# Advice for a young couple?



## Mrs Chai (Sep 14, 2010)

I see a lot of posts that talk about people who have been married 5-10+ years and while great advice and lessons to be had, none really focus on a couple who are still in college.

My husband is going to graduate college in less than a year and has begun talking about buying a house. I am still working on my Bachelors with my eyes set on Medical School and a residency beyond that. However, my heart is not set on staying in the state we are at. The idea of buying a house means that more than likely we will remain in this state. It's a lot of money and commitment to staying put - especially in the real estate climate. 

My husband doesn't want to rent - but he has no prominent career aspects here, his family is in another country, and no real experience involving buying or owning a home. My family is in this state and who knows where I will get sent to residency, but I planned on being flexible with where I go to med school in case he does get a job offer that requires an out of state move.

I suppose my question is: My husbands biggest gripe is paying for an apartment that is not going toward something we own. What can we do that will ease his feelings of that other than putting more of our cheques into savings?

Honestly, if he went out to buy a house, it's unlikely we'd be eligible. As poor college students and his history of being a starving artist, I doubt we're very tempting for any bank to take on...


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## Chelhxi (Oct 30, 2008)

Well, like you say you probably wouldn't be approved, so you could tell him that he could try to get pre-approved for a mortgage (that's what we do in Canada at least) and then have the bank turn him down. Though that's pretty passive aggressive.

Honestly though, if he hasn't heard about the housing crisis, people being desperately underwater with their mortgage, walking away, declaring bankruptcy etc, I'm not sure where he's been living. He should read more about the risks of home ownership. It's moderately risky a lot of the time and it's worse if you have to move and also extra risky with the economy. How are house prices in your area?

Personally, my husband and I rent - it's just the best decision for us right now, and not even financially speaking. We might have to move for work and we're both too busy to deal with all the upkeep that a house requires. Moving is hard enough, but selling one house and buying another is extra hard. 

I think you understand all this, but sounds like he doesn't. I'd just try to point him towards learning more about the realities, risks and cons of home ownership at this point in your lives.


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## PBear (Nov 16, 2010)

Try this... Figure out how much your housing expenses would be. Include the mortgage, taxes, budget for repairs... Subtract your rent. And put that difference aside for your downpayment. Then you get the freedom of renting, more of your cheques for savings, and prove to yourselves that you can afford a house.

Of course, this only works if your house expenses are more than your rent is... 

C
_Posted via Mobile Device_


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## Kauaiguy (May 8, 2011)

I don't see the point in buying a house at this time unless you're doing it for a long time investment. The housing market is still going down and according to my long time friend and realtor, he doesn't expect anything to happen within the next 5 years.

As a matter of fact, he expects the housing market to tank even more in the next couple of years. So the danger here is that if you were to purchase a house now, the value of that house may go down even more in the next two or three years.

Then if you were to be transferred to another state, you will be forced to sell at a loss. I seriously doubt that you'd be able to afford to keep two mortgages while you wait for the value of the current house to go back up. Think about that!

Our houses here in Hawaii were purchase at $710,000.00 and $650,000.00 respectively, and both are now valued under $500,000.00. Think about the money we lost on these two homes, and I expect it to go down even more in the next couple of years.

Fortunately, we don't plan on going anywhere because these are ours and sons retirement homes. Son will be retiring in about 10 years.

California and the other mainland states are tanking even more and I have a very good friend who can't afford to even sell his house. It went down from a value of about $850,000.00 to under $500,000.00. OUCH!

I think I would be inclined to advise you two to rent the cheapest place you can at this time and bank whatever you can for the next couple of years. Then think about buying that house.

I would be inclined to check out Susie Ormand(?) and see how you can invest some of your money so that you can have it available in a couple of years to put down on that house.

You may even be able to buy a cheap house on a foreclosure.


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## Mrs Chai (Sep 14, 2010)

Thanks for all the advice everyone! It is very helpful and I will take several of them into account. I will let you know of any updates. I'm still pretty firm on not getting a house and since that conversation it seems it's become a mutual understanding.

I think he will best get the idea by working it all out on a sheet of paper with expenses like Mike suggested. He definitely is a visual person.


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## lostleahnc (Aug 30, 2011)

You guys really need to just slow down and take one step at a time. Buying a home right now is not a good idea for several reasons: 1) you are both still in college and dont know where a potential post grad job will take you 2) If you do move for a job, you will likely need to sell or rent the house, note renting means you will likely still have to pay for repairs, pay taxes, pay toward the mortgage, and your house could be trashed 3) you are both full time students and may not qualify 4) A house is a HUGE financial responsibility, repairs and maintenance take a lot to keep up on, and down payment is also a big chunk of money 5) you will get a BETTER interest rate when you both have stable employment and have been with your employment at least 1.5 years You guys have PLENTY of time, spend this time wisely, save your money concentrate on school, do your homework on the market, and finally land a great job which will help you get the right house in the right place


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## maccheese (Jul 25, 2011)

The only way buying a house is a good idea right now is if you buy a very low cost foreclosure. I foreclosure will allow you all to truly pay a monthly expense below the cost of rent plus have money for maintenance (which unlike a an apartment, you are responsble for and can be expensive if you aren't prepared.) Also, as a previous poster said, if you all have to move, you all would have to sell the house and houses aren't selling these days. Also, a house right now is just not a good investment. Who knows when the values of houses will go back up. You may get into a mortgage today for$150,000 then the value of the house drops to $20,000. You still have to pay the $150,000.


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## Zzyzx (Aug 24, 2011)

The only way residential housing works as an investment is if buying with the intent to rent it out. In some locales, not all, must do your due diligence, it is possible to get positive cash flow out of a rental when accounting for the mortgage, property tax, insurance, maintenance and other expenses. A good question to ask: can you rent out the property for at least 1% of the purchase price? And is the area stable enough to allow you to keep charging that rent (or even raise it) for the next several years? Also you can use the depreciation to some extent against your W-2 income, but while that gives even more cash flow, I would not take this into account when running the numbers.

But ... But ... you must do a good job screening your tenants as the expenses from cleaning up after bad tenants can easily push you into the red. I paid my property manager for this and he has done an excellent job finding good tenants so his commissions were well spent in my opinion.

Otherwise if you are buying for the appreciation, well better be patient. If you need a faster return than "many years", forget housing as an investment!

Now buying a house to live in: the only way this works in today's environment is if you have a stable income, a stable marriage, a stable job, etc. Without that stability, it's very difficult to justify the commitment required to buy a house because houses are such an illiquid asset.

By the way, this is one of the reasons housing will have trouble making a comeback, it's because of the instability in the job market makes many people uncomfortable with making that commitment.

You can find many resources on the web about living cheap and saving for a house someday when you have attained that stability.

Good luck.


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## Just Dave (Sep 13, 2011)

Okay, I don't know if the two of you are old people who decided to go to school late in life or if you're young and have only been married a short time. So I'll assume the latter.

Have you considered the possibility that your husband may be a little scared of losing you and his wanting to buy a house is his way of cementing the relationship. Similar to the way women will suddenly become pregnant in the hopes of keeping a man from leaving her.

You want to be a doctor and this will mean working long hours with male doctors with whom you'll have much in common with under tiring and stressful situations. "We didn't mean for it to happen, it just did."

Also, as women grow older and more mature their wants seem to change. What was cute and fun back in college suddenly no longer is. Men don't change that much, but women do and career women often "out grow" their husbands.

Your life will take you down one road and your husband's down another.

Men are genetically programmed to be in charge of their family, but the radical feminist movement of the sixties have changed that. Now women compete with their husbands for the position of head of family. Did the divorce rate go up or down since the 1960's? Was this just happenstance or was there a reason for it?

The feminist ideology has preached for years that men are irrelevant to a woman's happiness, yet for some strange reason women still continue to marry... men. Women should not become dependent on men, yet women still continue to marry men. A women needs a man like a fish needs a bicycle, yet women continue to marry men. What gives here? You don't think that this modern day feminist ideology goes against human nature do you? That it puts women in conflict with their genetic programming?

No, it can't be that. It's just that men are so immature and childish. And that's not because of anything that we women have done. Yes, we've changed, but for the better right? ... right?


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## Wut2Do (Oct 17, 2010)

Don't buy a house. 

Terrible idea at this point in your life and with the state of the economy. With the fact that the Fed. Reserve inflated the money supply in 2 years by 300%+, we have massive inflation heading our way in roughly 2-3 years, depending on how much more market manipulation they do. Government debt bubble will also pop at some point in the near future, and as you can see Congress is not capable of making the necessary reforms ahead of time.

My bro just lost over $150k on selling his house. His remark to me was, "You'll never lose $150k on renting". 

See where life brings you first before jumping into buying a home. Every friend of mine who did this after college has gone and sold their house if possible. A few are still struggling with them. But I would say 2 out of 10 are still in the same area doing the same thing.


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## PFTGuy (Aug 28, 2011)

Don't buy a house, at least until you're stable and starting your family. Maybe not even then.


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## couple (Nov 6, 2010)

I agree with many of the comments about you being too young and too unsettled but I'll stick to the economics in this response.

Housing/rental markets vary greatly by location so nobody can really say how much of an advantage or disadvantage owning is over renting. Often the rental costs and housing values are well aligned but not always. But in some locations you can get much more for you money rent budget than you can in your buying budget and vice versa.

It's very easy to analyse this (sorry if you know all of this already). Find a mortgage calculator on the internet that breaks down each monthly payment by principal and interest. You'll see that at the beginning of the mortgage, very little goes to principal. Many people see it in absolute terms - renting is throwing money away and paying a mortgage is putting money 'into your house'. This is not a good way to look at it. For the first 5 years of a mortgage, you actually put very little 'into the house' with most of it going to financing the purchase. Compare your interest costs with the cost of renting and add on the owning side of the equation, the additional costs for repairs, real estate taxes, condo/housing associations, insurance and any utilities that might be provided in your rent. You also need to consider the impact of tax writeoffs for mortgage interest (if that benefit lasts). You can find internet calculators for this too.

This will give you a good economic view of owning vs renting. Nobody can predict the future and both renting and owning have risks. The risks of renting (often overlooked) include rent in your area rising disproportionately to your income. Could be an issue if you are a student on a tight and fixed budget. With buying you can lock in your payment with a fixed mortgage and only worry about taxes and associated costs rising. However, the risks of ownership are well known and greater than the risks of renting (e.g. drop in house value, unexpected repairs, etc).


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## turnera (Jan 22, 2010)

Read Rich Dad Poor Dad before you get married, and start on the path toward making your money work for you instead of you working for your money. If you do that early enough, straight out of college, it's very easy. And then you never have to worry about money again.


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