Speaking of housing

My 22 year old nephew just bought a house, it’s in Grove Texas and he paid just under $200,000. He’s in the Coast Guard and plans on being there for a while plus didn’t want to throw his money away on rent. He put $50k down, his interest rate is just under 7% on a 15 year mortgage and the PITI is just over $1,600 a month. He also has a roommate that’ll be paying him $750 a month.

The interest rate is double of what it was a year ago but he’s building equity for himself instead of a landlord. Buying today is still possible if someone wants to.

7% sucks but hes writing off interest and not throeing his money away on rent. And hes not paying PMI which should be avoided at all costs.

Hardly anyone writes off interest anymore.

Oh yeah, the tax changes from a few years ago.

He’ll probably do better with the standard deduction anyway.

Congratulations to your nephew @Bears54 so many good things in that story.

  • He saved up $50k for a down payment.
  • He is now building equity
  • He is avoiding PMI.
  • He is getting his rent subsidized from a roommate.

Well done !!!

Last stats I saw, only 10-11% of taxpayers itemize deductions. We’ll see what happens in a couple of years when the current law is slated to revert to the old law.

Yep…the TCJA has been a great policy. Almost everyone is paying lower taxes and more money is flowing to the Treasury.

He actually saved around $43,000, my sister told him they’d match the amount he saved for a down payment. She gave him the $50k and told him to use the money he saved for furniture, setting up the home and put the rest in a safe place for an emergency fund. She was impressed he saved that much in 4 years.

We stopped itemizing when we paid off our mortgage, the standard deduction was always better.

We haven’t had a mortgage for a few decades but didn’t stop itemizing until the standard deduction was raised substantially during the Trump administration

Sounds great. How dependent will he be on the room mate income? If the room mate can’t pay or leaves can he do without that income? That would be my only concern.

In some ways buying a house as an investment is similar to buying stock as an investment. I know people who bought a house for eighty thousand dollars during the seventies that is worth a few million dollars today and that turned out to be a very good investment for them. On the other hand, I know people who bought a house for that same dollar amount during the seventies that is only worth a few hundred thousand dollars today which turned out to not be a good investment when considering the other ways that money could have been invested.

Even so, I think there are many good reasons to buy a home instead of renting one.

I did, even after the cuts. I had mortgage interest and I had state income tax withheld when I was working and my itemized deductions were a bit higher than the standard deduction for a single person. And the rate was 2.875%. So in some situations, itemizing is still better.

I agree, but for some people renting is the better option. IMO life is more stable owning a home especially with kids and once it’s paid off it’s almost always less expensive than renting. My home is paid off and the taxes, insurance and maintenance probably come to $12,000 a year. To rent my house would cost over $3,000 a month and utilities would be the same.

He didn’t take the extra income into account before he bought, but the extra income will definitely be nice. My nephews girlfriend already has a house and they talked about living together but he wanted his own for now, he figures if they get serious he’ll keep the house for an investment.

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