One of my friends recently bought a house and put about a down payment in the $400,000 range. That sounded crazy until I thought about it a bit more. He’s buying a nice house in a good area. Maybe he’s buying it to stay in for quite a long time.
I’ve been looking at places in the last few weeks. I’m pretty confident of the place that I want to live in now, but how do I know where I want to live for the next many years? With that the case, I think that I should keep renting until I find a place that I am somewhat confident I would want to live in for many years, not just now.
If I project my down payment fund savings out based on forecasted income and 0.84% interest paid monthly, I get the following end-of-year balances:
- 2012: $91,800
- 2013: $133,800
- 2014: $176,200
- 2015: $227,800
- 2016: $279,800
I think that it is a better idea to keep renting and saving up cash than to buy a place that I end up wanting to sell in a few short years. Cash is king.
Renting definitely feels temporary and moving is expensive, but the great thing about renting is that I can try out different areas. I can rent a 2 bedroom apartment and see if that makes me happy by myself. If it doesn’t, I can go back to a 1 bedroom place. That option if I buy is a lot more difficult. (Though I really don’t doubt that I would be quite happy in a 2 bedroom apartment.)
Wow, I just found a 2 bedroom apartment in an area that I would consider living in for $1,300 per month! Where I am right now, 2 bedrooms go for around $1,800 to $2,200 per month. That’s a big difference, so I guess I will have to evaluate how much that $800 per month means to me.
I’m finally coming to terms with the fact that saving up a ton more money before buying a place isn’t a terrible option. I guess that’s the biggest thought I’ve gotten thinking about my friend doing a $400,000+ down payment on his house.
Everyone keeps telling me that they just knew when they found their house/condo. So it’s still possible that I could find the perfect condo in the next month. We’ll see what unfolds! In the meantime, I’m loving looking at gorgeous condos…