Now that I've got a job should I buy a house?

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RetroGamer87
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10 Dec 2015, 3:25 am

For the past few weeks I've been needing to move. I've had repeated robberies. I suspect they were all by the same guy. He waits a few months for me to buy my stuff back and then comes again. He knows were I live. I need to move somewhere he can't find me.

For the past few weeks I've been trying to come up with a plan, I say trying because I haven't come up with anything concrete, I can't make up my mind. Last time it took me a year to find a house, now I have to do it in a few weeks before my lease expires. I don't want to renew.

One of the options I've been considering is buying a house. The only reason I rented this crappy apartment is because at the time I was unemployed and it was the best I could afford.

Now I told some of the women at work and they got very enthusiastic about finding me another apartment to rent. They looked for places and dragged me to an apartment to inspect. They couldn't wait for me to fill out the application form.

I don't want to disappoint them but I'm not sure that I want to apply for it. The good thing about it is that it's in the city (the outermost part of the city but that's still better than the suburbs). That's the only good thing about it.

It's less than half the size of my current apartment. I think the whole thing is about the size of my current bedroom. The bedroom is this city apartment is so small I actually have doubts that my bed could fit in it. The living room is certainly too small for my living room furniture. It's the size of a studio apartment except that it's divided into several very small rooms. Also this city apartment is very old and worn out looking. It overlooks a garden full of brown grass and dead bushes. It's on the ground floor so I think it could be broken into easily.

Now as I said, I was thinking of buying a place. This city apartment has higher rent than my comparatively spacious suburban apartment. If I was paying that rent, saving up the 20 or 30 grand needed for a down-payment would be virtually impossible. Most of my money would go on paying rent for an apartment I don't even like. The only way I could save money while renting that place would be to live like a monk and take a vow of poverty.

It's difficult to save for a down-payment while paying rent. Some of the homeowners I know waited for their parents to die so they could inherit the down-payment (my parents are dirt poor). My cousin and his wife say they're having a hard time saving for a down-payment while paying rent.

My grandfather has spent the last year trying to convince me that I should just buy a house. Before I said it was too expensive. He recently found a good argument when he said 20 years from now, my rent would be triple but my mortgage payments would be the same price. In that case I don't want to be renting 20 years from now.

I got really depressed today by this guy who sits across from me at work. He's in my peer group but he's much, much smarter than me. He helps me when I get confused and helps me cleans up my stupid mistakes. He gets a frustrated with me because I take up his time with my foolish questions, several times per day. To him it must be like explaining the obvious.

He is four years younger than me. He bought a house about six months ago. Now these two women were talking excitedly about the apartment they're trying to get me into. The smart guy overheard and said "Yes but he's only renting".

This really hit me. He's right. He bought a house and he's younger than me. The manager's assistant bought an investment property and she's also younger than me (she wisely decided to continue living with her parents and how she watches the rent roll in).

If it hadn't been for my foolish spending in the past few years, I would have a down-payment on a house too. I bought so many things and they all got stolen. I have nothing to show for the tens of thousands I spent on stuff. I liked that stuff but I can never but it back again. It was irresponsible for me to buy it the first time, therefor I shouldn't buy it a second time. I think I must be doomed to fail at life because I haven't been able to cope with delayed gratification. Even now I'm tempted to buy the same stuff again. I'm saddened that I will never own it again.

I'm tempted to move in with my mother, grandparents or one of several friends. That way I can save for a down-payment in a couple of years and that smart guy won't think I'm such a fool.

Except that after I buy a house I certainly won't tell him because I don't want him to think I'm copying him (in a way I am copying him, I don't want him to know that). If I don't do what he did, I'm a fool, if I do what he did, it means I'm too foolish to think for myself because I copied him. Maybe it's pointless trying to achieve something if I can't tell people about it afterwards.

Our project runs for two more years and after that there's a chance the company will reassign us to different departments so maybe he won't have to know I bought a house (then again there's a very good chance he'll be my supervisor on the next project, assuming I haven't been fired for under-performance by that time)).

Maybe trying to quash my own self-loathing or keep up with the joneses (or my colleagues) aren't sensible reasons to buy a house. Maybe this is no different than that time I was obsessed with buying a particular laptop (now stolen) or other items I get obsessed with buying, were buying the item is actually more important to me than owning it (don't people get some dopamine release from buying stuff?) Maybe buying a house is just my next senseless obsession or my attempt to keep up with my peers.

But on the other hand, maybe it's a sensible thing to do that will save me money in the long run. I worry what would happen if I got fired for under-performance. I guess the bank would default on my loan and I would lose all the money I already paid into it. Since I wouldn't get a good reference from work I'd probably never work again. I only got this job through a complete fluke.

There are some nicer apartments and also town houses in the outer suburbs. It would be possible for me to rent one of those and live with a reasonable degree of comfort, however, while doing so I would be unable to save for a down-payment on a house. If I move into another rental place the move will have to be permanent – I would never be a homeowner.

So should I buy a house or be content to be a lifelong renter? Is my desire to buy a house a reasonable, sensible thing to do or just another obsession and a misguided attempt to keep up with my peers?


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izzeme
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10 Dec 2015, 3:29 am

If the job is steady, buying a house is a good option.

Don't feel bad about deciding against the one your collegues recommended you though; they got enthousiastic, you didn't ask them to drag you around.
Just thank them for their effort and inform them that you will not take the appartment they showed you, no harm done to anyone.



RetroGamer87
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10 Dec 2015, 4:46 am

^ Thanks for your answer.

I talked to a friend on the phone about it. I told him my fears of how, in 20 years, my rent might double or triple, while mortgage payments would stay the same. I was worried that if my rent tripled I would no longer be able to afford it and I had to get out of renting before all rental properties became affordable to me.

He said that in 20 years my rent might triple and my wage might also triple. I realized then that it would only be inflation and that my rent would effectively stay the same.

I felt relieved and thought maybe I could just rent a large place in the suburbs for the rest of my life and live comfortable (not that urban broom-closet). Maybe I could just annoy what smart guy said and try to overcome my envy of him and of the general human populace. Maybe cognitive therapy would be a cheaper way to deal with my feelings of inadequacy rather than buying a house.

But then my friend said that, under the right market conditions, the rent in Adelaide could easily go up faster than inflation. In other words, my wage could double while my rent quadruples.

This got me back into the same panic again and wondering if my grandparents will let me live in their guest bedroom for a year or two.


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izzeme
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10 Dec 2015, 6:02 am

The rent might also increase slower than inflation...

There is no telling what it will do, but rent payed is money lost, if you buy, you always have the value of the house as "backup money".

If you can afford the mortgage payments, i think that buying is recommended over rent, even though it means that repairs and maintenance become your own responsibility as well (if you rent, repairs should be taken care of by the corporation)



SocOfAutism
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10 Dec 2015, 9:52 am

My husband and I bought our first house, which we live in, in 2008. We rushed into it. In hindsight, there are some things we wish we had done differently. IF you're going to buy, this is what I think you should consider/do:

-Save up the 20% down payment by putting an imaginary mortgage payment into a savings account. If you can't comfortably live without the mortgage payment amount, you have no business buying. We could have afforded a better house if we had tried out doing this, but we didn't have the patience.

-Pay close attention to the neighborhood, traffic, and immediate neighbors of any house you might buy. The people around you might drive you crazy. They might have unwanted parades next to your house (all of this happens to us).

-Buy a house that is move in ready. You will never get around to fixing anything except inside paint.

-Buy a house with a flat lawn where the grass is growing properly. YOU will be mowing it. If you have a dog, either get one with a good fence, or be prepared to put one in.

-It sounds like you're single. If so, buy a house with room to grow, but be prepared to sell it if your future partner doesn't want it. A house is not a person, so don't buy it thinking you'll definitely keep it forever. It's replaceable.

-Don't have a fixed thing that you HAVE to have. For example, we were set on having a basement man cave, which we no longer even use. We should have also considered houses with attics, garages, etc. We made our search criteria too narrow.

-Remember your life will change, so don't discount things you don't think you'll want or need now. We didn't realize we would have dogs or a son and now we're having to put in a back fence. We didn't even look at properties that had more than we thought we'd want.



CaitlynConner
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10 Dec 2015, 11:42 am

Do you want to be a homeowner right now? It doesn't really sound like it, as buying wasn't on your radar until a colleague suggested it and others got excited about the idea.



GiantHockeyFan
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10 Dec 2015, 12:35 pm

If I could turn back the clock, I would have bought a (ridiculously overpriced) condo as opposed to renting. That is why my Fiancee is in SO much better financial shape than me. Sure they are expensive but you could sell it for MORE than you bought it for! Your grandfather is right about the mortgage payments generally not going up nearly as fast as rent: My rent in a crappy apartment went from $790 to $855 in less than three years. I've got sweet F all to show for my years of renting.

Of course, NOBODY explains this to youth in general so like everyone else I had to figure it out the hard way. I have also noticed that the Canadian and local economy sucks right now so it is becoming a good time to buy: houses are ridiculously overpriced but they are not selling at all in my neighbourhood. Once they get a clue and drop the price back to earth, we are going to buy. I originally planned to wait for the "right time" but the right time was 5 years ago. There is a reason why EVERYONE I know who rents is not only poor but will remain poor.



RetroGamer87
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10 Dec 2015, 5:10 pm

I have decided not to rush because Australia has inflated housing prices at the moment. I will rent. I will wait patiently for the market to crash. The prices will lower. The landlord will be keen to sell. I will buy the house I I renting from him.

To help me save I may sublet.


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Scorpius14
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10 Dec 2015, 5:53 pm

I will be putting myself onto the housing waiting list once I get a job that is earning minimum wage and working at least 40 hours per week, but I won't be putting a mortgage on a house until I have savings up to about £20k ($30k) and prices around my area cost on average £200-250k ($300-380k) however some banks offer generous mortgages like 10-15% upfront fees, i'm not sure how it works but I guess its like if it is a total of £200k i might be paying about £500 per month or something which is alot considering minimum wage 40 hrs a week is £1000 per month. I might have to consider relocating somewhere.

Realistically though, I don't have a job, and probably never will get a paid job let alone 40 hours per week.

So good bye dreams of a house, independent living, my own home improvements, change of scenery, to get a new tv, ps4/xbox one, won't be able to have any of that. Doomed to be living with parents all my life.



CaitlynConner
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10 Dec 2015, 8:11 pm

Scorpius14 wrote:
I will be putting myself onto the housing waiting list once I get a job that is earning minimum wage and working at least 40 hours per week, but I won't be putting a mortgage on a house until I have savings up to about £20k ($30k) and prices around my area cost on average £200-250k ($300-380k) however some banks offer generous mortgages like 10-15% upfront fees, i'm not sure how it works but I guess its like if it is a total of £200k i might be paying about £500 per month or something which is alot considering minimum wage 40 hrs a week is £1000 per month. I might have to consider relocating somewhere.

Realistically though, I don't have a job, and probably never will get a paid job let alone 40 hours per week.

So good bye dreams of a house, independent living, my own home improvements, change of scenery, to get a new tv, ps4/xbox one, won't be able to have any of that. Doomed to be living with parents all my life.


Is there a disability office that can you get job training or job finding assistance from? Or, if you're unable to work, to get disability from the government?

Maybe you'll never own a house but it's definitely within the realm of possibility to move out of your parents place and into a flat/shared flat/supported housing and buy the gaming console of your dreams!



RetroGamer87
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11 Dec 2015, 3:15 am

SocOfAutism wrote:
-Save up the 20% down payment by putting an imaginary mortgage payment into a savings account. If you can't comfortably live without the mortgage payment amount, you have no business buying.
It's not quite the same because while saving for a house I'll probably have to pay rent.

While paying off a mortgage I would probably be living in the place so I probably wouldn't have to pay both rent and a mortgage at the same time.


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RetroGamer87
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11 Dec 2015, 3:33 am

CaitlynConner wrote:
Do you want to be a homeowner right now? It doesn't really sound like it, as buying wasn't on your radar until a colleague suggested it and others got excited about the idea.
You're right, I think I will rent for now. I know I shouldn't buy a house just to spite my rival.


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Scorpius14
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11 Dec 2015, 6:13 am

CaitlynConner wrote:
Is there a disability office that can you get job training or job finding assistance from? Or, if you're unable to work, to get disability from the government?

Maybe you'll never own a house but it's definitely within the realm of possibility to move out of your parents place and into a flat/shared flat/supported housing and buy the gaming console of your dreams!


There used to be disability offices, but the government is making welfare cuts, at the moment disability benefits/welfare benefits cost the government in excess of £40bn and the government is proposing to cut it by at least 30% down to £28bn. This has caused many offices that cater for disabled people to close down, i am currently trying to claim the disability allowance that is available in my country, for as little as £200 a month which is not enough to live on really, renting or mortgage will be impossible at this rate.

Though my grandparents are paying for all my food, electrics and rent, don't know how long its going to last though.



kraftiekortie
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11 Dec 2015, 8:31 am

Do they have "rent to buy" in Australia?

There are some people in the US who are able to use the rent money they paid towards the downpayment on a home owned by the landlord.

In a sense, it's like putting money in escrow.

You should, perhaps, speak to a financial advisor, and see if that's feasible for you.



BeaArthur
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11 Dec 2015, 7:46 pm

RetroGamer, I have something to say which may sound unsupportive, but I hope you'll think it over anyway. As I read your lists of pro's and con's, I got the impression that you don't have a very good head for business, as well as using a lot of reasons that are really more emotional than they are financial. You spent on purchases you recognize were too expensive, and yet didn't purchase renter's insurance which would have paid to replace them. You have been burglarized, but apparently did not take the right steps to prevent another break-in. You were comparing one too-small apartment vs. buying a house, as though that were the only two options.

If I'm right, then learning who you are may mean recognizing that you don't have a good head for business.

I think postponing the decision to buy is the right one for now. In the meantime, you can attend some classes on buying a home, financing a home purchase, how to save for a down payment, etc. I also liked kraftiekortie's suggestion about speaking to a financial advisor.

This might not be true where you live, but in my US city there are programs to help first-time home buyers, and there are also programs to help lower-income people get into buying a house. These are not give-away programs, the person still has to meet various criteria and pay their mortgage payments on time, but they can be a good way to go if you are not financially savvy.

I hope I have not offended you, as that was not my intent. Buying a house is a very complicated process and the stress involved in it can sometimes overwhelm people, so the more ready you feel, the better.


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