Why you should buy a home as early as possible.

[biophase]

I know that this may be a controversial topic, but I want to give you a few examples of people that I know that are slowlaners but are actually doing very well vs. some aspiring "fastlaners" that aren't anywhere in the same position. This topic came to mind when another friend was shocked when he learned that one of our mutual friends had a decent net worth despite having a low paying job.

Example 1: I had a friend who we will call Amy who made $7/hr back in 2008. Back then a city in the Phoenix area had a first time homebuyers program. The city would pay up to $50,000 down payment for a home, but the catch was that when she sells the home, the first $50,000 is returned to the city. She qualified for the program due to her low salary.

So she bought a home for $100,000. With a $50k down payment from the city, she got a loan of $50,000 at something like 4.5%. She was able to qualify for a house on a salary of under $15,000 a year!

Today her home is worth $375,000. Her house equity is probably $170kish and she is lucky to have a nice fixed $500 mortgage payment on her current home until its paid off. If she had continued renting, she wouldn't be able to afford anything today!

Example 2: I have another friend who we will call Julie. I have known her since 2008. She has never made more than $35k per year. She bought a house for $88k in 2000. Today her house is almost paid off (she's been making an extra $100 payment per month). Today her house is worth $340k. Her equity is $330k. There is no way she could have saved that amount in 20 years on $35k a year.

These are two examples of people who would have huge issues in surviving today if they had not purchased a home years ago. Rents in their areas are $2500 a month for a home in their area. They would have been priced out a long time ago. But because of their purchase, they are paying $500 and $450 a month in mortgage payments.

I contrast this to others I have known who consistently make $75k-$150k per year but never buy a home. They lived the digital nomad life or the lifestyle business life of renting a nice loft in the city. 5-10 years later, their net worth is close to zero and they cannot afford a home any more due to the prices and interest rates.

I can already hear the naysayers saying, but if you reinvest everything back into your business, that's a much higher ROI. I agree. But this is assuming your business is successful. What I would tell any 20 year old aspiring entrepreneur is that if your business is doing well, invest into a home first, then the rest into your business.

 

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[P3HSB]

The people who made there investment in real estate very early are reaping the reward. The people who didn't get to buy in are being left in the dust, that is what we are seeing today.

How does a young millennial even have a chance? A six figure salary doesn't even cut it anymore with inflation so high

 

[biophase]

The people who made there investment in real estate very early are reaping the reward. The people who didn't get to buy in are being left in the dust, that is what we are seeing today.

How does a young millennial even have a chance? A six figure salary doesn't even cut it anymore with inflation so high

You can still find a way. Everyone always thinks that they are too late. If you are making six figures, you should be able to get something.

I bought my first home for $230k on a $65k salary at 8.25% interest. It was a 1.5 hour commute from my work.

It wasn't a great home. It had shag carpet in all the rooms.

 

[P3HSB]

I bought my first home for $230k on a $65k salary at 8.25% interest.

Your an example of somebody who play your cards right and got in early

Todays market number look like this for a very modest home. And that is without Reno. So yes shag carpet lol

$500-650k home -> 6-7% interest -> Monthly cost est $4000+

 

[David4431]

This is something I've thought about in the past and I agree with you. For someone following the typical 9-5, buying a home is one of the surest ways of building wealth over time. A home is not only a forced savings vehicle but it is also a great hedge against inflation. And if you buy right you will even see some real appreciation.

2 points:
1. (a bit of a tangent) In regards to people pursuing the fastlane, I don't think most succeed in the end. Not saying we shouldn't pursue the fastlane (I am) but it's a difficult pursuit and as with most difficult pursuits, most naturally won't succeed. For the majority that don't make it, their opportunity cost is the slowlane wealth that they could have built over time (a paid off home) if they had focused their time and resources there instead. I think as long as you're comfortable with the risks and opportunity costs involved in pursuing the fastlane then it's all good.

2. If you are in the camp of someone who is successfully running a fastlane business, then I would agree with the general spirit of what you are saying. I would only modify it and say don't limit what you buy to a home that you live in - be open to buying commercial RE, etc. as well. I personally know a family whose grandparents successfully ran a business and invested in different types of RE over time. They are now set in a multigenerational way and while their home purchase did well, it was really all the commercial stuff that they bought which really established them. Businesses ebb and flow, and their original business is no longer very profitable at all. If they did not have the foresight to invest their profits wisely when they were making good profits, they would be in a very different position today. I think this is why I like your advice telling successful fastlaners to buy property instead of spending it... because the good times might not last forever.

 

[Hurks2048]

I know that this may be a controversial topic, but I want to give you a few examples of people that I know that are slowlaners but are actually doing very well vs. some aspiring "fastlaners" that aren't anywhere in the same position. This topic came to mind when another friend was shocked when he learned that one of our mutual friends had a decent net worth despite having a low paying job.

Example 1: I had a friend who we will call Amy who made $7/hr back in 2008. Back then a city in the Phoenix area had a first time homebuyers program. The city would pay up to $50,000 down payment for a home, but the catch was that when she sells the home, the first $50,000 is returned to the city. She qualified for the program due to her low salary.

So she bought a home for $100,000. With a $50k down payment from the city, she got a loan of $50,000 at something like 4.5%. She was able to qualify for a house on a salary of under $15,000 a year!

Today her home is worth $375,000. Her house equity is probably $170kish and she is lucky to have a nice fixed $500 mortgage payment on her current home until its paid off. If she had continued renting, she wouldn't be able to afford anything today!

Example 2: I have another friend who we will call Julie. I have known her since 2008. She has never made more than $35k per year. She bought a house for $88k in 2000. Today her house is almost paid off (she's been making an extra $100 payment per month). Today her house is worth $340k. Her equity is $330k. There is no way she could have saved that amount in 20 years on $35k a year.

These are two examples of people who would have huge issues in surviving today if they had not purchased a home years ago. Rents in their areas are $2500 a month for a home in their area. They would have been priced out a long time ago. But because of their purchase, they are paying $500 and $450 a month in mortgage payments.

I contrast this to others I have known who consistently make $75k-$150k per year but never buy a home. They lived the digital nomad life or the lifestyle business life of renting a nice loft in the city. 5-10 years later, their net worth is close to zero and they cannot afford a home any more due to the prices and interest rates.

I can already hear the naysayers saying, but if you reinvest everything back into your business, that's a much higher ROI. I agree. But this is assuming your business is successful. What I would tell any 20 year old aspiring entrepreneur is that if your business is doing well, invest into a home first, then the rest into your business.

Interesting take Biophase!
Reminds me of what Tim talked about in the 4HWW, where he talked about how the usefulness of money can change depending on what you spend it on, who you spent it with, where etc.

 

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[Subsonic]

I know that this may be a controversial topic, but I want to give you a few examples of people that I know that are slowlaners but are actually doing very well vs. some aspiring "fastlaners" that aren't anywhere in the same position. This topic came to mind when another friend was shocked when he learned that one of our mutual friends had a decent net worth despite having a low paying job.

Example 1: I had a friend who we will call Amy who made $7/hr back in 2008. Back then a city in the Phoenix area had a first time homebuyers program. The city would pay up to $50,000 down payment for a home, but the catch was that when she sells the home, the first $50,000 is returned to the city. She qualified for the program due to her low salary.

So she bought a home for $100,000. With a $50k down payment from the city, she got a loan of $50,000 at something like 4.5%. She was able to qualify for a house on a salary of under $15,000 a year!

Today her home is worth $375,000. Her house equity is probably $170kish and she is lucky to have a nice fixed $500 mortgage payment on her current home until its paid off. If she had continued renting, she wouldn't be able to afford anything today!

Example 2: I have another friend who we will call Julie. I have known her since 2008. She has never made more than $35k per year. She bought a house for $88k in 2000. Today her house is almost paid off (she's been making an extra $100 payment per month). Today her house is worth $340k. Her equity is $330k. There is no way she could have saved that amount in 20 years on $35k a year.

These are two examples of people who would have huge issues in surviving today if they had not purchased a home years ago. Rents in their areas are $2500 a month for a home in their area. They would have been priced out a long time ago. But because of their purchase, they are paying $500 and $450 a month in mortgage payments.

I contrast this to others I have known who consistently make $75k-$150k per year but never buy a home. They lived the digital nomad life or the lifestyle business life of renting a nice loft in the city. 5-10 years later, their net worth is close to zero and they cannot afford a home any more due to the prices and interest rates.

I can already hear the naysayers saying, but if you reinvest everything back into your business, that's a much higher ROI. I agree. But this is assuming your business is successful. What I would tell any 20 year old aspiring entrepreneur is that if your business is doing well, invest into a home first, then the rest into your business.

But what about all the people who bought a home and got F*cked because of it?

What if I don't want to settle down in my 20s?


I like the idea and you know what your talking about, yet I feel like your somewhat biased towards real estate and it's greatness.

 

[Subsonic]

This is something I've thought about in the past and I agree with you. For someone following the typical 9-5, buying a home is one of the surest ways of building wealth over time. A home is not only a forced savings vehicle but it is also a great hedge against inflation. And if you buy right you will even see some real appreciation.

2 points:
1. (a bit of a tangent) In regards to people pursuing the fastlane, I don't think most succeed in the end. Not saying we shouldn't pursue the fastlane (I am) but it's a difficult pursuit and as with most difficult pursuits, most naturally won't succeed. For the majority that don't make it, their opportunity cost is the slowlane wealth that they could have built over time (a paid off home) if they had focused their time and resources there instead. I think as long as you're comfortable with the risks and opportunity costs involved in pursuing the fastlane then it's all good.

2. If you are in the camp of someone who is successfully running a fastlane business, then I would agree with the general spirit of what you are saying. I would only modify it and say don't limit what you buy to a home that you live in - be open to buying commercial RE, etc. as well. I personally know a family whose grandparents successfully ran a business and invested in different types of RE over time. They are now set in a multigenerational way and while their home purchase did well, it was really all the commercial stuff that they bought which really established them. Businesses ebb and flow, and their original business is no longer very profitable at all. If they did not have the foresight to invest their profits wisely when they were making good profits, they would be in a very different position today. I think this is why I like your advice telling successful fastlaners to buy property instead of spending it... because the good times might not last forever.

Bro get out of here with the "oh dream big but make sure to be ready to settle for less" mentality.

We just recently had a massive thread about how this is toxic and helping noone.

 

[jclean]

I advised my brother to buy something immediately with his girlfriend. they both still lived at home and then immediately bought a house in 2018 for 165,000 euros. has now paid off for 5 years. there is still 130,000 euros outstanding. this house is now being sold for 200,000 euros. = 70,000 euros that will be used to buy a bigger house.

I myself have rented for 6 years +- 800 euros per month = -57,600 euros.

you have to live somewhere you can buy your own house. if you still want to travel a lot you can rent it out.

Buying a home is a good way for many people to save money that they would otherwise spend on other junk

 

[illmasterj]

I've found getting a nice home to be great motivation. Previously I was very comfortable -- there was no burning need to grow my business or even increase my investment portfolio due to cheap rent and low cost of living.

When I decided to buy a huge house in a nice area for my family, it was massive motivation to change things in my life. My perspective shifted as well. One of the first questions I asked was "how can I own this outright in 2 years?" I'm on track to achieve that, even though there may be better way to allocate capital.

I think it's Grant Cardone who talks about putting every cent you have into another property. He claims he's in a perpetual state of "being broke". This creates the drive he needs to make more money. This sounds like a mindset focused on scarcity instead of abundance, but still, if you know what motivates you it could be a powerful stratech.

 

[David4431]

Bro get out of here with the "oh dream big but make sure to be ready to settle for less" mentality.

We just recently had a massive thread about how this is toxic and helping noone.

Business is hard and most people will fail. This is a fact. If you never succeed in building a successful business and spend years trying to do so, you will likely be worse off financially. This shouldn't be controversial. Why is acknowledging the opportunity cost of building a business somehow a "settle for less" mentality or toxic? Opportunity costs are still very real costs that need to be paid. I think most entrepreneurs recognize and accept this cost so I'm not sure why you have a problem with it. When I point this out, I'm honestly not trying to say "settle for less". For me, pointing out the fact that business will eat most people alive is like saying the sky is blue. And I'm cool with this. Business requires risk taking which means that if you fail then it is possible that you will be POORER as a result and a slowlaner who just did a 9-5 and bought a home will be wealthier than you in the end. Someone pointing out the truth of this honestly shouldn't distress you if you're serious about building a business. Business is hard and there is a price to pay if you want to play. I am happy to pay this price to play and you should be too if you are serious about this.

And for context, I run an ecommerce business so I know how ferocious competing in business can be.

 

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[MJ DeMarco]

For the average person, real estate as a residence is the best thing you can do.

It is a great hedge against inflation. First your home almost always appreciates in a mid- and long-term horizon. Second, you're mortgage is denominated in cheaper dollars which always, ALWAYS inflate.

I'm not an active RE investor, however, some of my "easiest" money wins came from selling my primary homes after 2 years and taking $250K tax-free. A $250k tax free gain is the same as earning $400K and paying taxes on it.

The smartest thing anyone can do is buy a primary residence for 2 years, sell it and take gains tax free, and repeat. (This is based on US tax law) Upgrade along the way.

By the time a 21 year old is my age, the will have millions... of course, those millions will be inflated and not worth as much, but still, far ahead of the average salary slave.

Location, also cannot be understated. My city is full of millionaires, even if they only own 1,200 square foot craftsmen houses ... owning real estate in a desirable location, is 100% responsible.

 

[biophase]

Your an example of somebody who play your cards right and got in early

Todays market number look like this for a very modest home. And that is without Reno. So yes shag carpet lol

$500-650k home -> 6-7% interest -> Monthly cost est $4000+

What city are you in? If you are making six figures that comes out to 50% of your income. $8333 a month income and $4000 expenses. It’s pretty close to the 33% threshold lenders want.

Can you find something a little further out?

What is the rent rate compared to the housing prices?

My monthly payment back then was $1200ish against my $5000 month income, 25%.

By the way, I did not get lucky. When I first got out of college, my starting salary was $30,000 and I could only afford a home that was $60,000. That was all that the banks would lend me at the current interest rate. The only $60,000 homes at that time were in the ghetto.

The houses that I was looking at were around $130,000 and about a 1 hour drive from work. This was in 1995. In 1999 I was finally able to afford my first home.

 

[OMDA]

I think I got lucky to get the timing right.

When I moved back to FL from Europe/west coast I still had some savings. My rent was at 1450 a month downtown starting in 2020. My renewal this year would've been 2200 a month. That was for a <700 sqft place, but right where I didn't really need to drive for most things.

But, was able to find in a very tight housing market a <500k place at just under 6%. Mortgage and HOA is ~2600 a month. But it's over 2000 sqft with garage. I'm just glad I had the savings to make a move on that when I did. Housing is so tight here it was hard to find anything sub 500k. I don't see housing prices dropping soon either with inflation and with how many people are moving here. Rent seemed to be going into a hole and I had to work in my living room which was packed with crap. Now, I have all my sports gear out in the garage and my own office with lots of space.

And bonus I'm on a bike trail. We can bike to a lake, a few small towns, and a bunch of other stuff on offroad paved trails. I can also get to one beach in a 10min drive. Others are further. And it's a relatively nice area. Still think it was a lucky move.

 

[biophase]

But what about all the people who bought a home and got F*cked because of it?

Yes this may happen. I bought a place in Chicago in 2005 and sold it for $20,000 cheaper than what I paid for it in 2022.

Not all real estate goes up.

What if I don't want to settle down in my 20s?

This is a choice that many people make. And then in their 30s and 40s they cannot afford to purchase anything and they do not have any savings.

This is the main reason I made this post because in my lifetime with my friends it is now 20 years later after they made that same statement and I can see the wealth difference between the haves and the have nots.

I like the idea and you know what your talking about, yet I feel like your somewhat biased towards real estate and it's greatness.

I am not biased towards real estate. I am biased towards investing when young however, the reason I suggest real estate is because it is a twofold asset.

One is that you get to live in it and two is that it is an investment and savings vehicle.

It is much harder to tell somebody young to invest in stocks/funds when they have to purchase shares and still have to pay rent, I tell them that real estate will accomplish those two things with one payment.

Ok I guess I am biased towards real estate in that way.

 

[AmazingLarry]

I got forced out of a rental last year because the landlord was selling the house. Wasn't planning on buying a house, but it was cheaper to buy than continue renting, and at this point I'm glad it worked out that way.

Got a somewhat rundown house from 1820 for under asking, which is unheard of in my area for the past couple years. I'm fixing it up and it's gonna be super nice when it's done and worth a hell of a lot more.

Just the fact that I'm not throwing money away on rent feels great.

 

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[biophase]

Bro get out of here with the "oh dream big but make sure to be ready to settle for less" mentality.

We just recently had a massive thread about how this is toxic and helping noone.

It's not dreaming big but settle for less. It's about protecting your downside. Businesses come and go. Their success may last 5, 10 or 20 years. You just don't know.

I have many friends that did very well in the past 10 years that are now complaining that housing prices are too high. My response is "Why didn't you buy anything when interest rates were at 3% for 10 years and prices were stagnant?" They can complain all they want, they chose the 20'-30's lifestyle over investing in their future. They couldn't foresee Covid, the price run up, interest rates at 7%. Now in their 40's they want to decide to start saving and investing? If they would have just taken a small chunk, like 1 year's profit to invest in a home...

My neighborhood in Scottsdale is a crazy example. The house I lived in was $500k in 2004. In 2008 it had dropped down to $350k. It remained between $350k and $450k until 2018. So anytime during 2008 to 2018 you could have bought into my neighborhood for $450k at 3%. That is 10 years!!! Today, the house is worth around $1.1M. Try getting into the neighborhood now at 7%. You are paying $7318 a month in 2023 whereas in 2018 you would be paying $1897 a month.

 

[P3HSB]

What city are you in? If you are making six figures that comes out to 50% of your income. $8333 a month income and $4000 expenses. It’s pretty close to the 33% threshold lenders want.

Can you find something a little further out?

What is the rent rate compared to the housing prices?

My monthly payment back then was $1200ish against my $5000 month income, 25%.

By the way, I did not get lucky. When I first got out of college, my starting salary was $30,000 and I could only afford a home that was $60,000. That was all that the banks would lend me at the current interest rate. The only $60,000 homes at that time were in the ghetto.

The houses that I was looking at were around $130,000 and about a 1 hour drive from work. This was in 1995. In 1999 I was finally able to afford my first home.

not pulling in six fig here more like half of that.

in the LA area further out

just to provide some context of the market we are dealing with here. It not pretty

I have many friends that did very well in the past 10 years that are now complaining that housing prices are too high. My response is "Why didn't you buy anything when interest rates were at 3% for 10 years and prices were stagnant?" They can complain all they want, they chose the 20'-30's lifestyle over investing in their future. They couldn't foresee Covid, the price run up, interest rates at 7%. Now in their 40's they want to decide to start saving and investing? If they would have just taken a small chunk, like 1 year's profit to invest in a home...

My neighborhood in Scottsdale is a crazy example. The house I lived in was $500k in 2004. In 2008 it had dropped down to $350k. It remained between $350k and $450k until 2018. So anytime during 2008 to 2018 you could have bought into my neighborhood for $450k at 3%. That is 10 years!!! Today, the house is worth around $1.1M. Try getting into the neighborhood now at 7%. You are paying $7318 a month in 2023 whereas in 2018 you would be paying $1897 a month.

The run up was insane after covid. That really made the separation. Real Estate price look like they never go down due to limited supply. If a Banking crisis can't drop it, I don't know what will. The Feds just continue to print and this is just the way it is.

 

[socaldude]

I became a Mexican citizen a few years ago with the intention of buying a property.

I guess growing up and living in California I've grown tired and frustrated (it's really bad). The high cost of living, the $25k/year dead-end jobs, depression, the homeless, crime and government.

Interestingly I ran my credit score in Mexico at the "Buro de Credito" which is owned by Trans Union and my score was 750. That was just me taking out a department score credit card and just stashing it away. I can walk into Santander and they'll give me a mortgage.

If you buy a condo in a growing city like Monterey. You are going to do good.

 

[JAJT]

My wife and I bought our home in 2008 for $260k at the age of 23-24. Youngest people we knew with a home and neither of us were making killer money.

With just some of the equity we built up over the years, we bought an investment property duplex in 2019 for coincidentally the same $260k.

Our primary home today is worth about $6-700k and our investment property has exploded to over $400k in just a few years. There's a pretty easy way to turn our primary home into a duplex as well so if we ever sold, we could explode the value by turning it into a turn-key vacant investment property.

My kids are only 11 and 13 right now, but I sleep pretty well knowing that when it comes time for them to want a home - I can use my equity/investment to assist them with the down-payment so they can get a home at a young age instead of having to work until 40 like many of my friends have had to. Some of my friends and family still can't afford a home (or rent, for that matter) despite some of them making significantly more than me!

I've started a few businesses over the years that didn't really go anywhere and I've had okay paying jobs my entire life but real estate has absolutely meant the difference between a struggling situation and a pretty optimistic situation for me and my family.

 

[biophase]

not pulling in six fig here more like half of that.

in the LA area further out

just to provide some context of the market we are dealing with here. It not pretty

View attachment 49410
View attachment 49409




The run up was insane after covid. That really made the separation. Real Estate price look like they never go down due to limited supply. If a Banking crisis can't drop it, I don't know what will. The Feds just continue to print and this is just the way it is.

Yeah it is tough in California. That's how I ended up in Phoenix. When I moved to Orange County in 2004 the prices were already high. Rent wasn't that bad if I remember correctly. I was looking for real estate investments and couldn't find anything even close to cashflowing.

But in Scottsdale AZ, I was able to purchase a 2br condo for $72k.

Sometimes you just can't afford to live where you want. It's hard to live on $50k in LA.

 

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[Feuertaufe]

Bought a small house this year and renovated it. It was definitely cheaper then renting a house/appartement. Either way we had to move, because with a family member more we needed more space.

 

[MitchM]

My fiancé is from Singapore and I’m currently on the fence as to whether we should buy there or in the US first - because Singapore will cost a lot more upfront.

I’m 27 now and am definitely starting to see the effect that the lifestyle of traveling and renting places is having on my net worth. Your post definitely hit home for me there.

It’s really the current interest rates in the US that are pushing me towards Singapore. The main problem on the Singapore side is the legal situation with renting it out if we go with an HDB property. We’d have to wait 5 years or do it under the table - which many people do ‍♂️

Even though my numbers have grown over time and my “Net Worth” is solid if you factor in the value of business (which I don’t think is a fair thing to do).. I can’t shake the uneasy feeling that I have. I’ve always been confident, but we’re talking about having a family at this point - and that has me really scared of failing her and our future children.

Lots of big think lately.

 

[socaldude]

Yeah it is tough in California. That's how I ended up in Phoenix. When I moved to Orange County in 2004 the prices were already high.

It's way worse today.

Areas that were newly developed and nice neighborhoods are now populated with homeless and junky cars and trashy RV's parked on the streets.

A lot of people close to me are slowlane millionaires just because they invested in real estate in CA back in 1995 or in 2005. They own 2-3 houses or a duplex. Worth 2-3X easily.

How does a young millennial even have a chance? A six figure salary doesn't even cut it anymore with inflation so high

We are just in a different economic environment. Not like 90 years ago when you had a Morgan silver dollar in your pocket and looked up at the empire state building being built.

The bankers and politicians have destroyed the value of college degrees, the US dollar and commoditized labor markets.

Hard assets all the way. Anything is better than cash at this point. LOL

Real Estate price look like they never go down due to limited supply. If a Banking crisis can't drop it, I don't know what will.

Real estate will never crash. It's a hard asset that holds more utility than most other assets. The only way out is hyperinflation and a reset with a central bank digital currency attached to a social credit score.

Money is a dialetheia with metaphysical properties, like paying a doctor for a life saving operation. It's why the political elites at the top think they are mortal gods that can levitate. LOL That's what happens when you put a small group in charge of money. What was supposed to streamline the economy is now abused by lying sociopaths. Like irredeemable drug addicts.

It's like the news. It was just supposed to be a "Utility" like turning on the faucet for water or flipping a switch for lighting is now controlled by laughing liars. That's why CNN was called "Cable News Network". News was supposed to be like a utility. Now it ain't.

 

[biophase]

BTW... I just looked up the city my friend purchased in and the program is still available.

Avondale First-Time Homebuyer Program

The City of Avondale currently operates a program to assist qualified households with the purchase of their first home in the City. In order to participate, households must be first-time buyers and meet certain income requirements provided by the US Department of Housing and Urban Development.

The City may provide up to $30,000 in down payment, closing cost and/or principal reduction assistance in the form of a non-interest bearing deferred, forgivable loan. The City will secure this loan with a Deed of Trust, Promissory Note and/or other approved lien instrument. The loan will become payable in full if the buyer sells or moves from the property within a certain period of time or does not maintain the property. If at the end of this period the buyer has complied with all requirements, the City will forgive the loan in full and release its lien.

Requirements

• The property must be located in the city limits of Avondale.
• You must attend an 8 hour homebuyer education course.
• Qualify for a first mortgage.
• The maximum sales price allowed is $300,000.
• Have a credit score of 580 or higher.

Unfortunately, I took a look in Avondale and there are no houses under $300,000 anymore. So this program is pretty much dead now unless they raise its limits. But what an awesome program. The city giving you $30k to jump start your savings and equity building.

A house like this one below would have qualified in 2020. Imagine getting this home for $295k, with $30k down. You have a $265k loan at 3%. You are paying $1500/mo including taxes and HOA for a 4br 2000sf home and have $130kish equity.

If you are young and haven't bought a home yet, I would look for opportunities like this. Especially if you are lower income and/or side walkers. I can't imagine not using this program when homes were $100k-$120k!

 

[biophase]

Well sh!t, I went down the rabbit hole and googled '$50,000 down payment assistance program" and found a bunch. So they are out there. I've never looked for them.


Here's a link to one in Massachussets. Up to $50k in down payment assistance, no payments, no interest. You pay back when you sell your home.

Income limits and eligibility requirements for MassHousing Mortgage Loans

Am I eligible for a MassHousing Mortgage Loan with Down Payment Assistance?

www.masshousing.com

Here is one in Cali from the city of Yorba Linda:

The City of Yorba Linda has recently reinstated the Mortgage Assistance Program (MAP) to assist a limited number of low and moderate income households in purchasing a home in our community.

The MAP loan is in the form of a “silent second” and is considered a second mortgage on the home. The MAP participant borrows a prescribed amount from the City, in addition to the amount borrowed from the lender providing the first mortgage loan. The maximum loan amount is $50,000. The loan is interest free and is considered payable when the home is sold or no longer considered a primary residence.

 

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[REV5028]

Thanks for this thread, @biophase . It gives me some hope.

My boyfriend and I mortgaged a lovely Santa Fe style, 2400 sq. ft., 13 year old house for $292k @ 5.99% fixed interest last August in a small college town about 1 - 1.5 hours from a larger city. As first time homeowners and just getting out of college, we put the minimum down (can't remember exactly, maybe 5%?). I know $292k and 5.99% aren't awful by today's standards, but looking at the amount of interest we'd be paying if we stuck to the standard monthly payment makes me physically ill.

Maybe we should have waited to build up more of a down payment, but maybe not for the reasons you've mentioned. We've also been paying an extra $100 per month and plan to start increasing that amount as our income increases and other debts get taken care of. When we bought the house our combined salary was ~$150k. Recently our combined salary increased to ~$203k. We both also have one toe on the fastlane, and I expect one day we'll both at least have a foot on it. And, if push comes to shove, we should be able to easily find renters. One of our 5-year goals (ideally 2 years) is to acquire rental properties here.

I would also like to acknowledge how lucky we were. It turns out that the family we bought the house from are really great friends with one of my friend's family. I don't know for sure, but I think this might have played a role in the sellers agreeing to replace the roof ($16k) and paying for a year-long home warranty even after our real estate agent forgot to include it in the deal... We are now going solar and have no roof issues to deal with first. Our tankless water heater also just bit the dust, so we'll only be paying ~$180 for a $3800 job thanks to the home warranty. And, now I don't have to argue with a stingy landlord about whether or not the water heater really needs to be replaced.

So, right now it feels like it could be better, but could definitely be worse. I'm hoping it will start feeling like a better and better investment as the years go on.

 

[biophase]

Thanks for this thread, @biophase . It gives me some hope.

My boyfriend and I mortgaged a lovely Santa Fe style, 2400 sq. ft., 13 year old house for $292k @ 5.99% fixed interest last August in a small college town about 1 - 1.5 hours from a larger city. As first time homeowners and just getting out of college, we put the minimum down (can't remember exactly, maybe 5%?). I know $292k and 5.99% aren't awful by today's standards, but looking at the amount of interest we'd be paying if we stuck to the standard monthly payment makes me physically ill.

Congratulations. I think there is some comfort in knowing that your payment ("rent") will stay at $1750 for the next 30 years if you don't move at all. 20 years from now, when rents are $10,000/mo. You'll be sitting pretty like my friends who are paying $400 a month now.

I know that for me, once I had my first property paid off in Arizona. I knew that if I ever f*cked up royally I always had a place to live and all I needed to do was pay the HOA and taxes which amounted to $250/mo. This gave me alot of confidence to be more aggressive in my business.

 

[REV5028]

Congratulations. I think there is some comfort in knowing that your payment ("rent") will stay at $1750 for the next 30 years if you don't move at all. 20 years from now, when rents are $10,000/mo. You'll be sitting pretty like my friends who are paying $400 a month now.

Thank you! Our "rent" is ~$2100, but I'll still take that over $10,000/mo. And it definitely helps to see your friends example - in even just five years from now I'm sure $2100 will seem low compared to now. In 20 years (or less) our $2100 will be the new $400.

I know that for me, once I had my first property paid off in Arizona. I knew that if I ever f*cked up royally I always had a place to live and all I needed to do was pay the HOA and taxes which amounted to $250/mo. This gave me alot of confidence to be more aggressive in my business.

That's awesome! I hadn't really thought about what it will feel like to have it paid off, other than one less stressor. A confidence boost to take more chances is another great feeling to look forward to.

 

[GuestUser4aMPs1]

Well sh!t, I went down the rabbit hole and googled '$50,000 down payment assistance program" and found a bunch. So they are out there. I've never looked for them.

Nuts. So glad these exist....

I'm kicking myself for not taking RE seriously enough over all these years.