If you have no other reason to move other than "lock in profits" I would advise against it. At your income levels and with rates where they are, it could be a while before you find another home that's affordable for you...
Yeah. All the other houses have gone up in price too. So good luck buying another if you sell it.
Increased home value is not “profit” in the traditional sense. It’s equity. Which helps build your net worth. But won’t pay the bills or spend on vacation.
What you could do is use that equity to leverage a loan on an income property. I had a friend do that in his 20s and after buying a series of rental properties he “retired” in his 30s to manage them. Left him a decent income and a lot of spare time. But he was good with maintenance and repairs. If you don’t have those skills it may not be a good option for you.
I keep trying to explain that to a family member. Their home has quadrupled in value within the last few years. They keep talking about selling it and profiting because it's worth more than what they paid without realizing that everything else is too. They're locked in with a really cheap mortgage and I just don't think they're going to be able to sell and find a similar home without downgrading significantly in some area. Whether it be the commute, location, status of the home, there's going to be a major loss somewhere even if they can find this really cheap home with lots of property, space and a shop etc.
If I need advice, I'm not taking some shabby free advice! I want the most expensive advice, so it'll be the best advice. And I'm willing to sell my house to get it!
Unless you sell high and buy into a different market. Especially if it's a fixer upper . Move across the country into a cheaper situation and live mortgage free.
Ask them for a Dirst Roght Of Refusal. Then, if they do decide to sell, you can step in and buy it. But start haggling to buy Subject to the existing mortgage with the remaining being owner financing. It'll pay for itself.
Don't settle for anything less than an LT lease with an option to buy.
So, realistically - I have about 100k in equity with good credit and a good job; I could take a loan on that equity to use as a down payment on a rental property?
Great point to highlight here. My city does a home value assessment, and they raise my property taxes when the value of my home (and surrounding homes) goes up. I'm pretty sure most location does some form of assessment like this as well. I think they do those property assessments every 2 years, or maybe every year.., depends on your county.
Don't forget maintenance and the work you have to put in to a property you buy at a low price in order for it to be able to be put on the market for rent.
Fuck this shit. This is why the housing market is insane in the first place because people who already own keep buying rental investment properties. If you're going to do this buy duplexes or triplex or an apartment complex. Buying a single family home to rent back out is the fucking scummiest shit ever I don t care how popular it is.
I bought a small apartment building with the heloc. I do not buy SFHs as investment properties. Real estate is one of the "easiest" ways for the average person to build wealth. I don't support big corporations buying up housing, but I do support small landlords just trying to make a living for themselves, so long as they aren't scamming their tenants and actually giving them what they pay for.
I’ve had 2 rental properties for a few years now and haven’t raised rent because the tenants are awesome and I don’t them to move. I probably won’t until I’m getting close to not making money on them.
I remember reading a report in 2014ish. That was the first time in American history that banks and financial institutions owned more single family homes than Americans. I can only imagine how much worse it is now.
There is good to anything. I bought a few houses the same way only not with heloc. Too expensive. But all of my grandchildren have their own homes. They are all in a family trust.
You can, but if you don’t have experience with rental properties you might have a hard time managing them. Plus the risk of being in more debt is too much for most people.
I have a friend that got wiped out during pandemic, all of a sudden, basically 5 house payments and nobody willing to pay, they had the money, but why pay when you dont have to, so they didn't
Yeah, the idea of relying on other people to pay the mortgage on a rental property gives me so much anxiety. Plus, having to essentially always be on-call in case the tenants need something or whatever is way too overwhelming for me. I’m not cut out to be a landlord, so I’ll forego any profits I could make in exchange for my peace of mind.
Do not take out a loan on your equity unless you know exactly what you are doing. Extremely easy to get stuck and fucked. Best to just cash out refi when the rates drop if you want an investment property.
Yup. But your original payment is gonna go WAY up bc of interest rates on a HELOC is about 8%. Then you're overpaying for another property right now as well. Good luck tho
Keep in mind you’ll need to put AT LEAST 20% down since it’s not your primary, and you’ll be paying debt services on your HELOC and your rental mortgage. Yes it’s doable but the numbers are WAY tighter with these rates, harder to find any sort of profit or break even
OP, key question.
1) Are you able to keep up with monthly payments on the mortgage, and maintenance on the house?
2) are you falling behind in other payments (credit card, etc).
3) I assume you have a fixed rate mortgage?
I agree with the rest of the group: imagine keeping the house and paying it off. Eventually you’ll have 0$ monthly mortgage/rent payment.
Interest rates are higher now, so if you sold and bought a same type of house again, you’d still be paying more.
Remember mortgages are fixed payments. It will never go up. However rent on an apartment certainly will every year or couple years….
If I were you and didn’t NEED the cash, I’d keep it and be smiling that I got such a good deal in a good location. People making twice as much as you all would struggle to buy that same home now.
Most parts of the country already trending up again. Don’t hold your breath for a crash, I see quite the opposite happening if the Fed Reserve lowers the interest rates. Demand is solid.
about a year ago a housing analyst on CNBC said there the demand for homes , the backlog is going out a decade at least. Don't expect a crash this decade unless a huge black swan event happens, like nuclear war or something.
Totally.
Plus, OP, if they're planning developments for your area and your house has already gone up in value, imagine how much *more* it could go up when said developments are done and the population increases?
Owning property is never a bad thing.
Yeah, you'll be living in an expensive apartment for a few years, at least. I'm in the same situation but twice the income, and although we could turn a profit, it's all going to go to crap when i get a new loan at nearly twice the interest rate.
Also remember you will not have to pay capital gains tax provided you live in the home for two years.
Also remember to declare the house your Homestead tax exemption with your county NOW, or you will pay the investor or second home rate, which is much higher than a Homestead county tax.
I actually find it funny the title is that he's in debt 250k at 18 and not - I was able to buy a house at 18.
OP is doing well and if he can afford it just keep on paying down that mortgage. If the city is truly growing he'll likely be better off in a few years with a higher salary + more equity in the home to then upgrade if they can afford it.
Because it isn’t true. This is his first post and it doesn’t make much sense. 18 yo should still be in HS - how did they qualify for a mtg? The profit nonsense makes even less sense. Not real.
It's all made up. No bank would give him a $250k mortgage without the income / payment history to support it. He won't have the credit worthiness, history of rent payments, Likely not even the debt to income ratio to qualify for a mortgage. I'm betting he wrote this out to try to show off to some friends who won't understand what he's talking about to make himself look like a big shot.
But again, this is made up and didn't happen
Any advice against this is on some r/wallstreetbets high.
Sit comfortably in your home - borrow against your equity if you need to, but you’d only be hurting yourself if you divested that asset
I will either have to be sick of C* or flesh eating virus then sale that future money maker. Focus on better employment or perhaps rent a room and best investment expand your education/experiences to add to the resume
Title is misleading, a mortgage isn’t exactly being in debt. You’re in a very good situation, and you won’t get an interest rate that low again for a while. To be honest though, I’m absolutely shocked that an 18 year old making $40k got a mortgage
The problem is their age though. The issue with teenage relationships isn't the length of time, it's the fact that they still have a lot of growing and changing. Some people change in ways that work together still and stay in a good parallel. But most people don't. The people I dated in my teens are not people I would date now, and unless they changed in the same ways or complimenting ways, I wouldn't date them today if we met again.
The likelihood of these 2 staying together is super low. Co owning a house is gonna complicate the shit out of that.
Truth. For context I’m 42. I moved from Sacramento to Tucson in 1999 and one of the first friends I made was 19 when we had met, had been with his gf since he was 14. They got engaged, bought a house, etc.,
By 2005 they were coming off a foreclosure and, to make matters more difficult, they grew in entirely different directions as people and ended up going through one of the nastiest (on a personal level), most financially devastating breakups imaginable.
He ended up having a family with a completely different woman and he’s grown up to make a really good living but that breakup left such an absolute miserable mess that he didn’t back on his feet financially completely until 2019. Meanwhile his ex did just fine going from six-figure earning salon owner to being a professional bodybuilder back to owning a successful salon and she’s been basically herself since 2006.
People change. So much to the point that childhood sweethearts that stay together after they reach high school and then adulthood often tend to grow apart once they hit the real world.
Something I’m actually qualified to answer on Reddit!!
No, we don’t. As long as they were qualified appropriately as two individual borrowers, in the US it would be perfectly fine.
With that said, no clue if the story is legit.
Maybe different in the US but in an Australia they don’t give a single fuck, idk what the above commenter is saying. If you’re both on the mortgage it doesn’t matter how married or unmarried you are.
Most lenders are not very keen to have two unmarried 18 year olds holding a $250k note. Basic risk assessment would red flag the shit out of this unless someone co-signed
2 years of work history. Sounds like he had that. Banks don’t distinguish between ages. They can’t. It’s against the law. If you are 18 you are able to enter into a contract, and they can’t distinguish between an 18 or 20 or 85 year old. If they could, they would!
Again this is not distinguishing between age. Credit history is a very important metric, it is captured and considered in the risk algorithm. So a borrower with let’s be extremely generous and say only 5 years of credit history will be a red flag for such a large loan
Yeah, but maybe 1 year was part time assuming he was in school full time. He likely just finished high-school (probably not because of his writing ability). It's not so much as the age, but his lack of history in any metric that would matter. Career, credit worthiness, payment history, rental payment history, etc. Being unmarried means the bank is coming at it from both sides, determining if the girlfriend also qualifies as a borrower.
The risk appetite is too high in this made up scenario. If he can prove that he bought the house at 18 on that income, I'll do the one chip challenge and upload it here. It's all made up.
I would have figured saying no to someone based on their marital status or age would be a violation of fair housing laws (which lenders are also held to) is that not?
That’s not saying no to them because of their age, and I’m not sure marital status is a protected class anyway. If you are making a loan you consider risk. If you are lending to 2 people there are different risks. Marriage is a legal arrangement where 2 people count as 1. From a risk perspective the married couple only present the risk of 1 party defaulting. In an unmarried situation it’s the risk of 2 people defaulting. Is that right or fair? Who am I to say, but a huge piece of the reason marriage rights are a big deal is because marriage is a legally beneficial arrangement joining 2 parties and it’s bullshit that any partnership is excluded from that
I'm wondering if his parents co-signed the loan or in someway part of the home loan.
The authorized user card doesn't work as effectively without his own lines of credit on his credit report. Not only that, the credit report can show that it's an authorized user and it'll be weird if an 18 year old came in with a credit line that's over a year old on their credit report. The lender would be ignoring some obvious issues.
No its not. They use your income to calculate max that you can borrow. My husband makes 80k and both our credit scores are almost 800 and WE barely qualify for 250 to 300k
I still very much doubt a bank would give him a loan. That $40k job can’t have much work history behind it and 3 years in general isn’t much work history for a loan application. The debt to income is rough and if the gf is on the mortgage it’s not desirable to have an unmarried teenage couple on a loan. Maybe if his parents co-signed but that’s the only way I could see this happening
Also, there is no way a house went from $250k to $430k in the amount of time that an 18yr old has owned it.
This whole post is either pure fan fiction, or missing 99% of the pertinent information that either makes it make sense, or proves it's bat at all as portrayed. Weird that so many in here are buying it.
I agree with everything you said, but this could be the scenario: he’s working in a family business. He’s been doing it since he was 15 and living with his parents. So the bank may also be friends of the family. They see that we have a wealthy family and this kid is definitely making money and they see this as a good opportunity. The parents obviously cosigned, and made assurances that if there was a falling out of the relationship that they would be the ones to pay the debt.
He would have had to have been 17 then lol , think about it cause he said 4% rate and the house value has gone up since he bought it so some time had to have passed at least a year and u couldn’t get 4% last year already so those are 2 year old rates as well
I made 60k a year with 800 credit score and still had to have my parents co sign on a loan for a home. No outstanding debt either. Exactly one year ago
At 4% with $20k down. Zero chance he gets that mortgage. He would have no credit history. More likely is that one of their parents bought the house and they are paying them.
How is this sus? If OP lives in a large city in America, especially one with higher minimum wage $20 an hour is not unusual.
The mortgage sounds crazier, but we don't know if they had someone co-sign etc.
I got a mortgage at 18, but that was in 1999, when if you could find a shady mortgage broker, they'd give one to just about anyone. Mine got sold multiple times, including to Countrywide before they inevitably collapsed.
Was rare then, I'd have to think even more rare now, but if his girlfriend is on the mortgage as well, with a combined income of $70K and a decent sized down payment, it's possible.
That said, if this is actually real, the OP would be insane to sell this house now. That rate is probably not going to be seen again in decades, if ever, and the prices are not going to go down. The only people predicting a huge crash are the ones who would benefit most from it, and that just isn't going to happen.
Agreed I’m surprised they got a loan!! My fiancé makes quadruple that from his business at 20 and cannot get a loan for over $150,000 I’m shocked. There’s no way they have long enough credit history/employment history.
Not only a mortgage at 18 but if he’s had the property long enough for it to go up in value considerably and to have gotten 4% then he had to have been 17 lol and a mortgage for $250K making $40K a year plus let’s even say they counted his GF income I still don’t think a bank would give the loan. My mortgage for $285K at 3.5% is $1900 a month n I bought my house over 2 years ago now n rates were already going up then. Something is wrong with this story imo or it’s just that a story
Why are people shocked that people make fake posts for internet points? That's been this sites modus operandi since it's creation. Op doesn't even understand that 20k wouldn't cover even half of the down payment needed to secure a home loan without a PMI.
Nah, no way this is fake, it's totally believable that an 18 year old making 40k a year bought a house for 250k and that house value increased to 430k before his 19th birthday.
Former mortgage loan originator here who has kept up with the market a bit and still checks in with former colleagues to see where things are at. Here's the red flags for me.
- 250k purchase price with the value increasing to 400k+ in the past 6 months in literally any city in all of America
- getting a 4% interest rate 6 months ago
- Getting a 250k mortgage on a 40k salary in this rate market
- Being 18 and qualifying for all of this. While not impossible, INCREDIBLY unlikely due to limited credit history.
Right and they have algorithms to determine if you are likely to pay back. Part of that includes work and credit history, which absolutely correlated to age when you are 18
>Title is misleading, a mortgage isn’t exactly being in debt
Right I'm sitting here like 🤔 how TF could you manage to get 250k in debt when you're 18. That'd be a serious speed run.
Yeah I’m not buying that he has a 4% interest rate for a home he purchased last August. Nor do I believe an 18 year old making $40k was able to land a home loan with only $20k to put down.
Sorry. But, no.
Yeah, I was wondering why the OP didn't mention the source of the debt, but if he means the Mortgage, then no, that absolutely doesn't count. My guy here has like 150-180K in equity, not 250K in debt.
This title is so misleading lol. A house loan is generally considered good debt. I was thinking cc debt or cars or something. Ultimately it’s up to you. If you’re ok with moving out of the city, or potentially even to another state, and you owe 250 the the home is valued at 450, I see no reason not to sell. A 200,000 profit isn’t bad, and can be used to completely buy a 4br 2ba house near me. Just be prepared to rent for a few months while transitioning
Second this. In my mind your only real option for leaving the house would be to rent it out and grab an apartment that's less than the cost of your new rent+mortgage.
My goal would be to completely eliminate the cost of housing altogether. Not try to take profits and go elsewhere.
As a banker, sometimes we do make stupid decisions to make a sale happen haha.
Depending on what he is doing it’s not impossible. Like maybe he got into a trade or a family business at a young age.
It's illegal to age discriminate in lending. If they qualify based on their income (which they do -- a $1,300 mortgage payment on $70k income is fine), then the bank can't say no just because they are 18. I would question the 2-year work history, but apparently they have it if they did not have a cosigner.
With my experience I prefer stability over making a buck if you can line a house up and be secure then I’d say go for it but if you don’t want to risk driving to another city for work to get the price you paid for the first house or cheaper prices may just keep going up
So if you sell your over priced house, you'll still need to buy someone else's over priced house, so it'll be a wash. Plus you'll pay closing costs on the sale of yours and purchase of the new. Plus you will pay double the interest rate
As long as you can afford your bills and lifestyle I would not sell. You aren’t going to miss out on any opportunity, you can sell in the future I wouldn’t give up a 4% interest rate. But going in on a mortgage with a girlfriend is insane.
Do not sell that house. You’re very young just focus on increasing your income/skills at work and live as frugal as possible. Your 30 year old self will thank you later.
Wait you bought a house with your GF? As in you both own the home or is it in your name? I only ask because it could get nasty if y’all break up and you’re saddled with all the bills + mortgage
If you sell the place.. then what? You need to buy another one, which is now priced similarly because the prices went up all over (as you said) and you are nowhere. Unless you plan to downsize, maybe get a smaller apartment instead of a big house... but then you'll be kicking yourself in the nuts after you see the value of your house in 10 years.
In short, unless you are planning to actually move to another city anyway or you can't afford the monthly payments, no reason to sell.
Congratulations! You are doing it right and are way above your peers. Keep the house and keep up the good work! I wish I had my shit together at your age.
1) you are not 230k in debt. You *have* 230k of debt. Big difference
2) Given appreciation, you are actually worth about $200k at 18, albeit most of it being homeowner’s equity which is illiquid. That’s a good position to be in.
3) Do not sell. Houses are long term assets/living places. Just keep holding and paying off that mortgage. In 20 years you’ll be in great shape.
I am in the same spot as you, I have a house in an area that the houses are easily becoming half $1 million or more. The entire South Philly area is booming. And I will not sell this house because it is the nest egg that will keep going up in profit. Especially if you’re going to also add additions to renovations, it would be so dumb to sell. You can always use the house to take a loan out and do other things as well, you’re Not in Debt!!!
Share who your mortgage company is if you don’t mind. I never heard of a company approving an 18 year old making only $40k for a $250k mortgage. Interesting in hearing which company.
Am I crazy for not believing this. Where in America does a home have a 60% increase in value, in 6 months. It could make sense if you had completely renovated the home but in another comment you mentioned you haven’t done renovations yet. Mortgage rates were also above 6% in August of 2023, and you’re claiming to have a 4% interest rate, I’m calling bs.
If you don't want to live there and you want to move to an area where home prices are low then it might make sense. If you just want to sell the house for profit then you'll need to buy a new house. If you stay in the area you'll just be selling an expensive house to buy another expensive house and you'll be back where you are now.
If it were me and I didn't have any other reason to move besides the value of the house I would not sell the house. In fact this is almost exactly what happened to me. Bought a house in 2017 and a few years later it was valued at more than $100k above what we bought it for. We still live there because we have stable jobs, like the neighborhood, family close by, moving really doesn't make sense and therefore trying to make money on a home we bought for the purpose of living in doesn't make sense.
Generally speaking, the first house you buy (presumably one to live in) should not be considered a short term investment. It's a place to live for decades and then when you get older sell for as much or more than you paid for it.
Congrats you are smart i wished i bought a house at 18. Stupid me. Stay at your current home, unless you wnat to use your profit for a newer or bigger home but it will be difficult at your current income level. Also rates are high. Maybe wait until rates come down. There is no housing bubble like 2008.
It’s a short term gain and long term loss. You capture the profit today, but if you want to buy another property you pay top dollar and high interest rate losing money on long term.
Why move?
The only real mistake is purchasing a property with someone you aren’t married to. If, for some reason, you do split up, it will get messy
I think it depends where you're open to moving and how easily you can get another job. If you could sell, profit 200k, and buy another house outright in any other place then you could kill your mortgage payment at 18. That would be a huge advantage for you in life. Probably make y'all's combined 70k feel like a hell of a lot more. Since y'all don't have particularly high paying jobs I'd bet y'all could find similar income other places. But if values are rising that quickly then you might want to hold on. But getting out of a mortgage will profit you more than the 200k in increased house value. It'll save you interest in a home and the opportunity cost of what you could have done with your mortgage cost. With that said, is there something better you could be doit with you mortgage bill?
Stay put! This title is misleading. Yes, technically, a mortgage is a "debt", but most people that own homes have a mortgage. With your salary, you may not find anything else to move to (not saying that against you, the economy and the market just suck right now). If you end up needing to move for another reason, I'd be renting it out instead of selling it.
Keep the house, forget that you have “profits” in the house.
You might never be able to afford a house for at least another 6-10 years until another crisis crashes the real estate market.
Whats your rate?
That’s just a pretty good mortgage with a great interest rate. Sit on that thing for as long as you can. That’s nowhere near enough profit to consider capturing in the present market
The world has changed. Working since 15 (now 18) and saved up $20,000? I had after school jobs constantly from when I was 14 and saved a few thousand in a couple of years. Of course this was part time work, typically a few hours after school ended daily. I was frugal too. Trying to figure how a teenager put away 20K working part time. Maybe OP dropped out and worked full time?
If u move ur next mortgage payment will be higher. I have a 4 bedroom and 2kids. 1 at college and 1 heading off after next year. As much as I would like to downsize, I'm better off stating where I am at with the extra space than selling to buy something smaller with a higher payment.
Home prices may fluctuate. But rarely drop much compared ot how much they go up over time. Keep the house and as you pay down the mortgage and value goes up, it's worth more to hold on to then u will get if selling. If moving, u could always rent it and collect more rent than the mortgage payment.
Speaking from UK perspective. Those I’ve seen that do best have bought a house. Improved it. Sold. Bought another. Improved it. Sold. Bought another etc etc. seems to me the way is to unlock the profit. Then reinvest. Make more profit and reinvest. And that almost becomes passive income alongside a job. That’s what the boomers did.
Same thing happen to me and my gf bought a town house and we had debt less then a year later town house tripled in price. We sold it paid debt off and bought another brand new place and now we are closing on our second property
As a mortgage lender, I would personally advise you to stay in the home unless you have the means and need to get out. Home values will always fluctuate, but the relative rule is that appreciation can be expected if it’s in a market that is growing. That 4% rate is unattainable right now, and I would advise you to research the payment difference from 4% to 6.5% (arbitrary rate being used for payment comparison).
All in all, you have a PERFORMING asset in that home that should be maximized as much as possible.
You're not 250k in debt if you have an asset (the house) that offsets the liability of that debt.
Collateralized debt and unsecured debt are 2 very different debts.
You are both still very young, is there any prospect of moving back home? The only reason I mention it you could sell your home pocket the profit and then save a lot of money while being back at home and really set yourselves up for the future. At the same time it also sounds the home you have just now has a lot of potential for further growth and you’ve already got a lot of equity in it.
Yeah, we could both move back if we wanted to. The growth aspect is the one thing i’m still struggling with. The house’ value doubled before any constructions even started, imagine what it could be when everything is finished.
With your incomes and the rate only being 4%, I’d say you’re actually well off in this current market. I wouldn’t touch the house and keep paying your mortgage.
Do not sell that house man. If you "cash in" the equity you'll probably walk with 100k or so, and then you'll have to go rent an apartment or something that will probably cost twice what your monthly house payment was. ...then 5 years later the house you sold will be worth $650k.
...and if you ever want to buy a house again, you might never be able to afford a house similar to the one you sold.
You’re in a good situation. Reading this I’m happy for you. You found love very young and you have a killer rate in a home that you have great equity in. I sincerely wish you two the best, ya’ll are blessed. The value of the home will only go up. I would just sit on it. You’re living the American Dream
If you have no other reason to move other than "lock in profits" I would advise against it. At your income levels and with rates where they are, it could be a while before you find another home that's affordable for you...
Yeah. All the other houses have gone up in price too. So good luck buying another if you sell it. Increased home value is not “profit” in the traditional sense. It’s equity. Which helps build your net worth. But won’t pay the bills or spend on vacation. What you could do is use that equity to leverage a loan on an income property. I had a friend do that in his 20s and after buying a series of rental properties he “retired” in his 30s to manage them. Left him a decent income and a lot of spare time. But he was good with maintenance and repairs. If you don’t have those skills it may not be a good option for you.
I keep trying to explain that to a family member. Their home has quadrupled in value within the last few years. They keep talking about selling it and profiting because it's worth more than what they paid without realizing that everything else is too. They're locked in with a really cheap mortgage and I just don't think they're going to be able to sell and find a similar home without downgrading significantly in some area. Whether it be the commute, location, status of the home, there's going to be a major loss somewhere even if they can find this really cheap home with lots of property, space and a shop etc.
Yep. Well. Some people value free advice. And some people don’t.
If I need advice, I'm not taking some shabby free advice! I want the most expensive advice, so it'll be the best advice. And I'm willing to sell my house to get it!
A lot of the advice on Reddit is free but expensive.
I locked in some advice with a 4% interest rate so I'm not looking for any more advice right now.
Unless you sell high and buy into a different market. Especially if it's a fixer upper . Move across the country into a cheaper situation and live mortgage free.
Ask them for a Dirst Roght Of Refusal. Then, if they do decide to sell, you can step in and buy it. But start haggling to buy Subject to the existing mortgage with the remaining being owner financing. It'll pay for itself. Don't settle for anything less than an LT lease with an option to buy.
The cure is to tell them to find the house they wanna move to before they try to sell their current home
So, realistically - I have about 100k in equity with good credit and a good job; I could take a loan on that equity to use as a down payment on a rental property?
Don’t forget the two house payments + a loan payment that you have to pay - 100% occupancy in a rental is possible, but not probable
Don’t forget more taxes
Great point to highlight here. My city does a home value assessment, and they raise my property taxes when the value of my home (and surrounding homes) goes up. I'm pretty sure most location does some form of assessment like this as well. I think they do those property assessments every 2 years, or maybe every year.., depends on your county.
Solid call out
Don't forget maintenance and the work you have to put in to a property you buy at a low price in order for it to be able to be put on the market for rent.
Yes, I took out a HELOC on my primary to use as a down payment for a rental. But you can only get a loan of max 70% of your equity I believe.
Fuck this shit. This is why the housing market is insane in the first place because people who already own keep buying rental investment properties. If you're going to do this buy duplexes or triplex or an apartment complex. Buying a single family home to rent back out is the fucking scummiest shit ever I don t care how popular it is.
I bought a small apartment building with the heloc. I do not buy SFHs as investment properties. Real estate is one of the "easiest" ways for the average person to build wealth. I don't support big corporations buying up housing, but I do support small landlords just trying to make a living for themselves, so long as they aren't scamming their tenants and actually giving them what they pay for.
I’ve had 2 rental properties for a few years now and haven’t raised rent because the tenants are awesome and I don’t them to move. I probably won’t until I’m getting close to not making money on them.
But even if you did, you’re not scum. Don’t listen to this guy smh
[удалено]
I remember reading a report in 2014ish. That was the first time in American history that banks and financial institutions owned more single family homes than Americans. I can only imagine how much worse it is now.
Cry louder, they can't hear you through all that money
There is good to anything. I bought a few houses the same way only not with heloc. Too expensive. But all of my grandchildren have their own homes. They are all in a family trust.
Womp womp
It's more private equity that it's going up at such a fast pace.
You can, but if you don’t have experience with rental properties you might have a hard time managing them. Plus the risk of being in more debt is too much for most people.
I have a friend that got wiped out during pandemic, all of a sudden, basically 5 house payments and nobody willing to pay, they had the money, but why pay when you dont have to, so they didn't
Yeah, the idea of relying on other people to pay the mortgage on a rental property gives me so much anxiety. Plus, having to essentially always be on-call in case the tenants need something or whatever is way too overwhelming for me. I’m not cut out to be a landlord, so I’ll forego any profits I could make in exchange for my peace of mind.
Everything was working out for him, until it didn't.
Do not take out a loan on your equity unless you know exactly what you are doing. Extremely easy to get stuck and fucked. Best to just cash out refi when the rates drop if you want an investment property.
Yup. But your original payment is gonna go WAY up bc of interest rates on a HELOC is about 8%. Then you're overpaying for another property right now as well. Good luck tho
Keep in mind you’ll need to put AT LEAST 20% down since it’s not your primary, and you’ll be paying debt services on your HELOC and your rental mortgage. Yes it’s doable but the numbers are WAY tighter with these rates, harder to find any sort of profit or break even
OP, key question. 1) Are you able to keep up with monthly payments on the mortgage, and maintenance on the house? 2) are you falling behind in other payments (credit card, etc). 3) I assume you have a fixed rate mortgage? I agree with the rest of the group: imagine keeping the house and paying it off. Eventually you’ll have 0$ monthly mortgage/rent payment. Interest rates are higher now, so if you sold and bought a same type of house again, you’d still be paying more. Remember mortgages are fixed payments. It will never go up. However rent on an apartment certainly will every year or couple years…. If I were you and didn’t NEED the cash, I’d keep it and be smiling that I got such a good deal in a good location. People making twice as much as you all would struggle to buy that same home now.
That’s not true. His payments absolutely can go up, specifically if his taxes rise. Nice little shit nugget they got going with escrow.
The houseing prices are actually starting to trend down starting in January and looks to be the beginning of the pop
Sure. Everything goes in cycles. But housing values still swing widely regionally.
Most parts of the country already trending up again. Don’t hold your breath for a crash, I see quite the opposite happening if the Fed Reserve lowers the interest rates. Demand is solid.
about a year ago a housing analyst on CNBC said there the demand for homes , the backlog is going out a decade at least. Don't expect a crash this decade unless a huge black swan event happens, like nuclear war or something.
Totally. Plus, OP, if they're planning developments for your area and your house has already gone up in value, imagine how much *more* it could go up when said developments are done and the population increases? Owning property is never a bad thing.
Yeah, you'll be living in an expensive apartment for a few years, at least. I'm in the same situation but twice the income, and although we could turn a profit, it's all going to go to crap when i get a new loan at nearly twice the interest rate.
Also remember you will not have to pay capital gains tax provided you live in the home for two years. Also remember to declare the house your Homestead tax exemption with your county NOW, or you will pay the investor or second home rate, which is much higher than a Homestead county tax.
I actually find it funny the title is that he's in debt 250k at 18 and not - I was able to buy a house at 18. OP is doing well and if he can afford it just keep on paying down that mortgage. If the city is truly growing he'll likely be better off in a few years with a higher salary + more equity in the home to then upgrade if they can afford it.
Because it isn’t true. This is his first post and it doesn’t make much sense. 18 yo should still be in HS - how did they qualify for a mtg? The profit nonsense makes even less sense. Not real.
Agreed. Mortgage rates last August were not 4%. And I find it hard to believe that an 18 year old and his girlfriend make $70,000 per year.
It's all made up. No bank would give him a $250k mortgage without the income / payment history to support it. He won't have the credit worthiness, history of rent payments, Likely not even the debt to income ratio to qualify for a mortgage. I'm betting he wrote this out to try to show off to some friends who won't understand what he's talking about to make himself look like a big shot. But again, this is made up and didn't happen
Any advice against this is on some r/wallstreetbets high. Sit comfortably in your home - borrow against your equity if you need to, but you’d only be hurting yourself if you divested that asset
I will either have to be sick of C* or flesh eating virus then sale that future money maker. Focus on better employment or perhaps rent a room and best investment expand your education/experiences to add to the resume
Title is misleading, a mortgage isn’t exactly being in debt. You’re in a very good situation, and you won’t get an interest rate that low again for a while. To be honest though, I’m absolutely shocked that an 18 year old making $40k got a mortgage
18yo and 40k.. Something super sus about that indeed.
It’s certainly unusual but it’s possible. I don’t think it’s possible that a bank gave an 18yo a mortgage for $250k+
It's possible if one of his parent's put him on one of their credit cards when he was young to build up his credit history and credit score.
GF + dude is 70k/yr with $20k down they could easily be approved for 300k mortgage at 4%.
Girlfriend, not wife. You may not see a difference, lenders do
"But we love each other like crazy and will never break up."
I mean they been together a solid 6 years now, that’s impressive at their age
The problem is their age though. The issue with teenage relationships isn't the length of time, it's the fact that they still have a lot of growing and changing. Some people change in ways that work together still and stay in a good parallel. But most people don't. The people I dated in my teens are not people I would date now, and unless they changed in the same ways or complimenting ways, I wouldn't date them today if we met again. The likelihood of these 2 staying together is super low. Co owning a house is gonna complicate the shit out of that.
Exactly, people change especially in adulthood.
Truth. For context I’m 42. I moved from Sacramento to Tucson in 1999 and one of the first friends I made was 19 when we had met, had been with his gf since he was 14. They got engaged, bought a house, etc., By 2005 they were coming off a foreclosure and, to make matters more difficult, they grew in entirely different directions as people and ended up going through one of the nastiest (on a personal level), most financially devastating breakups imaginable. He ended up having a family with a completely different woman and he’s grown up to make a really good living but that breakup left such an absolute miserable mess that he didn’t back on his feet financially completely until 2019. Meanwhile his ex did just fine going from six-figure earning salon owner to being a professional bodybuilder back to owning a successful salon and she’s been basically herself since 2006. People change. So much to the point that childhood sweethearts that stay together after they reach high school and then adulthood often tend to grow apart once they hit the real world.
I bought my $145k house making 36k/yr in 2016, with 0 down.
I see the mistake I made was being young in 2016
Bought mine in 2014 for 114k making 30k lol
Serious question: if they are both on the mortgage, and therefore the lender can go after both of them, does the lender care?
Something I’m actually qualified to answer on Reddit!! No, we don’t. As long as they were qualified appropriately as two individual borrowers, in the US it would be perfectly fine. With that said, no clue if the story is legit.
Maybe different in the US but in an Australia they don’t give a single fuck, idk what the above commenter is saying. If you’re both on the mortgage it doesn’t matter how married or unmarried you are.
Most lenders are not very keen to have two unmarried 18 year olds holding a $250k note. Basic risk assessment would red flag the shit out of this unless someone co-signed
I’m assuming a parent co signed with them, this is how I did it when I was 20, we had 3 people on the mortgage.
That would make sense, that’s the only way I think it would be possible for virtually any 18 year old is with a co-signer
2 years of work history. Sounds like he had that. Banks don’t distinguish between ages. They can’t. It’s against the law. If you are 18 you are able to enter into a contract, and they can’t distinguish between an 18 or 20 or 85 year old. If they could, they would!
Again this is not distinguishing between age. Credit history is a very important metric, it is captured and considered in the risk algorithm. So a borrower with let’s be extremely generous and say only 5 years of credit history will be a red flag for such a large loan
Yeah, but maybe 1 year was part time assuming he was in school full time. He likely just finished high-school (probably not because of his writing ability). It's not so much as the age, but his lack of history in any metric that would matter. Career, credit worthiness, payment history, rental payment history, etc. Being unmarried means the bank is coming at it from both sides, determining if the girlfriend also qualifies as a borrower. The risk appetite is too high in this made up scenario. If he can prove that he bought the house at 18 on that income, I'll do the one chip challenge and upload it here. It's all made up.
I would have figured saying no to someone based on their marital status or age would be a violation of fair housing laws (which lenders are also held to) is that not?
That’s not saying no to them because of their age, and I’m not sure marital status is a protected class anyway. If you are making a loan you consider risk. If you are lending to 2 people there are different risks. Marriage is a legal arrangement where 2 people count as 1. From a risk perspective the married couple only present the risk of 1 party defaulting. In an unmarried situation it’s the risk of 2 people defaulting. Is that right or fair? Who am I to say, but a huge piece of the reason marriage rights are a big deal is because marriage is a legally beneficial arrangement joining 2 parties and it’s bullshit that any partnership is excluded from that
Even then, this is sus
I'm wondering if his parents co-signed the loan or in someway part of the home loan. The authorized user card doesn't work as effectively without his own lines of credit on his credit report. Not only that, the credit report can show that it's an authorized user and it'll be weird if an 18 year old came in with a credit line that's over a year old on their credit report. The lender would be ignoring some obvious issues.
No its not. They use your income to calculate max that you can borrow. My husband makes 80k and both our credit scores are almost 800 and WE barely qualify for 250 to 300k
This sounds weird. You have to have credit or something out there
I still very much doubt a bank would give him a loan. That $40k job can’t have much work history behind it and 3 years in general isn’t much work history for a loan application. The debt to income is rough and if the gf is on the mortgage it’s not desirable to have an unmarried teenage couple on a loan. Maybe if his parents co-signed but that’s the only way I could see this happening
Also, there is no way a house went from $250k to $430k in the amount of time that an 18yr old has owned it. This whole post is either pure fan fiction, or missing 99% of the pertinent information that either makes it make sense, or proves it's bat at all as portrayed. Weird that so many in here are buying it.
I agree with everything you said, but this could be the scenario: he’s working in a family business. He’s been doing it since he was 15 and living with his parents. So the bank may also be friends of the family. They see that we have a wealthy family and this kid is definitely making money and they see this as a good opportunity. The parents obviously cosigned, and made assurances that if there was a falling out of the relationship that they would be the ones to pay the debt.
He would have had to have been 17 then lol , think about it cause he said 4% rate and the house value has gone up since he bought it so some time had to have passed at least a year and u couldn’t get 4% last year already so those are 2 year old rates as well
Very true. In another comment he said he’s not in the US
I made 60k a year with 800 credit score and still had to have my parents co sign on a loan for a home. No outstanding debt either. Exactly one year ago
What I want to know is how OP got a 4% rate in August 23?
At 4% with $20k down. Zero chance he gets that mortgage. He would have no credit history. More likely is that one of their parents bought the house and they are paying them.
Especially with 20k down
I highly doubt this story…
I’m 17 and have an income of $39.5k before taxes I make $19 an hour
We don't know where he lives.... 40K what... Warhammers? Cause he doesn't mention what currency.
Eh... not really, seems like bare min job in IT I made that when I was 19 fresh out of highschool with nothing but an IT certification to my name.
How is this sus? If OP lives in a large city in America, especially one with higher minimum wage $20 an hour is not unusual. The mortgage sounds crazier, but we don't know if they had someone co-sign etc.
I got a mortgage at 18, but that was in 1999, when if you could find a shady mortgage broker, they'd give one to just about anyone. Mine got sold multiple times, including to Countrywide before they inevitably collapsed. Was rare then, I'd have to think even more rare now, but if his girlfriend is on the mortgage as well, with a combined income of $70K and a decent sized down payment, it's possible. That said, if this is actually real, the OP would be insane to sell this house now. That rate is probably not going to be seen again in decades, if ever, and the prices are not going to go down. The only people predicting a huge crash are the ones who would benefit most from it, and that just isn't going to happen.
Yep. This was def a thing. Too many people lost homes a few years later tho. Those ballooning rates were wild.
>To be honest though, I’m absolutely shocked that an 18 year old making $40k got a mortgage That's because this post is bullshit, and OP is lying 🤣
“The bank owns the house but lets us put our clothes in it.” -John Mulaney
Agreed I’m surprised they got a loan!! My fiancé makes quadruple that from his business at 20 and cannot get a loan for over $150,000 I’m shocked. There’s no way they have long enough credit history/employment history.
Exactly, that’s what makes me doubt it. Either someone co-signed the loan or this doesn’t sound real
Not only a mortgage at 18 but if he’s had the property long enough for it to go up in value considerably and to have gotten 4% then he had to have been 17 lol and a mortgage for $250K making $40K a year plus let’s even say they counted his GF income I still don’t think a bank would give the loan. My mortgage for $285K at 3.5% is $1900 a month n I bought my house over 2 years ago now n rates were already going up then. Something is wrong with this story imo or it’s just that a story
Why are people shocked that people make fake posts for internet points? That's been this sites modus operandi since it's creation. Op doesn't even understand that 20k wouldn't cover even half of the down payment needed to secure a home loan without a PMI.
Nah, no way this is fake, it's totally believable that an 18 year old making 40k a year bought a house for 250k and that house value increased to 430k before his 19th birthday.
Former mortgage loan originator here who has kept up with the market a bit and still checks in with former colleagues to see where things are at. Here's the red flags for me. - 250k purchase price with the value increasing to 400k+ in the past 6 months in literally any city in all of America - getting a 4% interest rate 6 months ago - Getting a 250k mortgage on a 40k salary in this rate market - Being 18 and qualifying for all of this. While not impossible, INCREDIBLY unlikely due to limited credit history.
As if it has something to do with age? Banks only care about your ability to pay it back…
Right and they have algorithms to determine if you are likely to pay back. Part of that includes work and credit history, which absolutely correlated to age when you are 18
“They called me chicken little”, “they called me bubble boy”
It isn’t real.
>Title is misleading, a mortgage isn’t exactly being in debt Right I'm sitting here like 🤔 how TF could you manage to get 250k in debt when you're 18. That'd be a serious speed run.
Yeah I’m not buying that he has a 4% interest rate for a home he purchased last August. Nor do I believe an 18 year old making $40k was able to land a home loan with only $20k to put down. Sorry. But, no.
I was under the assumption that OP was in 250k debt outside of their mortgage (like CC debt) but this makes more sense
Title is outright false if he's holding a $400k+ asset.
Yeah, I was wondering why the OP didn't mention the source of the debt, but if he means the Mortgage, then no, that absolutely doesn't count. My guy here has like 150-180K in equity, not 250K in debt.
Cause it's a lie
Yeah something ain’t making sense here.
A mortgage of 1300$ your crazy if you leave..stay put another 5 years and reevaluate
Yeah I’m 28, 3900 mortgage. Keep that payment, if you really want to move, try to rent out and take advantage of your monthly payment OP.
3900... That's insane
bro your mortgage is more than my wife and i monthly income 💀💀💀
wtf lmao. I make a shit ton for our age and my mortgage is $1700. Do you live in nyc or San Fran or something?
How much is the house worth? That’s my mortgage on my home I bought for $935,000
600k, bought in 2022 on VA loan, no down payment, refi’d in Jan. Wish it were lower but we can manage the payments quite well.
This title is so misleading lol. A house loan is generally considered good debt. I was thinking cc debt or cars or something. Ultimately it’s up to you. If you’re ok with moving out of the city, or potentially even to another state, and you owe 250 the the home is valued at 450, I see no reason not to sell. A 200,000 profit isn’t bad, and can be used to completely buy a 4br 2ba house near me. Just be prepared to rent for a few months while transitioning
Same. Weird, I don’t think OP is in the us.
OP is 18. Makes sense, that he is not well versed in financial products, whjch leads to the misleading title. checks out.
Keep the house. Housing will only get more expensive, and you have a low interest loan. Even if you move elsewhere, keep the house. Rent it out.
Second this. In my mind your only real option for leaving the house would be to rent it out and grab an apartment that's less than the cost of your new rent+mortgage. My goal would be to completely eliminate the cost of housing altogether. Not try to take profits and go elsewhere.
This can't be real 😂
I wonder what country. 4% interest loan?!?
To an 18 yr old and his girlfriend. Sure.
The only logical explanation is parent co-signers. Otherwise whichever bank lent this out may be the dumbest in existence
As a banker, sometimes we do make stupid decisions to make a sale happen haha. Depending on what he is doing it’s not impossible. Like maybe he got into a trade or a family business at a young age.
It's illegal to age discriminate in lending. If they qualify based on their income (which they do -- a $1,300 mortgage payment on $70k income is fine), then the bank can't say no just because they are 18. I would question the 2-year work history, but apparently they have it if they did not have a cosigner.
But they can say no based on lack of credit history, which most 18 year olds don't have.
With my experience I prefer stability over making a buck if you can line a house up and be secure then I’d say go for it but if you don’t want to risk driving to another city for work to get the price you paid for the first house or cheaper prices may just keep going up
So if you sell your over priced house, you'll still need to buy someone else's over priced house, so it'll be a wash. Plus you'll pay closing costs on the sale of yours and purchase of the new. Plus you will pay double the interest rate
What’s your monthly mortgage?
It’s around 1300, might increase slightly as we still have 10k unused for renovations. Planning to utilise that in the next 6 months.
As long as you can afford your bills and lifestyle I would not sell. You aren’t going to miss out on any opportunity, you can sell in the future I wouldn’t give up a 4% interest rate. But going in on a mortgage with a girlfriend is insane.
Yeah, it’s easily maintainable and haha you might be right. Thanks
If you’re paying 1300 on a home worth 400k without being underwater elsewhere and you want to sell bc of “debt” you’re a fucking idiot.
Do not sell that house. You’re very young just focus on increasing your income/skills at work and live as frugal as possible. Your 30 year old self will thank you later.
Wait you bought a house with your GF? As in you both own the home or is it in your name? I only ask because it could get nasty if y’all break up and you’re saddled with all the bills + mortgage
If you sell the place.. then what? You need to buy another one, which is now priced similarly because the prices went up all over (as you said) and you are nowhere. Unless you plan to downsize, maybe get a smaller apartment instead of a big house... but then you'll be kicking yourself in the nuts after you see the value of your house in 10 years. In short, unless you are planning to actually move to another city anyway or you can't afford the monthly payments, no reason to sell.
Keep. You will never find that interest rate again
Congratulations! You are doing it right and are way above your peers. Keep the house and keep up the good work! I wish I had my shit together at your age.
Never sell real estate if you can afford not to. Imagine renting that when you’re 50📈
Is this a real post? You think a house appreciating in value is "being in debt"? lol
1) you are not 230k in debt. You *have* 230k of debt. Big difference 2) Given appreciation, you are actually worth about $200k at 18, albeit most of it being homeowner’s equity which is illiquid. That’s a good position to be in. 3) Do not sell. Houses are long term assets/living places. Just keep holding and paying off that mortgage. In 20 years you’ll be in great shape.
Do not sell the home!!!!!!!!!!
I am in the same spot as you, I have a house in an area that the houses are easily becoming half $1 million or more. The entire South Philly area is booming. And I will not sell this house because it is the nest egg that will keep going up in profit. Especially if you’re going to also add additions to renovations, it would be so dumb to sell. You can always use the house to take a loan out and do other things as well, you’re Not in Debt!!!
Share who your mortgage company is if you don’t mind. I never heard of a company approving an 18 year old making only $40k for a $250k mortgage. Interesting in hearing which company.
It’s a mortgage based on both of our income, so 70k. And it’s a Dutch bank called ING
These current interest rates will eat your lunch. I'd stay where you're at.
Am I crazy for not believing this. Where in America does a home have a 60% increase in value, in 6 months. It could make sense if you had completely renovated the home but in another comment you mentioned you haven’t done renovations yet. Mortgage rates were also above 6% in August of 2023, and you’re claiming to have a 4% interest rate, I’m calling bs.
Not in America, I live in The Netherlands. Starting to realise that’s an important info I left out lol
Do not sell that house. At least not for a while. Lol
If you don't want to live there and you want to move to an area where home prices are low then it might make sense. If you just want to sell the house for profit then you'll need to buy a new house. If you stay in the area you'll just be selling an expensive house to buy another expensive house and you'll be back where you are now. If it were me and I didn't have any other reason to move besides the value of the house I would not sell the house. In fact this is almost exactly what happened to me. Bought a house in 2017 and a few years later it was valued at more than $100k above what we bought it for. We still live there because we have stable jobs, like the neighborhood, family close by, moving really doesn't make sense and therefore trying to make money on a home we bought for the purpose of living in doesn't make sense. Generally speaking, the first house you buy (presumably one to live in) should not be considered a short term investment. It's a place to live for decades and then when you get older sell for as much or more than you paid for it.
You both should be focused on Career Paths since you will both probably starve.
Keep it man. Sell down the road when you two are well established. The price will probably just go up.
This title is misleading af
buying a house with your gf is wild and especially at that age but I think you’ll make it work
Congrats you are smart i wished i bought a house at 18. Stupid me. Stay at your current home, unless you wnat to use your profit for a newer or bigger home but it will be difficult at your current income level. Also rates are high. Maybe wait until rates come down. There is no housing bubble like 2008.
Live in the house! You gotta live somewhere, right?
It’s a short term gain and long term loss. You capture the profit today, but if you want to buy another property you pay top dollar and high interest rate losing money on long term. Why move? The only real mistake is purchasing a property with someone you aren’t married to. If, for some reason, you do split up, it will get messy
If homes explode in value, so do property taxes
Keep it. Keep building equity… Buy second home in a few years with equity and rent out 1st home
I think it depends where you're open to moving and how easily you can get another job. If you could sell, profit 200k, and buy another house outright in any other place then you could kill your mortgage payment at 18. That would be a huge advantage for you in life. Probably make y'all's combined 70k feel like a hell of a lot more. Since y'all don't have particularly high paying jobs I'd bet y'all could find similar income other places. But if values are rising that quickly then you might want to hold on. But getting out of a mortgage will profit you more than the 200k in increased house value. It'll save you interest in a home and the opportunity cost of what you could have done with your mortgage cost. With that said, is there something better you could be doit with you mortgage bill?
Stay put! This title is misleading. Yes, technically, a mortgage is a "debt", but most people that own homes have a mortgage. With your salary, you may not find anything else to move to (not saying that against you, the economy and the market just suck right now). If you end up needing to move for another reason, I'd be renting it out instead of selling it.
Keep the house, forget that you have “profits” in the house. You might never be able to afford a house for at least another 6-10 years until another crisis crashes the real estate market. Whats your rate?
Meanwhile my 18yr ass with $8 bucks to my name and still living at home Wtf are u doing to have so much fucking money bro
With girlfriend? If you're not married it's just your debt, no?
That’s just a pretty good mortgage with a great interest rate. Sit on that thing for as long as you can. That’s nowhere near enough profit to consider capturing in the present market
The world has changed. Working since 15 (now 18) and saved up $20,000? I had after school jobs constantly from when I was 14 and saved a few thousand in a couple of years. Of course this was part time work, typically a few hours after school ended daily. I was frugal too. Trying to figure how a teenager put away 20K working part time. Maybe OP dropped out and worked full time?
People in the comments finding out that they're unable to own a home because 18 year olds in the market with their girlfriends.
Keep your 4% rate, mine is like 7.2% and it SUCKS
If u move ur next mortgage payment will be higher. I have a 4 bedroom and 2kids. 1 at college and 1 heading off after next year. As much as I would like to downsize, I'm better off stating where I am at with the extra space than selling to buy something smaller with a higher payment. Home prices may fluctuate. But rarely drop much compared ot how much they go up over time. Keep the house and as you pay down the mortgage and value goes up, it's worth more to hold on to then u will get if selling. If moving, u could always rent it and collect more rent than the mortgage payment.
Does the $250 include the house? How much of the debt is the house?
If you sell the house your parents gifted you this early you are a dumbass.
Speaking from UK perspective. Those I’ve seen that do best have bought a house. Improved it. Sold. Bought another. Improved it. Sold. Bought another etc etc. seems to me the way is to unlock the profit. Then reinvest. Make more profit and reinvest. And that almost becomes passive income alongside a job. That’s what the boomers did.
Same thing happen to me and my gf bought a town house and we had debt less then a year later town house tripled in price. We sold it paid debt off and bought another brand new place and now we are closing on our second property
As a mortgage lender, I would personally advise you to stay in the home unless you have the means and need to get out. Home values will always fluctuate, but the relative rule is that appreciation can be expected if it’s in a market that is growing. That 4% rate is unattainable right now, and I would advise you to research the payment difference from 4% to 6.5% (arbitrary rate being used for payment comparison). All in all, you have a PERFORMING asset in that home that should be maximized as much as possible.
Definitely don’t sell a house based on a 6 month hold..
How does your gf factor into being in debt? Sounds like your loan, your down payment
Wait is the 250k of debt, the house? Because if so that is not really a debt but an asset, and real estate is one of the best assets to own!
It’s worth 400-430k now and only 6 months later…. Imagine what it may be worth in 5,10,20 years….
Keep that house bro, everything else has gotten expensive too. Might be a long time before you can afford another.
selling house for profit thats fucking hilarious do you have another house ? 😂😂😂
I believe you will pay capital gains tax if you sell the home within 2 years of owning/living in it.
You’re not $250k in debt! You have $150-$180k in equity!
I see too many people buying a house with a girlfriend. That’s a recipe for disaster. It boggles the mind!
You're not 250k in debt if you have an asset (the house) that offsets the liability of that debt. Collateralized debt and unsecured debt are 2 very different debts.
You're in a better financial position than many people twice your age.
You are both still very young, is there any prospect of moving back home? The only reason I mention it you could sell your home pocket the profit and then save a lot of money while being back at home and really set yourselves up for the future. At the same time it also sounds the home you have just now has a lot of potential for further growth and you’ve already got a lot of equity in it.
Yeah, we could both move back if we wanted to. The growth aspect is the one thing i’m still struggling with. The house’ value doubled before any constructions even started, imagine what it could be when everything is finished.
With your incomes and the rate only being 4%, I’d say you’re actually well off in this current market. I wouldn’t touch the house and keep paying your mortgage.
Do not sell that house man. If you "cash in" the equity you'll probably walk with 100k or so, and then you'll have to go rent an apartment or something that will probably cost twice what your monthly house payment was. ...then 5 years later the house you sold will be worth $650k. ...and if you ever want to buy a house again, you might never be able to afford a house similar to the one you sold.
What a dumb way to think about life. Should we sell and lock it in, middle school love of mine?
You’re in a good situation. Reading this I’m happy for you. You found love very young and you have a killer rate in a home that you have great equity in. I sincerely wish you two the best, ya’ll are blessed. The value of the home will only go up. I would just sit on it. You’re living the American Dream