am going to assume that your federal tax rate is around 20%. That means your interest deduction is only worth $400 (20% of the difference of 5K and 7K).
$400 saved in taxes is good, plus he may have other deductions to itemize, this one just helps.
One thing I just thought of that hasn't been mentioned a lot is home improvement and maintenance.
Are you handy, or interesting in learning how to tackle these things yourself? If you are you can save a lot of money when issues come up or if you decide to change some things. If not that is a cost you will have as an owner that you don't have as a renter. Things will break.
I'm fairly handy and do most things myself. It helps that I also enjoy working around the house. Youtube and online forums are valuable resources that previous generations didn't have. For example, my dryer stopped working at one point. I googled the problem and found out what the likely cause was on a repair forum. I bought a $20 part, and after an hours worth of work had a working dryer again. The alternative was calling someone to repair it which I imagine would have been at least $100, or buying a new dryer for hundreds.
One thing I just thought of that hasn't been mentioned a lot is home improvement and maintenance.
Are you handy, or interesting in learning how to tackle these things yourself? If you are you can save a lot of money when issues come up or if you decide to change some things. If not that is a cost you will have as an owner that you don't have as a renter. Things will break.
I'm fairly handy and do most things myself. It helps that I also enjoy working around the house. Youtube and online forums are valuable resources that previous generations didn't have. For example, my dryer stopped working at one point. I googled the problem and found out what the likely cause was on a repair forum. I bought a $20 part, and after an hours worth of work had a working dryer again. The alternative was calling someone to repair it which I imagine would have been at least $100, or buying a new dryer for hundreds.
Just something else to consider.
I am handy. I've always been the type to try and fix something before I ask for help. As a homeowner I estimate that to be an added responsibility I am willing to take. Thanks for the pointer!
This is absolute crap and shows that the poster has no clue about taxation.
If you take out a 180K loan, your interest per year will be about 7K only slightly above the 5K standard deduction. Given the home price, I am going to assume that your federal tax rate is around 20%. That means your interest deduction is only worth $400 (20% of the difference of 5K and 7K).
I agree with many of the posters that if you are going to buy, make sure it is in a good area. Much better to have the worst house in a good area than a good place in a bad area. No one wants to live in a bad area and always looking to get out putting a cap on prices.
Sounds like we have a bunch of people on the CD who bought early (including myself). I will still contend that getting a SFH is a bad idea. You should be focusing on your career, education and skills not dealing with plumbing, yards, roofs and other headaches.
Again, unless you are in a position to buy and turn it into a rental if needed. I think keeping your options open is a better idea. If you are planning on staying in the same area for at least 5 years then it isn't the worst thing.
Final note, the market is VERY VERY hot right now. Just maybe you wait for prices to fall back to reality. Talk to anyone who was caught in 2008 and forced to old on until 2015 just to break even.
In any event, sounds like you have your head in the right place. Good luck
Hi BizrulesSD, thank you for the information. I'm not too familiar with the various taxation deductions so I cannot comment on that right now. I agree that having the worst house in a good area is better than the opposite. I am not worried that if I become a home-owner my career, education or skills will be affected. My plan is to purchase the home and rent out a room or two to help cover the mortgage. In the event I have to leave the area i would try and rent the house out. If I'm unable to rent the house out I would try and sell and as long as I do not take a loss I think I'll be fine. I'd rather pay rent toward something that potentially I can own as opposed to the money just going to a landlord/owner. Thank you again for the info!
I used to live in Union County now I live and love South Florida. The taxes are very high in Union County. I remember reading that all counties in NJ are considered urban because it's so densely populated.
Springfield is a nice town as is Westfield, but that may be more expensive. Towns surrounding those towns like Clark and Cranford are nice too
But for something in your price range you might have to look in Union or Linden or Rahway.
Edison has nice areas if you are willing to go to Middlesex county.
You should also post in the NJ forum
Hello, glad you are enjoying South Florida. Yes, you are correct with all the counties in NJ being classified urban. I did post in the NJ forum as well. As you know the property taxes in NJ especially northern NJ are ridiculous but i have factored that within my budget. Thank you for your comment!
In buying a house the value is in location, location, then condition. You really need to know the neighborhoods you are considering. A great place to start is to look at school test scores. The better the test results the stronger the home market. The next factor is to consider the maintenance needs of the home you are considering. A new roof is expensive. Look for dry-rot, mold, plumbing and water (as in drainage) issues. If the neighborhood has 3 bedroom homes and what you are considering has 2 bedrooms it might not be the best choice. On the other-hand if the neighborhood is in high demand even a one-bedroom house that may need repairs could be a good choice.
My concern is how long you would live in the house. You are very young and usually young people marry and as the previous poster mentions jobs do change. Do you see yourself living in the house you would purchase more than 7 years? It takes that long, usually, to accumulate enough equity to make the purchase viable.
On the other hand mortgage interest rates are at record lows.
Hello, yes I agree location is key. I've been looking at areas where gentrification is slowly taking place and luxury apartments are being built. These are not terrible crime-ridden neighborhoods but because of a stigma attached to city, might not be looked at and explored as opposed to other areas. I know schools are important but in more urban areas I do not think they are as important as suburban neighborhoods, since most will send their kids to private school. Also, I am not looking at this house as my dream house. I want it to be a starter home where I can learn the pros/cons of home-ownership and other things. In a situation where I would ever have to leave, I think the Principle will be low-enough where i should be able to rent it out and at least break even. Thank you for your response!
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