My husband I are saving for a house in the D.C. area, so not cheap. But I recently graduated with a Master’s degree and I have about $20,000 in student loans. Those aren’t going to be paid off anytime soon because I’m a freelance writer still getting the business up and running.
Is it a bad idea to jump into buying a house? We would wait until we saved at least 10% down, so it’ll be a year or two. What do you guys think? Thanks!
I say jump into the market as soon as you can - especially in that market! Putting it off could mean you might get priced out of the market and…you never know what will happen to interest rates in a future economic state.
I’m sorry but if it were me, I’d not focus on buying a house just yet. Can you rent to own? If I had a Master’s and student loan debt, I’d get a job first to pay that off while working on getting the freelance business going.
It’s much cheaper to buy a house than rent one. I would consider the southern Maryland area as its 30 minutes from DC and half the price . Also, jobs are prevalent in the dmv area. So you could work while establishing your freelance business. I bought my house out here 5 yrs ago and the property value has already doubled. Great luck!
Cons: Purchasing a residential house is not an investment. It requires a loan, tax, insurance, & maintenance (less than 20% down, you will pay additional for PMI). It ties you down in one spot making location changes more difficult. The general rule is you need 5 years of payments to break even in most markets. Keep in mind Real Estate agents are going to take around 6% to sell your property.
Pros: Higher quality of living. Over the long term builds in equity that can appreciate.
Looking back, I wish I had focused more on my financial foundation first. I should have done better in building an emergency fund separate from the down payment as the Air Condition went out about a year after we purchased our property. So $9,000 later…
Make sure you are saving for retirement, have an emergency fund separate from the down payment fund, good health insurance, long term disability, and life insurance if you have a family, etc. Basically, get a decent foundation first and then go for it. This foundation is what will make all the difference. Not buying a house in 1 year or 5 years from now. It sounds like you are already building towards this. Great job only coming out with $20,000 for a master!