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I am just starting grad school and I will make about $20,000 in the form of a Graduate Assistantship stipend (this also covers my tuition costs). I'm looking to rent in my town, which is pretty affordable -- the rental prices are about $600-$800 for a decent apartment. However I see several small homes for purchase in which the monthly cost would be even lower -- in the neighborhood of $500 per month. I'm in my late 20s and I've rented for about a decade. The idea of owning a home and building equity is really appealing. I also have a large dog, so owning my own place with a yard would be much easier. However I realize I make really low income. Is this a bad idea? My grad program will last three years. After that, working in my field, I should be making about $70,000 per year starting out.
I am just starting grad school and I will make about $20,000 in the form of a Graduate Assistantship stipend (this also covers my tuition costs). I'm looking to rent in my town, which is pretty affordable -- the rental prices are about $600-$800 for a decent apartment. However I see several small homes for purchase in which the monthly cost would be even lower -- in the neighborhood of $500 per month. I'm in my late 20s and I've rented for about a decade. The idea of owning a home and building equity is really appealing. I also have a large dog, so owning my own place with a yard would be much easier. However I realize I make really low income. Is this a bad idea? My grad program will last three years. After that, working in my field, I should be making about $70,000 per year starting out.
Are you considering the other costs per month? (insurance, utilities, property tax...all things you don't necessarily see as part of rent) as well as upkeep and repairs this place may need right away? You might not even qualify for any financing anyway. If this was me I would wait until I'd finished school and have a stable job before buying anything. A lot can change in those 3 years and you might get your best job offer elsewhere.
Also - sometimes an affordable option if you have a dog and want some autonomy is a mobile home in a park. Sometimes you can get small mobiles for a few thousand dollars cash, then you just have to pay lot rent, and whatever utilities are not included in that... usually electric.
They are usually easy to sell again too if they are still livable... especially in a college town.
I am just starting grad school and I will make about $20,000 in the form of a Graduate Assistantship stipend (this also covers my tuition costs). I'm looking to rent in my town, which is pretty affordable -- the rental prices are about $600-$800 for a decent apartment. However I see several small homes for purchase in which the monthly cost would be even lower -- in the neighborhood of $500 per month. I'm in my late 20s and I've rented for about a decade. The idea of owning a home and building equity is really appealing. I also have a large dog, so owning my own place with a yard would be much easier. However I realize I make really low income. Is this a bad idea? My grad program will last three years. After that, working in my field, I should be making about $70,000 per year starting out.
Yes you should be able to buy, around a $75K house but it depends how many other revolving debts you have per month such as car payments, credit cards or student loans. Also it depends on how much the property taxes are and how much the property insurance costs. If you can find an area where they are both low it will be that much easier.
If you live in a place where you can rent a decent apartment for $600 you should be able to find an older home in decent shape for about $50K to $75K. I think it's a great idea, find properties and go get a preapproval, then find an agent and have them show you houses in your price range.
What I don't know is if the stipend will be counted as regular income. If you don't have money saved closing costs can be high, but you can get a loan with 3 to 5% down. You can also get gift funds from your family if they can help.
Are you considering the other costs per month? (insurance, utilities, property tax...all things you don't necessarily see as part of rent) as well as upkeep and repairs this place may need right away? You might not even qualify for any financing anyway. If this was me I would wait until I'd finished school and have a stable job before buying anything. A lot can change in those 3 years and you might get your best job offer elsewhere.
Utilities are not a part of rent besides water and sometimes heat. Heat can be expensive if you live in a very cold part of the country with cold winters, but you can set the heat to 65 and use an oil filled radiator to sleep. Plus you do an inspection to make sure everything works the big things like plumbing, electric, heating and or AC and the roof. You can buy somewhere with lower property taxes and insurance. A $50K home can cost less than $500 a month including the mortgage, insurance and taxes.
Utilities are not a part of rent besides water and sometimes heat. Heat can be expensive if you live in a very cold part of the country with cold winters, but you can set the heat to 65 and use an oil filled radiator to sleep. Plus you do an inspection to make sure everything works the big things like plumbing, electric, heating and or AC and the roof. You can buy somewhere with lower property taxes and insurance. A $50K home can cost less than $500 a month including the mortgage, insurance and taxes.
Not always. I've rented places where utilities were folded into the rent. Usually SFHs or manufactured homes with less formal leases through private LLs.
There are no clear "yes" or "no" answers. First of all, check with a couple of local lenders to see if you would even qualify for a loan. If you can get financing, then you'd really need to consider the total costs of ownership, as noted previously, to see if it can work out. Just be aware that if you plan to move in three years, you're not going to build up much equity in that amount of time (your loan payments will primarily consist of interest during the first three years) and then you'll need to sell the house which will have expenses involved. Although the house may appreciate in that time, it also could go down in value or stay about the same. So, from a purely financial standpoint, it may not be your best choice.
You'll need to weigh whether having the yard and personal space is worth the trouble and costs (and time) involved. Another option may be to simply find a house to rent that allows dogs.
I'm in my late 20s and I've rented for about a decade.
The idea of owning a home and building equity is really appealing.
I also have a large dog, so owning my own place with a yard would be much easier.
How much have you saved up for the down payment & closing costs?
How much will that leave you for the reserve fund?
Quote:
I am just starting grad school and I will make about $20,000 ...
I see several small homes for purchase in which (some limited portion of the ownership costs)
(are being described as being) in the neighborhood of $500 per month.
I realize I make really low income. Is this a bad idea?
Pretty much.
Find a cheap rental -- probably a multiple share. Focus on finishing school.
If/when you graduate and get that $70,000 job... reconsider your options then.
But to buy? You'll still first need CASH saved for the down payment & closing costs & reserve fund.
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