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Young adults and mortgages


Scarlett
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I don’t think age has anything to do with qualifying for a mortgage since he is over 18. However, when we were recently going through refinancing out mortgage, two years of stable work history was required. About 14 mos ago, I changed jobs. Neither lender we worked with would consider my income since it I was less than 2 yrs in my current job. We had no problem qualifying fir the amount we needed based only on DH’s income, but your DS may have to wait a few months since he hasn’t had that job for 2 years.

With interest rates so low, buying a home now seems like it might be a good choice except in areas where home prices have been inflated due to the increase in demand.

I wouldn’t co-sign a mortgage, but if he can afford it, I don’t see any reason to discourage him from purchasing a home on his own.

Edited by City Mouse
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4 minutes ago, City Mouse said:

I don’t think age has anything to do with qualifying for a mortgage since he is over 18. However, when we were recently going through refinancing out mortgage, two years of stable work history was required. About 14 mos ago, I changed jobs. Neither lender we worked with would consider my income since it I was less than 2 yrs in my current job. We had no problem qualifying fir the amount we needed based only on DH’s income, but your DS may have to wait a few months since he hasn’t had that job for 2 years.

With interest rates so low, buying a home now seems like it might be a good choice except in areas where home prices have been inflated due to the increase in demand.

 

Yeah, I am thinking the work history might be an issue. He has been at this job for almost a year.  And before that he worked in construction for 6 months.  And before that he did 6 months at one restaurant and 10 months at another.  He has tax returns for all of that.....but they might want to see a stable job pattern.  

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13 minutes ago, Scarlett said:

There are literally zero apartments in this town that are not income based.  

I think I’m misunderstanding you — I assumed that there would be an income requirement for any apartment he might want to rent. I’m just not sure how that relates to anything I posted.

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2 minutes ago, Catwoman said:

I think I’m misunderstanding you — I assumed that there would be an income requirement for any apartment he might want to rent. I’m just not sure how that relates to anything I posted.

I mean there are no decent apartments in this town.  They are all low income. And if you make too much they won't even rent to you full price.

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2 minutes ago, Scarlett said:

I mean there are no decent apartments in this town.  They are all low income. And if you make too much they won't even rent to you full price.

Oh! Thanks! That makes sense now!

What a nuisance!!! It makes things so hard!

Are small, inexpensive houses available to buy? 

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We built a house when we got married. I was 20 and dh was 23. We still live in the same house and do not regret it. Our house payment was on par with a cheap rental (far nicer in a better area then we could have rented at). I think it is good to talk to him about what he wants to do with his life, his goals etc like you are doing. Not everyone wants to travel or move around. I can't wrap my brain around this being such a horrible decision if this is what he wants to do. I'd work with teaching him the ins and outs about ownership so he goes in with his eyes wide open.

All of that said I'd not be buying a house right now if the housing market was all crazy like it is in a lot of the country. I will encourage my young adults to stay living at home so they can get on better financial feet (you know assuming everyone still gets along and they want to stay in the area). For kids good with money and saving on their own I'd encourage them to do that (along with investing because compound interest).  For mine that has so far shown that they aren't so good with money I'd consider charging rent and then setting it aside in savings and investments for them. 

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We bought extremely young and zero regrets.  The property market sky rocketed shortly afterward.  I wouldn’t have been able to afford to stay home and homeschool if we’d done things differently.

That said maybe it would be wiser to look at buying something that would be easy to rent out if he needs to relocate at some point - that way there’s the benefit of investment without feeling too tied down.

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11 minutes ago, Catwoman said:

Oh! Thanks! That makes sense now!

What a nuisance!!! It makes things so hard!

Are small, inexpensive houses available to buy? 

I watch the local market ALL OF THE TIME.  It is just a habit I have that I can't break.  LOL  And houses here are flying off the shelf.  There are a few but not many.

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33 minutes ago, Scarlett said:

And part of this discussion about houses has come about because he came to me and told me he was going to take $5000 of his savings and buy some stock on Robinhood (something similar to that Gamestock thing that went on).  So we strongly discouraged that and told him he would be MUCH smart to put his money in to a home. 

We aren't pushing him to buy a house but we are showing him what he is capable of doing. But then I got to thinking he might not qualify.  But I think he might.  I guess he just needs to go find out.  Even if he doesn't right now he will at least know what he needs to work on.

Omg.   🤦🏻‍♀️    Yes, I think I'd be talking to him about alternatives, as well.  

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3 minutes ago, Scarlett said:

I watch the local market ALL OF THE TIME.  It is just a habit I have that I can't break.  LOL  And houses here are flying off the shelf.  There are a few but not many.

If he buys a house, would he be amenable to having a roommate who could pay rent? That could be a big help with expenses.

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25 minutes ago, WildflowerMom said:

Omg.   🤦🏻‍♀️    Yes, I think I'd be talking to him about alternatives, as well.  

Right?

24 minutes ago, Catwoman said:

If he buys a house, would he be amenable to having a roommate who could pay rent? That could be a big help with expenses.

Yes, probably.  In fact, his friend has bought a fixer and that was the plan....he would move in with his friend and pay rent.  But that project is dragging on forever.  It might be what he ends up doing still though.

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2 minutes ago, Scarlett said:

Right?

Yes, probably.  In fact, his friend has bought a fixer and that was the plan....he would move in with his friend and pay rent.  But that project is dragging on forever.  It might be what he ends up doing still though.

I can see the appeal of wanting his money to go toward paying his own mortgage, rather than toward someone else’s, especially if he can get a roommate of his own. I guess it also depends on how much he would have to pay in rent to his friend.

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1 hour ago, Scarlett said:

And part of this discussion about houses has come about because he came to me and told me he was going to take $5000 of his savings and buy some stock on Robinhood (something similar to that Gamestock thing that went on).  So we strongly discouraged that and told him he would be MUCH smart to put his money in to a home. 

We aren't pushing him to buy a house but we are showing him what he is capable of doing. But then I got to thinking he might not qualify.  But I think he might.  I guess he just needs to go find out.  Even if he doesn't right now he will at least know what he needs to work on.

I have great concerns of young people who do not really know what they are doing making some poor decisions buying stock on Robinhood.  But, I would not make a blanket statment that it is smarter to put money into a home.  

Overall, stock market returns have exceeded home value returns for the average person in the past century (there have been exceptions in localized markets).  Plus, to purchase a house he is BORROWING money that adds risk to the decision.  If he has $10,000 that he uses to buy stock, yes he MIGHT lose the $10,000.  With a diversified portfolio it is highly unlikely he would lose it all, but the most he can lose is $10,000. 

If he puts the same $10,000 down on a $100,000 house and the house price falls below $90,000--he has lost his $10,000 AND MORE.  Or, if he loses his job, becomes very ill, or faces some other catastrophe, he may have to sell the house quickly at a loss to raise cash.  AND he has expenses with the house--insurance, utiities, maintenance, property tax.  You never have to put a new roof on stock you own.  

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5 minutes ago, Bootsie said:

I have great concerns of young people who do not really know what they are doing making some poor decisions buying stock on Robinhood.  But, I would not make a blanket statment that it is smarter to put money into a home.  

Overall, stock market returns have exceeded home value returns for the average person in the past century (there have been exceptions in localized markets).  Plus, to purchase a house he is BORROWING money that adds risk to the decision.  If he has $10,000 that he uses to buy stock, yes he MIGHT lose the $10,000.  With a diversified portfolio it is highly unlikely he would lose it all, but the most he can lose is $10,000. 

If he puts the same $10,000 down on a $100,000 house and the house price falls below $90,000--he has lost his $10,000 AND MORE.  Or, if he loses his job, becomes very ill, or faces some other catastrophe, he may have to sell the house quickly at a loss to raise cash.  AND he has expenses with the house--insurance, utiities, maintenance, property tax.  You never have to put a new roof on stock you own.  

Our concern is very specifically related to Robinhood. Not to investing in general. And although there are risks to owning a home you have to live somewhere so it is more than an investment. It is a need.  Some May choose to rent.  In this part of the country though renting is not the best option.  
 

He probably would prefer to keep living here rent free with no worries in the world.  But he is an adult and he will have to start doing some adult things soon.

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14 minutes ago, Catwoman said:

I can see the appeal of wanting his money to go toward paying his own mortgage, rather than toward someone else’s, especially if he can get a roommate of his own. I guess it also depends on how much he would have to pay in rent to his friend.

They already have that worked out and both seem happy with the agreement, but if it never happens, dss might have to go another route.  

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Just to clarify, when I talk about where my kids may want to go, I don’t mean traveling.  I have one kid who may go into teaching... wherever they’re hiring.  Another who’s career could involve longer commutes or moving closer to a different company. And another who will have a good job while in school, but doesn’t know the exact location of where her intended career is going to land.

If our area had all work opportunities readily available for a young adult to grow into, maybe that wouldn’t be such a major factor in my head, lol.  But the best opportunities are very limited in our area. 

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4 minutes ago, Scarlett said:

Our concern is very specifically related to Robinhood. Not to investing in general. And although there are risks to owning a home you have to live somewhere so it is more than an investment. It is a need.  Some May choose to rent.  In this part of the country though renting is not the best option.  
 

He probably would prefer to keep living here rent free with no worries in the world.  But he is an adult and he will have to start doing some adult things soon.

What specifically are you concerned about Robinhood?  A person can buy Apple, Google, Walmart... all of the same stock on Robinhood as they can at Fidelity or Schwab or with any other broker.

If you are planning on telling him that he must pay rent or find another place to live, then I agree that a big part of the disucssion is what is the most cost-effective living arrangement.  That is really a diffierent discussion than buying a house as an investment.  

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2 minutes ago, Scarlett said:

He probably would prefer to keep living here rent free with no worries in the world.  But he is an adult and he will have to start doing some adult things soon.

So charge him rent. Put it toward your mortgage or utilities or whatever. OR you could take all his rent payments and set them aside in a savings account or investment account and when he is ready to move out and buy his own house, give him the money as a down payment or help toward a down payment. This is my plan if any of my adult kids end up living with me long term. I plan to surprise them with it.

My three oldest kids are around the same age. They will be 20, 21 and 23 this summer. The oldest is getting married this fall which scares the hell out of me but that's a whole 'nother thread. They are all still just babies to me. Barely not teenagers anymore. I cannot imagine any of them being ready for the responsibility of homeownership at this point in their lives. I mean, they aren't party hardy fools or anything like that. They are responsible young adults with steady jobs and everything but homeownership and paying a mortgage is such a huge undertaking and responsibility.

They may or may not want to travel the world at this point in their lives but I think there are much better ways of being an adult and having adult responsibilities than saddling themselves with a large debt even if it can be an investment. Like @Bootsie said, stocks and investments don't need new roofs or need other emergency repairs that one must be prepared for. Just my 2 cents for whatever that's worth.

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33 minutes ago, sweet2ndchance said:

So charge him rent. Put it toward your mortgage or utilities or whatever. OR you could take all his rent payments and set them aside in a savings account or investment account and when he is ready to move out and buy his own house, give him the money as a down payment or help toward a down payment. This is my plan if any of my adult kids end up living with me long term. I plan to surprise them with it.

My three oldest kids are around the same age. They will be 20, 21 and 23 this summer. The oldest is getting married this fall which scares the hell out of me but that's a whole 'nother thread. They are all still just babies to me. Barely not teenagers anymore. I cannot imagine any of them being ready for the responsibility of homeownership at this point in their lives. I mean, they aren't party hardy fools or anything like that. They are responsible young adults with steady jobs and everything but homeownership and paying a mortgage is such a huge undertaking and responsibility.

They may or may not want to travel the world at this point in their lives but I think there are much better ways of being an adult and having adult responsibilities than saddling themselves with a large debt even if it can be an investment. Like @Bootsie said, stocks and investments don't need new roofs or need other emergency repairs that one must be prepared for. Just my 2 cents for whatever that's worth.

Everyone needs a place to live though. And I don’t think young adults need to assume they can live with their parents forever.  
 

Maybe houses cost  a lot more where you live, but I am not talking about him being saddled with some overwhelming mortgage.  Cheaper than rents what we had in mind.

I am not so sure what is so complicated about paying a mortgage every month.  

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51 minutes ago, Bootsie said:

What specifically are you concerned about Robinhood?  A person can buy Apple, Google, Walmart... all of the same stock on Robinhood as they can at Fidelity or Schwab or with any other broker.

If you are planning on telling him that he must pay rent or find another place to live, then I agree that a big part of the disucssion is what is the most cost-effective living arrangement.  That is really a diffierent discussion than buying a house as an investment.  

Did you see that part where I said he was wanting to do some of that on Robinhood like that Game stock from a few weeks back?  He thinks he can put $5000 in and double or triple his money in a few weeks.  Yes, I am aware that normal thoughtful investing can be done on Robinhood.... but that is not what he was talking about doing.  
 

As far as buying a house as an investment, I don’t mean financially....it is an investment in having a place to live.  Which we all need.  

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3 minutes ago, Scarlett said:

Did you see that part where I said he was wanting to do some of that on Robinhood like that Game stock from a few weeks back?  He thinks he can put $5000 in and double or triple his money in a few weeks.  Yes, I am aware that normal thoughtful investing can be done on Robinhood.... but that is not what he was talking about doing.  
 

As far as buying a house as an investment, I don’t mean financially....it is an investment in having a place to live.  Which we all need.  

I saw "Our concern is very specifically related to Robinhood. Not to investing in general."  If he is wanting to take $5000 and dump into one stock that he thinks will double his money in a few weeks that is not a wise move, but I am not sure how that is very specifically related to Robinhood.  That said, I am not a fan of Robinhood for a number of philosophical, industry-related reasons and it would not be the place I would recommend someone open an account.

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7 minutes ago, Scarlett said:

Everyone needs a place to live though. And I don’t think young adults need to assume they can live with their parents forever.  
 

Maybe houses cost  a lot more where you live, but I am not talking about him being saddled with some overwhelming mortgage.  Cheaper than rents what we had in mind.

I am not so sure what is so complicated about paying a mortgage every month.  

And I don't think it has to be forever that they live with me. All of mine are out on their own, living on their own and paying their own bills. But my doors are always open if they need it, no matter what. Whether it be for a few weeks, a few months or a few years. As long as they are working toward a goal and they need a place to live while they do it, they are welcome in my home. I know not everyone feels that way about adult children living at home but that is where I am coming from.

I have no idea what housing costs around here. Lower than the national average I would imagine. After the cameras used in open houses thread I am kinda glad that we aren't likely to be in the housing market ever again.

When you own a home vs renting, you are responsible for so much more than just the mortgage payment. That's what would worry me about someone so young owning a home. You have to be prepared for not only the mortgage payment but also taxes, insurance, maintenance, repairs both expected and emergency, all the tools and equipment for repairing and maintaining a home such as lawn care equipment, repair and maintenance of household appliances and systems like heating and cooling, pest control... that is a lot for someone so young to be responsible for. Not to mention the time the time and energy to learn how to do these repairs yourself or having additional money to pay a professional to come in and do them for you.

I don't know, maybe I'm underestimating my young adult kids but I feel much better knowing they are getting their taste of adult responsibility a little at a time by renting for now and not by biting off possibly more than they can chew. But there are adults much older than them that get taken by surprise by how much of a responsibility homeownership really is. Like I said though, this is just my two cents. You are under no obligation to agree with me at all. 🙂

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Would he get a roommate? It’s a great way to reduce expenses.

My first house that I bought in my 20s turned into a rental and my second house I lived in, but advertised for a roommate.  I had a roommate (3 different ones over the years) that paid a good amount of rent- which covered more than half of my mortgage, plus they shared the utilities.  It was so much cheaper than renting. When I got married, I turned that house into a rental as well. I didn’t find home ownership to be a drag at all on my lifestyle, and travelled plenty.

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7 hours ago, TexasProud said:

I know.  They hated to do it. Her daughter needed a car. She has been out working after college for 3 years, but no one would sell it to her without it, despite the fact that she had spotless credit and a decent credit score.  So they did. I am not sure what the other ones chose to do. 

Cosigning for a car loan is a LOT less scary than a mortgage.  

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35 minutes ago, matrips said:

Would he get a roommate? It’s a great way to reduce expenses.

My first house that I bought in my 20s turned into a rental and my second house I lived in, but advertised for a roommate.  I had a roommate (3 different ones over the years) that paid a good amount of rent- which covered more than half of my mortgage, plus they shared the utilities.  It was so much cheaper than renting. When I got married, I turned that house into a rental as well. I didn’t find home ownership to be a drag at all on my lifestyle, and travelled plenty.

I think so.  He probably will just rent from his friend if it ever get livable. 

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Owning a home is expensive. You need a good amount of savings to cover things that might go wrong. 
If you don't have 20% to put down, you usually have to have mortgage insurance. 
If the A/C goes out, you can easily (at least here) be looking at $5-12,000 to replace it.
Insurance is expensive.
Utilities can be expensive too. You can help those by making sure you have adequate insulation and using energy star appliances and doing your laundry off hours/etc. 
Plumbing repairs. Argh. 

If he is interested in purchasing a house, *HE* should start investigating the true cost. 
https://www.hsh.com/first-time-homebuyer/cost-of-owning-a-house.html

And I think he also has to evaluate his job situation. A young adult relative, with a stable job, purchased a home about 6 minutes before COVID. Within a couple of months of COVID, his company, which seems sound, went out of business and he was left without a job. That decision to buy that house at that time looked like a very bad one. Fortunately for him, he found another job within 6 months. 

Most finance people advise that you have six months of all your living expenses saved at all times for situations such as that. I would think a young man working basically 2 years would not have that amount of savings. 

You really don't want to end up in a situation where you lose the house and mess up your credit rating. 

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I would NOT push someone into home ownership who isn't REALLY interested in it.  I know a LOT of people said "we bought young with no regrets" but almost all of those responses were from "WE's." Home ownership isn't all roses, and when people talk about what a great investment it is, they all conveniently forget about how a house will nickel and dime you all along the way, how everything is expensive to fix, how many hours you put into maintenance, how utilities and taxes add up, and how your mobility is restricted by your local market.  Taking care of a home can be a burden even for a couple who really really want to do it.  On top of that people suggested he rent to a roommate to make money, so now he's thrust into a landlord role. It doesn't seem like the greatest fit for someone who just wants to ride the next Gamestop stock wave.  Maybe a better interim step would be to convince him to split his investment into some risky endeavors and some IRA-type stuff.  It is the best time in life to take some risks, make some investments, travel a bit.  Maybe it's time to plan his launch from home, but leaping into a mortgage seems like a LOT for a single 20-year-old.

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38 minutes ago, Bambam said:

Owning a home is expensive. You need a good amount of savings to cover things that might go wrong. 
If you don't have 20% to put down, you usually have to have mortgage insurance. 
If the A/C goes out, you can easily (at least here) be looking at $5-12,000 to replace it.
Insurance is expensive.
Utilities can be expensive too. You can help those by making sure you have adequate insulation and using energy star appliances and doing your laundry off hours/etc. 
Plumbing repairs. Argh. 

If he is interested in purchasing a house, *HE* should start investigating the true cost. 
https://www.hsh.com/first-time-homebuyer/cost-of-owning-a-house.html

And I think he also has to evaluate his job situation. A young adult relative, with a stable job, purchased a home about 6 minutes before COVID. Within a couple of months of COVID, his company, which seems sound, went out of business and he was left without a job. That decision to buy that house at that time looked like a very bad one. Fortunately for him, he found another job within 6 months. 

Most finance people advise that you have six months of all your living expenses saved at all times for situations such as that. I would think a young man working basically 2 years would not have that amount of savings. 

You really don't want to end up in a situation where you lose the house and mess up your credit rating. 

Lots of doom and gloom in your posts.  I have been a homeowner for 30 years and bought 5 houses.  I do know about how it works.  Dh is highly skilled in all things required to maintain a home and what he hasn’t already taught dss he can surely show him as things come up.  
 

Things go wrong in life. And if things go too wrong, your credit will be ruined whether you own a home or are renting an apartment. 
 

Most people do not have the luxury of planning for every eventuality.  We encourage him to stay out of debt, have some savings and now we are trying to get him to think about living his life as an adult.  
 

I asked a question about qualifying for a mortgage as a 20 year old.  That is really all I was wondering about.  I thought there might be a mortgage person or spouse of on here who knows what is going on currently with lenders.  

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15 minutes ago, KungFuPanda said:

I would NOT push someone into home ownership who isn't REALLY interested in it.  I know a LOT of people said "we bought young with no regrets" but almost all of those responses were from "WE's." Home ownership isn't all roses, and when people talk about what a great investment it is, they all conveniently forget about how a house will nickel and dime you all along the way, how everything is expensive to fix, how many hours you put into maintenance, how utilities and taxes add up, and how your mobility is restricted by your local market.  Taking care of a home can be a burden even for a couple who really really want to do it.  On top of that people suggested he rent to a roommate to make money, so now he's thrust into a landlord role. It doesn't seem like the greatest fit for someone who just wants to ride the next Gamestop stock wave.  Maybe a better interim step would be to convince him to split his investment into some risky endeavors and some IRA-type stuff.  It is the best time in life to take some risks, make some investments, travel a bit.  Maybe it's time to plan his launch from home, but leaping into a mortgage seems like a LOT for a single 20-year-old.

Oh my word, no one is pushing him to do anything.  We are having conversations about what adulthood looks like. 

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I think if the kid is interested it is worth looking into. If this is something you can help him with as far as helping him figure out a budget and what he will need and your Dh can help with repairs and maintenance it could be a good thing. I think there are ways that parents can help the young adults get going in life that don’t always cost a lot of cash from the parents but are very valuable. It would have to be the right family and the right situation but this could be one of those things that Scarlett and her Dh could do with dss to help him launch. Just having the support and guidance of people that know how things work in real estate transactions and who are skilled at home maintenance could be a way to get the young adult started in life. A lot of things would have to fall in place but it could be a good move. 
 

I think the parties would all have to be on the same page and willing to discuss money and issues. Some families can’t do that but some can. My family of origin could never have had such an arrangement but I can see it working with my kids (at least the ones who like our guidance. Lol). In my family I would also have in mind I might need to help out financially from time to time. But I wouldn’t think that is indulgent with a 20 yo. I’m willing to help my adult kids some while they launch. Sometimes a little help in the transition can set the young adults up for success and be a good investment in the young adult. 
 

 

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33 minutes ago, Scarlett said:

Oh my word, no one is pushing him to do anything.  We are having conversations about what adulthood looks like. 

Sorry.  I've moved into a more general commentary on the topic and will not be tethered by your reality.

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8 hours ago, DawnM said:

And just to counteract some of you who bought houses younger.....I bought my first house, with DH, at 32 years old.   I didn't even marry until age 29, and I rented until then.   I am glad I did, it gave me more freedom for those years.    

We didn’t buy until 33 because we kept moving for education. But it’s almost paid off and we have over $400k in equity, so it turned out fine.

I have to say that although I’ve heard lending standards have tightened, I was surprised that on his own my 20 something son was preapproved  (by more than one lender) for the maximum conforming loan, despite less than one year of full time work and a brief period of unemployment during the pandemic. But in the crazy market here, it doesn’t make much difference because so many current homeowners can either pay all cash or put down a very substantial down payment, so most first time homebuyers can’t compete. Plus, he’s not willing to waive an inspection or do an appraisal gap guarantee. He sees it as much riskier for someone like him who doesn’t have his own increased equity to cover part of the cost.

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21 minutes ago, Frances said:

We didn’t buy until 33 because we kept moving for education. But it’s almost paid off and we have over $400k in equity, so it turned out fine.

I have to say that although I’ve heard lending standards have tightened, I was surprised that on his own my 20 something son was preapproved  (by more than one lender) for the maximum conforming loan, despite less than one year of full time work and a brief period of unemployment during the pandemic. But in the crazy market here, it doesn’t make much difference because so many current homeowners can either pay all cash or put down a very substantial down payment, so most first time homebuyers can’t compete. Plus, he’s not willing to waive an inspection or do an appraisal gap guarantee. He sees it as much riskier for someone like him who doesn’t have his own increased equity to cover part of the cost.

Your son sounds like a smart and sensible guy!

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I do think that purchasing a house at a young age can be a wise move for some people--and a disastrous move for others.  I have one child, who in his early 20s, has managed to save so that he could make a substantial down payment and has been looking at a lot of possibilities, from renting to buying a small place, to purchasing a larger place and getting roommates; He has a dog; he doesn't like to travel; he wants a place for his "stuff"; he doesn't like moving or change; it is important to him to feel settled and connected.  Early home ownership might be practical for him.

My other child--voted by her high school peers as most likely to be "who knows where in the world she is?" when it comes to track people down for a class reunion.  She wants to see the world; she wants to go to grad school; anything important to her fits in a backpack.  She likes change.  (Maybe a motor home is in her future????)  Purchasing a home would be a financial and emotional nightmare for her, at least right now.  

All financial decisions are complex--home ownership is especially complex and there is not a one-size fits all answer.

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7 hours ago, Scarlett said:

I asked a question about qualifying for a mortgage as a 20 year old.  That is really all I was wondering about.  I thought there might be a mortgage person or spouse of on here who knows what is going on currently with lenders.  

I can’t speak with any special knowledge but, “word on the street” is that lenders are swamped and getting more picky. My biggest concern in the given scenario would be the limited work history.  It could very well be enough to get pre-approved, but could still cause trouble in underwriting.  If he were to move forward, I’d try to use a local bank rather than a national one.

My daughter’s still struggling to get picked as a tenant. She’s got a pandemic-proof and recession-proof job, but it’s been just under a year. She’s up against more solid applicants.  And that’s for a 1 year commitment, not a multi-year, 6-figure commitment.  It’s very frustrating.

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9 hours ago, Scarlett said:

Oh my word, no one is pushing him to do anything.  We are having conversations about what adulthood looks like. 

Any parenting thread is fraught for disagreement. It seems to be even worse for discussions on young adults because everyone not only has to defend how they grew up but how they are raising their kids. There are a lot of different people in the world and a lot of ways to do things. There is not one right path. I think it is good you are having the conversations so he can make the decision himself. I hope you got some good info to pass along that will help him form that decision well.

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Posted (edited)

Things might be getting crazy here——for here. That house went pending. In less than 72 hours.  That of course is how long it took to show up pending on line.  I bet it sold over the weekend.  

Edited by Scarlett
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10 hours ago, Scarlett said:

Lots of doom and gloom in your posts.  I have been a homeowner for 30 years and bought 5 houses.  I do know about how it works.  Dh is highly skilled in all things required to maintain a home and what he hasn’t already taught dss he can surely show him as things come up.  
 

Things go wrong in life. And if things go too wrong, your credit will be ruined whether you own a home or are renting an apartment. 
 

Most people do not have the luxury of planning for every eventuality.  We encourage him to stay out of debt, have some savings and now we are trying to get him to think about living his life as an adult.  
 

I asked a question about qualifying for a mortgage as a 20 year old.  That is really all I was wondering about.  I thought there might be a mortgage person or spouse of on here who knows what is going on currently with lenders.  

You are completely right in I do look at all the potential problems with any situation before I jump into it. As an engineer, that is what I do. 
I think it is best to present people looking at any decision with all the info they can get before making any choices.  I understand you can't plan for every eventuality, but you can have a good idea what the experts suggest as a solid base for taking on a new responsibility. 

You are fortunate to have such a skilled handy husband. Can he work with his son and his friend to repair/fix up the house the friend owns that both boys were planning on moving into? If that would work, that seems like a good solution - son gets a close up-hand look at home ownership and the responsibilities of such + great experience fixing things + much less risk. 

ETA: And you are correct about your original question and this thread has expanded greatly from there. That seems to be the trend - things start one place and end up totally different - sorta like the old Telephone game. Treat it like FB, take the good, ignore the rest. I find when I read posts that do not necessarily pertain to me (at this point, neither of my kids are in a position to purchase a home) but I find useful bits of info/suggestions/ways to approach something. I'm assuming others do as well. I've found useful info here to store in my memory banks for if/when my kids are interested in purchasing a home. 

Edited by Bambam
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1 hour ago, Scarlett said:

Things might be getting crazy here——for here. That house went pending. In less than 73 hours.  That of course is how long it took to show up pending on line.  I bet it sold over the weekend.  

It's like that here right now. And the houses are going for higher amounts than they were listed for. 

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1 hour ago, Bambam said:

You are completely right in I do look at all the potential problems with any situation before I jump into it. As an engineer, that is what I do. 
I think it is best to present people looking at any decision with all the info they can get before making any choices.  I understand you can't plan for every eventuality, but you can have a good idea what the experts suggest as a solid base for taking on a new responsibility. 

You are fortunate to have such a skilled handy husband. Can he work with his son and his friend to repair/fix up the house the friend owns that both boys were planning on moving into? If that would work, that seems like a good solution - son gets a close up-hand look at home ownership and the responsibilities of such + great experience fixing things + much less risk. 

ETA: And you are correct about your original question and this thread has expanded greatly from there. That seems to be the trend - things start one place and end up totally different - sorta like the old Telephone game. Treat it like FB, take the good, ignore the rest. I find when I read posts that do not necessarily pertain to me (at this point, neither of my kids are in a position to purchase a home) but I find useful bits of info/suggestions/ways to approach something. I'm assuming others do as well. I've found useful info here to store in my memory banks for if/when my kids are interested in purchasing a home. 

To the bolded, yes, I guess I got a little defensive because I took it personally, but I do know these threads take on a life of their own.

To the fixer that dss's friend bought....the friend knows how to fix it.  He is also skilled in a lot of things.  The problem is not with the skill level of any of them, but time.  They finally got the metal roof on......now on to finishing the interior.  It is almost like a new build.  It had a fire and so needs all new electrical, plumbing, kitchen etc.  As these things normally go, it is taking much longer than he thought it would.  But it will be a nice stepping stone for dss20 if nothing else works out for him in the meantime.

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I think pushing a young person to not buy a house is just as bad as pushing him to buy a house. (I don’t  think Scarlett is doing either). If he can pay for it on his own, then it is none of anyone’s business what he chooses to do.

 

 

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If your dss is interested in buying a house, ask him if he would like your or your husband's help in making a list of pros and cons. One of those would be related to the feasibility of financing. If he's interested enough, he'll contact the bank. 

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4 hours ago, Scarlett said:

Things might be getting crazy here——for here. That house went pending. In less than 72 hours.  That of course is how long it took to show up pending on line.  I bet it sold over the weekend.  

The housing market is crazy right now, and that’s one reason why it might be wise for your dss to wait a while to buy a home unless he’s able to find a real bargain. My concern is that prices are high at the moment, but this could end up like it has in the past — the bubble could burst and your dss’s home could end up being worth significantly less than he paid for it.

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1 minute ago, Catwoman said:

The housing market is crazy right now, and that’s one reason why it might be wise for your dss to wait a while to buy a home unless he’s able to find a real bargain. My concern is that prices are high at the moment, but this could end up like it has in the past — the bubble could burst and your dss’s home could end up being worth significantly less than he paid for it.

Right.  That is not really a concern at this price point.  I thought it was priced too high and I would have never recommended he pay that for it.  The fact that is sold so quickly indicates someone is probably buying high.  I will keep an eye on it and once it closes I can see how much it went for. 

His friend, although it is moving slowly....probably made a wise move to buy when he did.  And to buy what he did.  Not many people would have take on the project he is doing.  

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An observation that I have is that charging rent to young adults seems to be a good thing. Otherwise the young adult is not being treated like an adult. There are, of course, exceptions. Illness, disability, job loss, etc. The same circumstances in which I, as a middle aged adult, would still turn to my parents for help. And they would give it wholeheartedly.

But under normal circumstances. charging rent to an adult in an adult-like manner, has worked for most of the families I have observed. Some parents save the rent that is paid and give it back to the young adult when they move out, to be used as a down payment to buy a house, or a security deposit on a rental. And some parents don't give the rent back, probably because they need it for day to day expenses.

The lesson that I see being learned is how much adult life costs. I can say that my kids know, but if they are not paying rent, they know it in the same way that someone knows how to ride a bike in their head, but they have never actually ridden a bike. What a gift to our young adults to let them actually learn to  ride the bike, in the safety of our own driveway. That's what paying rent at home does, in my opinion.

 

On the other topic, investing, I think our young adults need to know more about that, and how to do that in a low-risk way. If they invest in low-cost index funds with a reputable company, starting at age 20, they will be amazed and thrilled at the results down the road. 

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16 minutes ago, mum said:

 

An observation that I have is that charging rent to young adults seems to be a good thing. Otherwise the young adult is not being treated like an adult. There are, of course, exceptions. Illness, disability, job loss, etc. The same circumstances in which I, as a middle aged adult, would still turn to my parents for help. And they would give it wholeheartedly.

But under normal circumstances. charging rent to an adult in an adult-like manner, has worked for most of the families I have observed. Some parents save the rent that is paid and give it back to the young adult when they move out, to be used as a down payment to buy a house, or a security deposit on a rental. And some parents don't give the rent back, probably because they need it for day to day expenses.

The lesson that I see being learned is how much adult life costs. I can say that my kids know, but if they are not paying rent, they know it in the same way that someone knows how to ride a bike in their head, but they have never actually ridden a bike. What a gift to our young adults to let them actually learn to  ride the bike, in the safety of our own driveway. That's what paying rent at home does, in my opinion.

 

On the other topic, investing, I think our young adults need to know more about that, and how to do that in a low-risk way. If they invest in low-cost index funds with a reputable company, starting at age 20, they will be amazed and thrilled at the results down the road. 

I don't have any problem with parents who choose to charge their young adult children rent.  But, I do not agree that not doing so is not treating them like an adult.  My mom never paid rent.  She went from living in her parents home to being married and my father working and paying the rent.  He never charged her rent.  

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One of my young adults had no trouble getting a mortgage with less than 2 years of work history to buy a condo. (And was able to refinance when mortgage rates dropped even further.)

This was shortly before everything closed down and remote work began, so not being with a roommate 24/7 in a small apartment was a huge benefit to owning own home. 

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1 minute ago, Bootsie said:

I don't have any problem with parents who choose to charge their young adult children rent.  But, I do not agree that not doing so is not treating them like an adult.  My mom never paid rent.  She went from living in her parents home to being married and my father working and paying the rent.  He never charged her rent.  

Agreed. I lived rent free with my parents for two years while working full time in a well paying office job and saving like crazy. That's exactly why I was able to buy my first house at 22 and put 1/3 down.

(It would never have occurred to my parents to charge me rent, or for groceries or anything else. I guess it's showing my privilege, but that's a thing I didn't realize anybody did until I joined this board.)

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19 minutes ago, Pawz4me said:

Agreed. I lived rent free with my parents for two years while working full time in a well paying office job and saving like crazy. That's exactly why I was able to buy my first house at 22 and put 1/3 down.

(It would never have occurred to my parents to charge me rent, or for groceries or anything else. I guess it's showing my privilege, but that's a thing I didn't realize anybody did until I joined this board.)

I moved back home with my infant son after a horrific divorce and they never charged me rent. We lived with my parents for a  year and a half before I got remarried and we moved. It's definitely not the norm where we are to charge adult kids rent. Maybe the "take the money and then give back to them when they move out situation" happens though. 

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33 minutes ago, Pawz4me said:

Agreed. I lived rent free with my parents for two years while working full time in a well paying office job and saving like crazy. That's exactly why I was able to buy my first house at 22 and put 1/3 down.

(It would never have occurred to my parents to charge me rent, or for groceries or anything else. I guess it's showing my privilege, but that's a thing I didn't realize anybody did until I joined this board.)

We so far haven't charged our kids rent either.  And all situations aren't equal. A kid with a plan is different than one floating around and sometimes barely working.  Some kids need a little nudge to just grow up. 

13 minutes ago, hippymamato3 said:

I moved back home with my infant son after a horrific divorce and they never charged me rent. We lived with my parents for a  year and a half before I got remarried and we moved. It's definitely not the norm where we are to charge adult kids rent. Maybe the "take the money and then give back to them when they move out situation" happens though. 

Again, if any of our 3 needed to come home especially with a baby we would do everything in our power to help them.  

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