How do I make enough money to buy a nice house within five years as a 22-year-old software engineer in the Bay Area, other than joining a pre-IPO startup and making $1 million for a down payment in an IPO?
Here is how you do it. I am going to give you a realistic answer, one that does not require you hitting the IPO lottery, moving to Oklahoma or having rich parents.Firstly, you have to have realistic expectations. 27 years old don't really buy "nice" houses, not in the most desirable place to live in the country. They buy starter homes and them move up to nice homes, or save for a bit longer before buying their first home. I bought my first home in Noe Valley when I was 33 (six years after I graduated). You can do it too, if you save diligently and are frugal.Now, cut your expenses as much as possible. Live in a room in a shared house. In San Francisco, you can do this for $1000/mo. Sell your car and ride a bike or get a Muni pass instead.You will save $5000/yr or more this way. Cook your own meals, at least during the week. You should be able to easily live on $30,000/yr.You need to save at least 25% of your gross income. It is not really that hard if you are making good money. Just live like a college student, this should be easy for you now. If you start getting used to spending money, it will be harder to cut back. In five years you will have $100k-$150k saved.Step three is to find someone else with a job to go in with you. This is probably a wife or girlfriend. Unfortunately, for those of us born without rich parents, this is the only way to afford buying your own place here. She should be a saver too and have her own $100k saved up.With $250k as down payment and a combined income in the $200k/yr range, you should be able to afford a $1M home, which is either a small home in a nice area or a larger home in a somewhat less desirable area. You will have to make a trade off between size, quality, neighborhood and commute. You do have compromise, even at this price range. I personally would recommend a place in a good neighborhood near where jobs are.I know it seems impossible now, but what is the downside? You have saved up a $1/4M? It might take an extra year or two depending on the economy and housing market, but you also might get lucky and have a big cash payment saved just in time for a downturn.
I have enough money to buy a house. So should I buy with that money or take a home loan?
Buying a house in cash or with the help of a loan have their own advantages. It totally depends on what you want. I am trying to highlight advantages of both so that you can take your own decision.Advantages of buying House in Cash:No Interest - You will not have to pay interest rate. Home loan interest rates are higher than any savings interest rate. So, unless you want to invest in equity investments, you will be better off paying for your house in full.Peace of Mind - You will worry about your home loan all the time since your house will be all paid up in cash.Advantages of buying with Home Loan:Buy bigger house - You can buy a bigger house with the help of a home loan as your budget will automatically increase with more money at your disposal. Leveraged Investment - Home loan is the best way to invest by borrowing money as home loan is the cheapest form of debt. Since, real estate prices increase over time, your Return on your Cash will be quite high with the help of home loan leverage.Tax Benefits - You can claim tax deductions under section 80 C (Principal Repayment) and under section 24 (Interest Repayment). Check this Home Loan Tax Benefit Guide to know how you can take tax benefit for home loan under various scenarios.These are the major advantages of both. Now, you can decide yourself as to what is more important to you - peace of mind of owning the house upfront or the benefits of a leveraged investment along with home loan tax benefits.
How much is enough for down payment on a house?
If my boyfriend and i save 15,000 in a year will that be enough for down payment on house 300,000-400,000? we don't want anything to big or expensive in york region ontario canada
How much money do I need to make a year to buy a 800,000 house in an affluent area?
Most lenders will ask for 20% down - that leaves a mortgage of 640,000.00. That is a jumbo mortgage and the interest rate will be about a 1/4 % more than typical conventional rates. The payment on $640,000 mortgage is about 3,100 based on an interest rate of just under 4%. Now you must add property taxes - assume there are 6,000 a year - that's another $500.00 per month. Add homeowners insurance at another $100.00per month. That totals $3,700 a month house payment. As lenders generally allow a house payment at 28% of your gross income you will need to make $135,000 per year to qualify. Your assets and liabilities may determine otherwise.
18 year old buying a house?
You should buy the house and try to put it up for rent! There are plenty of college students who are desperately in need of a place to stay during their years of study. So if you're confident that you have enough money - go for it! You may even start to learn some valuable business skills at this young age, which is a good head start in life. Good luck.
If I have $600k saved and I'm debating about buying a house for 1.2 million, would it be a smart decision if I make $200k/yr? I'm 30 years old and I want to pay-off my house in 15 years. I might get married and have 2 kids.
Andy Rachleff pretty much hammered down the numbers.. If you can live on $60k thats fine....If you are living in LA on $1200 a month for 2 .... FEAKIN CONGRATS. You must be living in the park in a pup tent and eating in soup kitchens... Your GF must be a gem to have a BF who makes $200k and doesn't spend it on her....Saving $600k on $200k gross is very commendable, Probably confirms that you live on nothing... For most without serious high level investing, it would have taken you at least 6 years to save that....Me... Keep as much of the cash as you have.... WHY A $1.2MILLION home? Why not a $1mil? or $850k? Better to find a home that suits your needs and conserve cash... $600k WELL invested should return 20% a year... Thats $120k for doing "nothing" and much better than putting it in a house that going to cost a lot. I always look at the EXPENSE of living there at 5% to 10% of purchase price for taxes, utilities, maintenance (YES they need work and its never cheap when it happens), etc. If you buy the house, its going to look strange with your "goodwill/college furniture" inside it too. Plan on $100k for furniture. Not really cheap. BTW a lot of the places I've seen in Santa Monica for $1mil (I looked a couple years back) were closer to what I consider "tear downs" than a $1million castle...My advice.... Buy a $400k house, pay cash; keep $200k cash, and that way when the boss walks in a month after you get it and says things are changing and here is your final check, you can be the only one walking out the door with a smile since you have money to live a year or more without problems. The people you work with will be looking for something high to jump off off....Save at the rate you are saving and be ready to get out at 40 and live somewhere cheaper and eliminate the stress of working......Last one... What price house would you be comfortable with? Thats one only you can answer.....Best of luckMark H
How much should I save up to buy a house?
The more you put down, the better chance you have of getting approved for a mortgage. If you can, save up 20% for the down payment -- that's $30,000.00 for a house that sells for $150,000.00. Yes, 20% is a lot, but you won't have to pay mortgage insurance and you'll probably qualify for a better interest rate. If your credit isn't so great, spend the next year or two doing everything you can to repair your credit. Make sure you pay all your bills on time and try to pay off as many credit cards/accounts as possible. Don't get rid of the cards though. One very good way to increase your credit score after you've paid a credit card completely down is to buy some things on it every month and pay the balance in full when the bill comes.
Should I save up to buy a house with cash instead of taking out a mortgage?
It really depends on your patience. You have $25,000 - $50,000 a year. I will just assume the house you would purchase is $250,000 - $500,000.Lets take $25,000 a year to purchase a $250,000 house. It would take you around 10 years to save up to buy this house. But taking a mortgage would instantly give you the cash to buy this houes. But it comes with a catch, interest. The problem with mortgage is that you pay way more than you initially borrowed. It seems like a good idea until you have to pay it back, and this will take you even longer than if you had just saved the money. Lets say you borrow $250,000 from the bank with 30% interest, that means you would pay $75,000 more than you borrowed. With $25,000 a year (assuming that this $25,000/year is a disposable income that is reserved only for paying off the house) it will take 13 years to pay this house off, 3 more years than if you had just saved and sets you back $75,000 more. Another problem with mortgage is if you don't pay, you loss your home along with all the cash you ALREADY PAID. Its better to SAVE
Should I use money to buy house cash?
First, awesome work man! Congrats on the success!I'll preface this with full disclosure. Yes, I'm a big fan of being debt free...the freedom that comes with NO MONTHLY PAYMENTS, is so insanely liberating and powerful, it changes lives. So I believe that should be the ultimate goal of everyone. The concept of "the borrower is slave to the lender" is always true, no matter who you are. It's not fun being a slave. :-)So here's my answer.1.) Make sure you are otherwise COMPLETELY debt free before you make this decision. With $700k in the bank, I would assume all other debts are paid, but I've learned not to assume anything. So make sure credit cards, student loans, car loans, and ANY other debt is completely paid off.2.) Next, set aside money for 3-6 months of living expenses in a savings account, you don't touch this unless there is an emergency. This will give you tremendous peace of mind, and confidence to tackle new adventures putting basic living needs at risk. Hard times will come, it's just a matter of time.3.) Take 15% of whatever money you have left (after completing step 2) and invest it into a Roth IRA. This will give you a HUGE jump into retirement. Continue to contribute 15% of your household income to the Roth IRA monthly.4.) NOW, after this is done. If you still have enough money left to pay for a home with cash, then yes, I would purchase the new home with cash. Again, you'll have an amazing peace of mind that everything is paid for. If your business suddenly takes a crap (this happens all the time) and you have no income, you won't need to worry about making a monthly payment.5.) If AFTER steps 1, 2, and 3, you *don't* have enough to cash off the home, then take a 15 year mortgage, put as much money down as you can, and pay that sucker off as soon as you can.This gives you several layers of security, and plan to stay successful...not to mention, tremendous peace of mind. Again, huge congrats on the success...I'm honored to be able meet you.Rock on!