Buying Early

Should a college student with no credit history buy a house, or wait?

QUESTION: Gil is a college sophomore and makes $1,500 a month at his job. He pays $500 in rent each month. He has no credit history and has $20,000 to put down on a $140,000 apartment. Should he do that? Dave says he shouldn’t, for a few reasons.

ANSWER: That would be a mistake. You could lose that job, and you don’t have a lot of wiggle room with your income. Also, the 18 months following college graduation have the most life-changing potential of any such period in your life. You could take a job in another town, get married, go to graduate school, and this house will be an anchor around your neck, preventing you from living your life. It’s a great time to be a renter until you graduate. Keep saving up cash and buy a house when you are ready to settle down.