best idea for first home buyer
Hi-My son is 24 and has been at his career job for 7 months. He lives at home to save money and is ready to buy or rent. He is asking what is the best thing he should do. Rent for year of buy? Buy a condo or townhome? He would like to put down about $12,000 and have a monthly payment of 1,600 – 1,800 max. He is asking my advice and I wanted to get your advice because I follow your segments on WGN and respect your explanations. Thank you in advance.
Terry Says
This is tough advice, but I’d suggest that he continue to live at home for another 9 months, building up his reserve for a down payment. He should also check is credit report at www.AnnualCreditReport.com. He should be building a credit history, by using one or two cards, and paying them off IN FULL and ON TIME EVERY MONTH!
Any mortgage lender will want to see a credit history of at least two years, and also a job history of that time period for a young person buying a first home. In the meantime, check out your state’s first-time homebuyer programs. In Illinois you can find those at IHDA.org.
And he might benefit from a session with a credit counselor at Consumer Credit Counseling — 800-388-2227. He needs to learn that there is more to home ownership than the monthly mortgage payment. There are property taxes and insurance — and lots of other unexpected expenses, for which he should have a reserve — beyond his down payment.
So while it’s admirable of him to want to purchase a home, he might benefit from living with you for a year to save month, or getting a roommate to make an apartment affordable. Then he can learn more about living on his own. After all, if he’s successful he might want to move to another city, or buy a larger house if he earns more.
