As the title states, I am a 26 year old and looking into buying my first home in the near future. I may be reprimanded, and that’s okay, when I say that I do not have any of the typical financial planning tools set up yet. (401k, IRA, separate emergency fund account etc.) Any constructive criticism/advice is much appreciated. My employer doesn’t offer a 401k option, and I just haven’t pursued an IRA yet. My money is essentially just sitting in my checking/savings account aside from a couple grand in crypto.
Now onto the numbers:
Currently in bank: $45,300 (By mid-late October that will be ~$62,000 give or take)
CC Debt: $0.00
Car/trailer insurance $185.00/mo
Travel trailer payment: $135.00/mo
Health insurance: $493/mo
Cell phone/internet: $130/mo
Netflix: $10
Direct TV Now: $45
Vehicle: Paid off
Rent: Varies
FICO Score: 810 as of last month
If anyone can think of any more expenses/ information I may be missing feel free to ask, and I will Edit in.
So, onto the unusual circumstances. I don’t work year round, nor do I have set dates of employment. Typically I work for 6-9 months out of the year. Through late Spring to mid to late Fall. Though this year it will only be around 4 months. I travel for work and live out of my travel trailer when I am working. That is why rent varies, as I stay in a multitude of different RV Parks throughout the work season. $120/week might be around average.
This past offseason, in order to save for myself/house I lived out of my trailer on my parent’s property this past winter/spring. I have a close relationship with my folks, and we all get along really well, so while it might not be ideal, it works for me (and them). I hate the idea of throwing away money on rent only to have to A: move all of my belongings out once work begins each year and then look for another place when I get back home and move my life back in. Or B: Bite the bullet and pay for rent year round even though it would be unoccupied for a decent portion of that time. I don’t live in a big city, quite the opposite, but it has become somewhat of a destination spot for Californians and Canadians. So, the price for rent is more expensive than it used to be. I could rent a 1 bedroom apt for around $1000-$1500/mo. So that’s a lot of money wasted if I am paying year round for a place I might only live in for 4-6 months out of the year.
When I am working, my paychecks vary, but are typically around $6300, paid biweekly after taxes. Here’s the thing, I am only taxed for about 3/8 of my overall income because of the way my employer breaks up my paycheck. Which is great! But then comes the problem of applying for a mortgage. Will they only look at my taxable income, and base that number off of what kind of loan they would be willing to give me? I can easily prove to them that I make substantially more than my taxable income dictates.
I am looking at only putting ~$20,000-25,000 down on a house so I will have to pay PMI. I am fine with that, as I can’t afford 20% down. The houses that I am looking at are 250-300k. So total monthly payment including P&I/insurance/taxes/PMI would be about $1700-$2000.
So with about $1000/mo in other expenses, I would be looking right around $3000/mo not including food/fuel/fun etc. That’s ~$36,000 a year, again, not including food/fuel/fun. In other words, I would have to work for about 3 months to cover the bare essentials at that price point.
By the time I get done working this season, my bank account will be floating just over $60,000. Say I put $25,000 down on a $300,000 home, and factor in about $10,000 for closing costs and the like, that puts me at about a $35,000 initial investment. This leaves me with roughly $30,000 in my bank account. If I put away $10,000 as an emergency fund, I would be left with ~$20,000 to use to pay for mortgage/living expenses until work begins again in the spring.
SO, finally. My main question is: Is this too risky and/or a bad idea? Is my price range for a home too high? The example I included was intentionally on the higher side of houses in my range to try to cover all my bases, so it may end up being more affordable dependent on the home I would pick. With reducing my price range down to say $150-$200k I would more than likely be buying a very old home (1910’s-1960’s) This is worrying to me, with my current price range I could at least keep it within a decade and a half of age, with the possibility to purchase something new construction. Is that worth the uptick in initial investment? Sorry for the long read, and if you have made it this far, I appreciate your time and would even appreciate your feedback even more so.
TLDR: 26 years old and single, no kids. Only work 6-9 months out of the year, but am compensated very well for those months. Will have ~$60,000 saved up by end of October, considering purchasing a home in the $250-$300k range. Am I an idiot??
Submitted September 19, 2017 at 04:23PM by ThrowingAwayMyWallet http://ift.tt/2xOc6pv
