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How did you afford your first house?
To put it in perspective, my father bought his house in the early 80’s, for 80. He was making $30,000/year.
I’m making $70,000 a year, and its hard to find a house for under $400,000 in the New York/New Jersey area.
How were you able to afford your first house? They say prices are “low” now, but it seems that prices are going higher, and paychecks are not advancing at the same rate.
Were you diligent about saving? Did you get your parents or a relative to help out? Are you making a lot more than me? Are you still renting?
If there’s a rental (i.e. it’s a two family house), it could be much easier.
If you are talking about buying a house in the usual, honest, kosher $ way,,,, I have NO IDEA how folks do it! WHere I live, a flat goes for $400,000 and a detached NICE one about $880,000. Now banks are demanding a 25% downpayment. So..do the math and see if you can come up with any ideas….I have none!
Step 1: File for HUD when 16.
Step 2: Earn no money so that you qualify
Step 3: Wait until your application is accepted
Step 4: Find a house
The first thing you need to do is build good credit. That means don’t have a lot of credit cards just one or two and pay your bills on time. Don’t fall for the store gimmicks with the 15% off when you sign up. Mortgage lenders do NOT want you to have 15 credit cards. Yes department store cards are considered credit cards. So stick to the minimum.
#2. Pay your parking tickets on time. That will come up when you are being researched for a loan. If you have outstanding parking tickets or other DMV issues you will NOT get the loan.
The next thing is to save as much as you can and then do not go overboard. Look within your budget even though you would love to do more. If you can’t afford a house you might be able to afford a co-op or condo that will build equity. That might be a stepping stone for you. You might want a one family but that might not be feasible for your budget and an income property might be the way to go so what you want versus what you need is something you should figure out with a financial advisor.
In addition be realistic about what you can live with and what you really have to do. Remodeling is not only very expensive it is draining. It is never what the estimate or contract states. You will always want to do more and you have to figure in hidden and unexpected costs. So even though you hate the bathroom or kitchen as long as it is functional stick with it if remodeling does not fit into the budget for now. Use your own resources to make it feel more like home. Paint it yourself if you can’t stand the color. Wait a year or two to recover some financing before redoing the kitchen. Be creative with new towels, curtains, etc to camouflage what you don’t like. The space and location is more important than the look. Look at the bones of the house rather than the decor. You will be surprised how much you can do on your own. I learned to wallpaper all by myself in one of my apartments.
You can get a great deal on something ugly but something that has great bones. My first house was considered the “haunted house” on the block. It was empty for a while, the paint was peeling off on the inside, the garage was falling apart. No one wanted it, it was being sold by the court, etc. What I saw was a 40×100 lot in Flatbush. A completely detached house with a private driveway and a 3 bedroom with an attic which could be a 4th bedroom. My mom a”h told me I would be sorry if I bought it. I was never sorry and SHE was so proud of my house she told everyone they should be as smart as me.
Was it the perfect house? My dream house? Exactly what I wanted? No, of course not. But it was a great first house for my family and gave us room to grow. We lived there for ten years and it tripled in value. Which gave us the base we needed for our current house.
You are all incorrect!
First of all yes it is very difficult yo purchase a home in the NY erea,to say if all your $ is kosher its not possible, without the help of family that’s also not true.I just bought a home bet me amd my wife we have over a 150k sallary bef taxes!! After taxes not left with must. All of you out there should know that if you are making under 52k a year you could get a sick amout of $ back from the gov. A friend od mine got back about $50k. The next issue is its 100% not true that banks require 25% down. You could put 10% DOWN if you have enough income to show however you would need to pay PMI. Good luck its not easy I didn’t move in yet I’m already choking
Option B: (If you live in a place where the “besserer mentchen” don’t seek out gov’t programs)
1. Get married to someone willing to work a full-time job also.
The rest of the country is living on dual incomes, that’s why it’s harder to compete on a single income. Even if your salary is above average, it is most likely less than twice the average.
How to afford a house? Simple. Go around the board a few times, collect $200…
I bough a haunted house also .It is much cheaper . also i bought a two family and rented it out for years to help pay the mortgage. now my kids have a bit more space and we rent out half a floor to a chosson and kalla so thta also helps. be honest and g-d helps. My wife and i got married without a dollar to our name. we are still far from comfrotable but g-d is lways there just when i feel chocked.
I bought my house for about $450 and made around $70K at the time.
1) NO Credit Cards!!!
2) All extra money you earn, put it into savings. Don’t bother buying expensive suits or hats. Put all extra money in savings.
3) Cut down on all your bills, as much as possible. Hence, I got rid of cable.
4) You will need to save for a few years. You should have enough for 20% AND closing fees which can range from 10-20K. You could probably put down less for a down payment, but pay PMI. Speak with a lender.
5) Shop around for the BEST rate, no matter if your friend does mortgages too. Be educated.
6) Do NOT move to Brooklyn or any densely related areas because the housing prices are high. Look for frum neighborhoods where you can get relatively cheap houses, like Monsey.
7) When you are ready to buy a house, increase your allowances on your W4 to receive more money back in your paycheck. I increased mine to 12. The end result is you will be receiving a less of refund at the end of the year. But who cares? You need money NOW.
8) Learn to be handy. Do not call an electrician to scrrew in a light-bulb or change an outlet. Home Depot sells great books that teaches you how to do it yourself. Yes, something you need help, but there are a lot of things you can do yourself.
Good luck and have fun!
One thing I can tell you that too many young people got caught up in. If you play games or find something that is too good to be true, it will come back to haunt you. Stay on the straight and narrow, go by the book. It will take longer to get where you are going but you will always be on solid footing.
Daniel, the spirits don’t infringe on your privacy?
Keep in mind that many financial advisers recommend renting over ownership nowadays.
aries, I love your “haunted house” story (and all your others as well. I find your posts very interesting and informative).
aries, if you were starting out now, where and for what (what kind) would you be looking for a house? These days, renovating a “haunted house”, just enough to make it livable, can cost a hundred thou easily and you never know what Tzaros you’re getting into once you start renovations.
My husband and I worked very hard for the first few years we were married, didn’t spend on many extras and lived in a small rented apartment with 3 kids, and put away as much as we could. We didn’t get help from either of our parents, but bought a house “with lots of potential”.
Gotta think ahead and don’t spend on silly things.
aries, you REALLY are smart! That whole long shpiel up there was like so well written, I felt I was reading a first time home buyers column in Chatelaine Magazine or something! I learned a lot.
Move
I don’t know where you people live but in my neighborhood, apartments go for about $545,000 and houses for about avg. $1.2 mil. It is basically impossible to buy a house as a young couple and even later on it is very hard.
Dial back your lifestyle as much as you can. Every dollar you don’t spend today you can put to your house.
Choose where you live with care. If Boro Park is very expensive don’t live there, think about somewhere cheaper (Though most of greater NY is pretty expensive). For $200,000 you will not be able to get much of anything in New York, but you probably can get a great house in Say Pittsburg or St Louis.
Also get out of debt, drive a used car and generally live like there is no such thing as a bank loan!
Boro Park Girl, so would you rather wait forever to buy the 1.2 mil house in BP, or perhaps consider a 500,000 house in Kensington or even parts of Flatbush?
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