Recent grads, gross income 70k, seeking housing advice

[vinnytc]

Hello from Gainesville, FL.

My girlfriend (24) and I (25) currently live with roommates but want to get our own place. She has been teaching for 2 years, and I have a stable job with the university. Our combined gross income is $70,000. We live frugally, cook a lot, don't own expensive things, and have good cars, but are just starting to research what we want to do in terms of housing and saving.

Debt and loans are paid off + good credit.
Savings currently $10,000.
We both put away 10% toward retirement.
No significant investments or dividends.

The cost of living here is not high as long as you are not walking distance from the university. We are not sure whether to rent starting this summer or look into buying a house, if that's even possible. Obviously we don't have enough money to make a 20% down payment + closing costs on a ~$175-200k house, which is the range we're looking at, so if we purchased I assume we'd need PMI. The problem is that renting here is expensive, and the home rental market is very limited.

We're planning on having our savings closer to $20,000 by this summer. The last thing: we might move in 4-5 years, as my job's ceiling is limited. Thanks for any advice.

[wrk4lvg]

Hello from Gainesville, FL.

My girlfriend (24) and I (25) currently live with roommates but want to get our own place. She has been teaching for 2 years, and I have a stable job with the university. Our combined gross income is $70,000. We live frugally, cook a lot, don't own expensive things, and have good cars, but are just starting to research what we want to do in terms of housing and saving.

Debt and loans are paid off + good credit.
Savings currently $10,000.
We both put away 10% toward retirement.
No significant investments or dividends.

The cost of living here is not high as long as you are not walking distance from the university. We are not sure whether to rent starting this summer or look into buying a house, if that's even possible. Obviously we don't have enough money to make a 20% down payment + closing costs on a ~$175-200k house, which is the range we're looking at, so if we purchased I assume we'd need PMI. The problem is that renting here is expensive, and the home rental market is very limited.

We're planning on having our savings closer to $20,000 by this summer. The last thing: we might move in 4-5 years, as my job's ceiling is limited. Thanks for any advice.

As a native Floridian, I'd say no to buying the house then if you are fairly certain you will be moving. The market there, even around the universities, is in bad shape.

That aside, the pros will be in shortly to advise you on the other items.

[bjl584]

If you are fairly certain that you are moving, then I would keep renting and saving money. In 4 to 5 years, you should easily have at least a 20% downpayment plus an ample emergency fund in place. Then you will be financially ready to buy a house.

[snshijuptr]

For anyone I would say do not buy a house if you are moving in < 5 years. It may be frustrating, but continue renting (and living with roommates if you can handle it) and when your job ends, you'll have plenty for a down payment.

As an aside, you should also setup a separate 6 month Emergency Fund before you move. Lenders like to see that you have money set aside for something other than the down payment.

[littleroc02us]

Can you imagine if you save $20k every year for 5 years, then you move and you have 100k to put as a down payment on the house. I wish I would have done that myself. Your mortgage payment would be next to nothing. Wait!!!

[mtgadvice4u]

I do agree with the other replies that buying a house and potentially moving in the next 5 years may be in issue bc you may have a problem reselling if the market continues to decline and the inventory of Short sales and foreclosures in Florida is still high. Another thought to keep in mind is if you buy something now at a very good price, in five years you may be able to use it as a rental property and generate some rental income while having your tenant basically paying your mortgage. Alot of couples I know did something similar to this. Purchased a condo or townhome as a starter home then 3-5 years later wanted to buy a home and ended up renting their condo.

Just another perspective.

[jpg7n16]

Obviously we don't have enough money to make a 20% down payment + closing costs on a ~$175-200k house

You've said it yourself, you don't have enough to make a legit downpayment on a home. That means you're not financially ready to purchase a home. Owning a home is no small matter. You don't have to rush into purchasing a home just to get some space from too many roommates.

Nevermind the issues with titling the deed if you purchased. This is your girlfriend, not your wife. So things could get very dicey if things went south (God forbid). And whose name would the mortgage be in? Would you have to change beneficiaries on life insurance to make sure proceeds went to cover your share of the mortgage? Would you need to buy a separate policy to cover that risk?

If you're not married, and the mortgage is in your name, and she passes away in a car accident - her life insurance will likely pay to someone else - likely a family member. So though you got the home expecting to pay for it from your combined income, you would now be responsible for the entire balance, with no money from her to help you out. And no legal recourse to get it from her relatives - cause you're not married.

So you don't have enough to make a proper downpayment, the legal complications abound with asset ownership, you're not protected financially/legally against a break-up, and you'll be moving in the next couple of years anyways.

Those factors all seem to be pointing away from purchasing a home. So don't do it



If there are houses to buy that meet your financial limits, then there are very likely houses to rent. Apartments, condos, rental homes, duplexes. You can find them in a similar range to the monthly costs of purchasing a home. (And lease agreements are much simpler to get out of if needed.)

Since the recommendation is 28% of take home income - you're likely looking to rent at a MAX of around 1300-1500. The lower the better.

[vinnytc]

Thanks for the all the advice. Truth be told I recognized that many signs pointed to renting, but with a decision of this magnitude (and a resource such as this at my fingertips), why NOT ask, was my reasoning. We are looking to rent in the 1100-1300 range.

Thanks again for everyone's input.

[wrk4lvg]

We are looking to rent in the 1100-1300 range.

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