I am currently 19 years old, and when I am 27 I will buy my very own house. Could I afford it? Please read.?

Hi guys, my name is Sam, and I am currently 19 years old. I am currently working on my AOS in Information Systems Technology, which is a 1 year and 10 month long program. Once i complete that I am going back to school to work on my B.S. in History with minor in English Literature, then Masters in Education, then Masters in History, and finally P.h.d. in American History. I will purchase my very own house when I am around 27 years old. I am currently in Baton Rouge, La and plan to buy a house here in BR, LA. I am striving to purchase a home between $ 300,000.00 and $ 550,000.00. Based on my career aspirations could I aford between this range. My home would also be in a gated community. How do you figure monthly payments without interest rates? For example if a home is $ 325,000.00, without anything added how would you figure its monthly payment, based on 30 years. How do some people afford homes like this? Please advise me, it will be greatly appreciated thanks!

Sam, there is no way to determine cost or even your income in 8 years. Worry about that later.

Also, there are no interest free loans, so do not even bother calculating one. The interest rate might be 5% then or 15%, I have seen both in my lifetime.

BTW, if you are going to have your PHD you will be able to afford much more then 550k in todays market. You are seriously underestimating your income.

It is too far in the future to call. But good luck with your plans. All you can do is work hard, save what you can, and see what life brings you. Good luck.

Dude (or Dudette),

You are totally overanalyzing this. If this is your dream, just start saving and make it happen.

Sam, for so much education - you still have a lot of learning to do.

first of all when do you plan to purchase said house? today? tomorrow, 8 years from now? if it is 8 years from now - how do you know what the price will be in 8 years? It won't be the current price range.

second, goto bankrate.com they have a ton of financial calculators you can use to run different scenerios through. even 0% rates.

when are you going to start making money with all those college tuitions to pay? A $325K mortgage is $2,000 per month. Add $500-$1000 for utilities and insurance, etc. THe mortgage goes down with the amount of downpayment, assume $63 per month lower for evern $10k you put down. 10% is a good safe number, 20% down is better. Sounds like you'll have $1 million in student loans, so it may be tough.

Sounds like you have your education in order and are on the right track as far as career wise. Are you planning to work while in school?
Also 8 years from now housing prices could go up or down, nobody knows.

I think you would be well advised to buy a smaller cheaper house first. You would be able to do it sooner, you would learn first hand about homes and what you like to keep up and what you don't. If you plan to rent for the eight years until you are twenty seven---think about all the equity you could be earning in the meantime that would help toward buying that home you are currently dreaming about.

Your goal is laudable, but what you seem to lack is a financial plan to make it happen. How do you plan to buy this house - where will the money come from?

Well it depends on some variables.

1. cost of the house
Let assume it will cost 300000 (if more, figures are proportional)

2. lenght of the mortgage
30 years (or less?)

3. fixed or variable rate
A 30 years mortgage for an investment is usually based on a fixed rate. You will consider a variable rate on a shorter time or if your personal incoming will increase a lot. Based on my country (I write from Italy), nowadays rates are around 5% and 6%. Assume 6% to be sure you'll find a lower rate.

4.your personal wage
A well known rule (but in many cases forgotten ...) says: you can't afford a mortgage whose rate is higher than 33% - 35% of your net wage. You not only buy an house, but you also eat, travel, make sons (?), live ...

Let's do some calculations: 300000 at 6% fixed rate makes a monthly repayment of:

years monthly
10 years 3330
15 years 2529
20 years 2148
30 years 1800

So if you plan to get 30 years, and if 1800 is 33% of your monthly net wage, you must earn 1800 / 33% X 100% = 5454 per month (net). It is 5454 X 12 = 65454 per year (you must maintain this for a period of 30 years).

Is it realistic for you? I can speak about the Italian reality, here it is not realistic. In Italy wages are not so high, so young people can afford buying houses only if their families participate to the investment, giving them money. This is what happens in Italy, but I think is almost the same everywhere.