Colli Real Estate

Interested in Buying House for the future?

I’m 20 right now. I’m saving money to buy a house in 5-8 years… I’m interested in buying a house in suburbs of Atlanta, GA where I live now. I would like to buy a house in the 100k-250k price area but of course I’d like to buy one around 160k for example. How much money should I save for a down payment? I can save a lot since I work and still live at home… I would like to pay off the house a lot with the down payment as much as possible… I really want to invest in a house and get it paid off soon as possible so I don’t have to pay monthly mortgages for the rest of my life!

First thing you need to do is thank your mother and father for instilling intelligent values upon you! Congratulations, you are significantly ahehad of the curve for just about anyone your age.

Regarding the investment of a home. If it is something you plan on moving into then given your long term goals, think through the area, the siae and amenioties of the home and anticipate your life in the next 10-15 years (beleive me it will be very different than it is now). The reason for this is you don’t want to buy a small house, then start a family and grow out of it if your goal is to pay it off. If you plan on renting it out and continue to live at home, be sure to speak to some local professional realtors to discuss the pros and cons of being a landlord.

As for the downpayment, 20% is the minimum and given yourt age and lack of credit, it is unlikely in today’s environement that you will be able to secure a mortage without a co-signor. If your parents or reletives have an exisiting mortgage on the house you live in or better yet have a relationship with your local bank, go in and see them and ask what they will be willing to loan. You may need more than the 20% but much depends on your income, length of time on the job, your personal expenses etc.

As for paying off a loan as soon as possible, I strongly sugest you still get a 30-year fixed rate mortgage at a very afforadable payment. Many banks offer payment plans to make extra payments that reduce your principal and ultimately saves you in interest and years. This is not necessary as you can always make additional payments or pay more than your payment and the banks will automatically apply the additional payment to your principal.

It is an admirable goal to want to pay off your mortgage as soon as possible but as you get older and begin to understand the world of finance and investment, you may find that that may not be in your best financial interest as you eliminate one of the great tax benefits of homeownership and that is the ability to write off your interest. You will also find that once the economy rebounds you should be able to invest your money that you would use to pay down your 5% mortgage and use it to invest in something that will yield a higher rate of return.

I don’t want to discourage you from your honorable ambitions of paying off a mortgage (God only knows I wish the thousands of people that are inforclosure would have your maturity) but you should be as aware as possible of all your investment options.

Best of luck to you although if you maintain your current attitude, you won’t need any luck.

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