Buy a House Now Or Wait?

Lily Elliot: Buy a House Now Or Wait?
Hi My Name’s Lily
I’m currently a Freshman in College without a job (never had a job)
I’ve just come into some money and I was thinking of buying a house and renting the extra rooms to my friends next year. (Since I have the money for a down payment)
I am planning on getting a job next semester, and hopefully getting a house at the beginning of the summer?
Seeing as how I have no credit as of the moment would I need a cosigner?
How much will having a cosigner affect me? I still get the equity right because a cosigner is just a back up or does that show that I can’t do anything on my own?
And is it really a bad thing to be having my friends pay more for rent since I’m paying for the down payment?
Any other advice you can give to a first time buyer in college would be much appreciated.
Thanks!

Answers and Views:

Answer by Cat
Buying a house is not like buying a car. Having a ‘cosigner’ entitles them to half of the house when you sell it (except for your initial investment). It also entitles them to make decisions regarding the property such as how frequently and well it is maintained, who lives there, etc. Also, FYI – with no credit and no job, no bank is going to loan you money to buy a house – even if you do have a down payment. You’d be better off to put that money in the bank and save it until you’ve graduated from college and have a stable job.

Answer by Toni
When you buy a house with a mortage don’t forget all the other costs.
Closing costs can be as much as 6% of the loan price – a hefty fee.
Also you will pay property taxes, home insurance, and possibly flood insurance and HOA dues.
You will also have to pay for upkeep and fix things that break such as plumbing, electrical, foundation, etc.

You could be getting yourself into a heap of mess if you have no job and no ability to pay for these repairs that could be more than the renter is paying you after you pay the monthly mortgage loan.

Also, you could face friends that lose a job, and don’t pay the rent.
Then, since they are your friends, they will probably live there rent free…

Answer by Dustin E.
go get your self a fixed rate mortgage as low as .250 percent. BUY NOW BUY NOW BUY NOW. If you need a cosigner make it someone you trust more than your own parents. And go get yourself a job!!!! If the money you “came into” isn’t large enough to pay for the down payment and three months mortgage on a loan don’t even think about buying.

Answer by Bob
Buying a house with a cosigner is fine as long as you realize there is more to owning a house than just the mortgage. Property taxes, house insurance, sewer and water, garbage collection bills, repairs to roof, hot water tank, plumbing, appliances, paint, lawn and yard maintenance.
Having a cosigner will give you a source of credit but have your own independent lawyer explain the contract to you as if you can’t pay the mortgage you could lose the money you invest as they may get ownership. So make sure you know what you are signing before you sign it.

I would suggest a good yielding term deposit. Take out a small collateral loan at your bank using the term deposit as collateral and build your credit rating. Then when you are working apply for a mortgage and use no more than 2/3 of your funds as a down payment to keep and continue to build a reserve for repairs, mortgage payments due to loss of work, or illness. You will then be in a better position and have more time to focus on managing the property and building a real estate portfolio.
Always try to keep your rental income above your mortgage and property expenses to create some profit. Why risk your inheritance if you are not getting a larger return.
Living with your renters is not a good idea, money deals and friends, relatives, usually end on a sour note.

I’m not saying don’t, just to look out for the things I mentioned here and take a long look. Draw up a pro’s and con’s list. Check your values, money, friends. Remember if you but the house you are signing on for 20+ years, your friends could move out next month.
This is business not friends, do the math, protect yourself, and if you can maintain the mortgage payments, bills, maintenance, and keep it full of renters and have positive cash flow to grow the contingency fund you’ll do ok. Otherwise wait till a better deal is available and apply the same criteria.
Such is the life of a landlord.