Hi All,
So I am a 24M living on my own and working in the IT sector. I net on a monthly basis around 3k$ after taxes. My expenses are around 2k$ a month including rent food and all the other stuff. On average I can save between 1k and 800$ per month. I already have savings of around 30k$ since I've been working for 4 years now.
I have the option now to purchase real estate because the average apartment in my area would cost me around 200-220k$. My current rent is 990$. My options with the bank are a 25 year mortgage with a 10% downpayment at 3.5% interest which will probably cost my entire savings to execute the move and maintain some cash buffer. I can borrow a bit from family if really needed so I have a safety net. They also offered me a no down payment option which is at 4.2% interest, but I believe that it is probably a bad option due to the long term interest getting more expensive. Monthly re-payments for these two scenarios are 1070$ a month and 1150$ respectively.
Normally I just throw money at index funds. I figure acquiring real estate would be really smart though, because you shouldn't "throw money away renting".
On the other hand, I don't know how many more years I want to live here, I want change in my life and I feel like I'm still young. I want to move to get more money and try something new. I feel like purchasing an apartment is going to tie me down alot and it will consume an additional 400 or so dollars of my income, meaning I'll save less, though a big part of my income will go towards paying off an asset that I will own after 25 years. Problem is the ticket price that I'm looking at is basically double due to the repayment term and interest. Buying short term to resell in a few years is probably too risky because the market is unpredictable. But on the other hand I am very employable so I know I will always have an income unless god forbid something happens. I can also potentially rent the property out to someone else after 5 years (or less if I make some arrangement with a friend). I'm not delusional and realize it won't cover mortgage taxes and other expenses but it would lessen the burden of paying a regular mortgage, though it might make it alot harder to move considering a part of my income is perpetually tied up paying off this property.
How should I make this decision? Any thoughts are appreciated.
Submitted June 12, 2023 at 06:14AM by Donut-Disastrous https://ift.tt/VUDtzK8
