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Millennials, like myself, are stuck between a rock and a hard place. We either have to keep shelling out a mortgage-level rent payments every month, with a $100

Millennials, like myself, are stuck between a rock and a hard place. We either have to keep shelling out a mortgage-level rent payments every month, with a $100+ increase every year, or try and save up and spend the 20% down payment and hedge against the rent payment increases. I went with saving for down payment and getting a home. I'd say i made the right choice though. I just looked at rent cost for the apartment I use to have, and when i started renting it was $900; It's now at $1315 4 years later. My mortgage is at $1300, and I know it will always stay that way, too. Only downside is replacing things that seem to break all the time when you own a home :P

ams6110 8y ago
Do people still think about "starter" homes? The first house I bought was tiny. Two small bedrooms, a bathroom with a sink, tub, and toilet, a living room and a kitchen. Carport in back on a small lot. I knew it wasn't what I wanted forever, but it was adequate at the time (no kids when we bought it, one when we sold it) and the payment was lower than rent on a similar sized apartment. Gave me a tax deduction, and though it didn't appreciate a lot I didn't lose money on it either. When I sold it, I parlayed the original down payment, the small increase in equity, plus additional savings into buying a bigger house. If you start off with a big house at the very upper end of what you can afford, you have a hard time saving more money and can be really hurt by unexpected maintenance and repairs.
- LeifCarrotson 8y ago
  They do, but that 1200 sqft 2br might be sold for a cash offer of $160k, not $40k after a few weeks on the market like it was a few decades ago.
- swagtricker 8y ago
  >Do people still think about "starter" homes? Yeah. With fond memories of 20+ years ago when they actually existed in competitive markets. Unfortunately, house flippers have killed the "slow growth, sweat equity" path to ownership. Everything that can be improved, updated, or expanded in a competitive housing marked is done by flippers. Then, even 2 bedroom 1 bath "small" homes cost a fortune because they have stainless steel appliances & granite countertops covering up 50 year old galvanized pipes and electrical work with a limited number of grounded outlets. Flip with flashy improvements, drive up the price, and let the expensive infrastructure problems be a time bomb for the sucker that wants to live in it.
- makotech222 8y ago
  When i first started looking, there were none in the area below 170k that were what I needed in a home. None of them were in good condition and all required extensive work. I ended up with a 219k home, which was a bit more than I wanted. Unfortunately, all new construction in the area is for 300k+ homes. Same with rental apartments.
VBprogrammer 8y ago
I completely agree with you but would also point out that the tiny home / alternative lifestyle movements have, at least in my perception, grown out of this ugly dichotomy. I on the other hand chose to buy a house that needed a lot of work in the hope of accelerating the equity growth. Time will tell if that worked out.
- abledon 8y ago
  My friend is a single child and she was joking how since her parents are divorced and each live in separate homes she’ll have 2 houses in 15~20 years... the ones she grew up in lol. Kind of a weird dynamic for ‘modern’ Instagram culture but looking back on history , not so weird pre 1900s
ceejayoz 8y ago
Taking an FHA loan and not needing the 20% downpayment is also an option.
- joshuamcginnis 8y ago
  If they didn't have the cashflow to save 20% down, they will likely run into issues affording the PMI on the FHA loan.
  - ceejayoz 8y ago
    Maybe. Maybe they've got a good paying job fairly quickly out of school and thus have great cashflow but not much in savings built up yet, like I did.
  - LyndsySimon 8y ago
    Not always true. I was living in a high cost area that made it very difficult to save. Buying a house in a much cheaper area meant my monthly expenses were halved.
- ams6110 8y ago
  You typically need PMI then? That's money down the drain.
  - vorpalhex 8y ago
    You can pay off enough to not need PMI, and in many areas the house value increasing will help you.
  - ceejayoz 8y ago
    So's renting. I took an FHA loan and paid it down to the "cancel my PMI" level as quickly as possible, and I'm fairly sure it was the right decision in my case.
    - jrnichols 8y ago
      can't do that on a lot of FHA loans now. It's for the lifetime of the loan.
ojhughes 8y ago
In the UK renting makes very little sense for most people, due to low interest rates, mortgage payments are lower than the equivalent rent. Renters have very little security, landlords are often unscrupulous with minimal regulation. Us Brits like to say that renting a house is money down the drain.
potta_coffee 8y ago
I just bought a house 2 weeks ago. Mortgage is $1200, rent for an apartment with one less room and no yard for the puppers is $1300...plus extreme competition for that rental. Buying a house was pretty much a no-brainer for me this time around.
- mrguyorama 8y ago
  There are quite literally zero homes in my price range within about 50 miles. I pay ~$1300 a month for 750sq ft and utilities. As a single guy, my only choice to not burn the money on rent would be to find a significant other or some other form of housemate and lock ourselves into a long term relationship. The market is absurd.
  - potta_coffee 8y ago
    Yeah market is crazy. I live in a smaller city so it's still somewhat doable but prices are steadily rising here and competition for both rentals and homes for sale is really crazy. I got outbid on three houses, some of my bids were 20k+ greater than asking price.
vorpalhex 8y ago
> Only downside is replacing things that seem to break all the time when you own a home :P The nice thing is that you can choose to fix them yourself and save money. You can also use that as an opportunity to upgrade them and do the job right. Once or twice a year, go through your house and check on the major parts like appliances, fixtures, etc. Make a list of what is due to be updated or repaired soon so you can save up money and do some research. Determine what is in your wheelhouse of what you can fix and what you need to call in a contractor for - personally I'll do appliance repair or drywall all day, but I refuse to go climbing into trees to prune them. Aim to buy good replacements - avoid fancy (easily broken) features, but splurge to get better made stuff. Don't be afraid to use quality non-oem parts either, since they are much cheaper and usually still very good. Youtube is a godsend for a lot of repair jobs.
PretzelFisch 8y ago
My mortgage payment may not change but the yearly Taxes and Insurance do.
- jrnichols 8y ago
  > but the yearly Taxes and Insurance do. This is what we are facing. Our property taxes have jumped up substantially along with homeowners insurance, adding another $150/mo. and this was after a refinance that was supposed to save us $90/mo.

ams6110 8y ago

Do people still think about "starter" homes? The first house I bought was tiny. Two small bedrooms, a bathroom with a sink, tub, and toilet, a living room and a kitchen. Carport in back on a small lot. I knew it wasn't what I wanted forever, but it was adequate at the time (no kids when we bought it, one when we sold it) and the payment was lower than rent on a similar sized apartment. Gave me a tax deduction, and though it didn't appreciate a lot I didn't lose money on it either. When I sold it, I parlayed the original down payment, the small increase in equity, plus additional savings into buying a bigger house. If you start off with a big house at the very upper end of what you can afford, you have a hard time saving more money and can be really hurt by unexpected maintenance and repairs.

LeifCarrotson 8y ago
They do, but that 1200 sqft 2br might be sold for a cash offer of $160k, not $40k after a few weeks on the market like it was a few decades ago.
swagtricker 8y ago
>Do people still think about "starter" homes? Yeah. With fond memories of 20+ years ago when they actually existed in competitive markets. Unfortunately, house flippers have killed the "slow growth, sweat equity" path to ownership. Everything that can be improved, updated, or expanded in a competitive housing marked is done by flippers. Then, even 2 bedroom 1 bath "small" homes cost a fortune because they have stainless steel appliances & granite countertops covering up 50 year old galvanized pipes and electrical work with a limited number of grounded outlets. Flip with flashy improvements, drive up the price, and let the expensive infrastructure problems be a time bomb for the sucker that wants to live in it.
makotech222 8y ago
When i first started looking, there were none in the area below 170k that were what I needed in a home. None of them were in good condition and all required extensive work. I ended up with a 219k home, which was a bit more than I wanted. Unfortunately, all new construction in the area is for 300k+ homes. Same with rental apartments.

VBprogrammer 8y ago

I completely agree with you but would also point out that the tiny home / alternative lifestyle movements have, at least in my perception, grown out of this ugly dichotomy. I on the other hand chose to buy a house that needed a lot of work in the hope of accelerating the equity growth. Time will tell if that worked out.

abledon 8y ago
My friend is a single child and she was joking how since her parents are divorced and each live in separate homes she’ll have 2 houses in 15~20 years... the ones she grew up in lol. Kind of a weird dynamic for ‘modern’ Instagram culture but looking back on history , not so weird pre 1900s

ceejayoz 8y ago

Taking an FHA loan and not needing the 20% downpayment is also an option.

joshuamcginnis 8y ago
If they didn't have the cashflow to save 20% down, they will likely run into issues affording the PMI on the FHA loan.
- ceejayoz 8y ago
  Maybe. Maybe they've got a good paying job fairly quickly out of school and thus have great cashflow but not much in savings built up yet, like I did.
- LyndsySimon 8y ago
  Not always true. I was living in a high cost area that made it very difficult to save. Buying a house in a much cheaper area meant my monthly expenses were halved.
ams6110 8y ago
You typically need PMI then? That's money down the drain.
- vorpalhex 8y ago
  You can pay off enough to not need PMI, and in many areas the house value increasing will help you.
- ceejayoz 8y ago
  So's renting. I took an FHA loan and paid it down to the "cancel my PMI" level as quickly as possible, and I'm fairly sure it was the right decision in my case.
  - jrnichols 8y ago
    can't do that on a lot of FHA loans now. It's for the lifetime of the loan.

ojhughes 8y ago

In the UK renting makes very little sense for most people, due to low interest rates, mortgage payments are lower than the equivalent rent. Renters have very little security, landlords are often unscrupulous with minimal regulation. Us Brits like to say that renting a house is money down the drain.

potta_coffee 8y ago

I just bought a house 2 weeks ago. Mortgage is $1200, rent for an apartment with one less room and no yard for the puppers is $1300...plus extreme competition for that rental. Buying a house was pretty much a no-brainer for me this time around.

mrguyorama 8y ago
There are quite literally zero homes in my price range within about 50 miles. I pay ~$1300 a month for 750sq ft and utilities. As a single guy, my only choice to not burn the money on rent would be to find a significant other or some other form of housemate and lock ourselves into a long term relationship. The market is absurd.
- potta_coffee 8y ago
  Yeah market is crazy. I live in a smaller city so it's still somewhat doable but prices are steadily rising here and competition for both rentals and homes for sale is really crazy. I got outbid on three houses, some of my bids were 20k+ greater than asking price.

vorpalhex 8y ago

> Only downside is replacing things that seem to break all the time when you own a home :P The nice thing is that you can choose to fix them yourself and save money. You can also use that as an opportunity to upgrade them and do the job right. Once or twice a year, go through your house and check on the major parts like appliances, fixtures, etc. Make a list of what is due to be updated or repaired soon so you can save up money and do some research. Determine what is in your wheelhouse of what you can fix and what you need to call in a contractor for - personally I'll do appliance repair or drywall all day, but I refuse to go climbing into trees to prune them. Aim to buy good replacements - avoid fancy (easily broken) features, but splurge to get better made stuff. Don't be afraid to use quality non-oem parts either, since they are much cheaper and usually still very good. Youtube is a godsend for a lot of repair jobs.

PretzelFisch 8y ago

My mortgage payment may not change but the yearly Taxes and Insurance do.

jrnichols 8y ago
> but the yearly Taxes and Insurance do. This is what we are facing. Our property taxes have jumped up substantially along with homeowners insurance, adding another $150/mo. and this was after a refinance that was supposed to save us $90/mo.