Should I Buy Now?

Sam wants to buy a house in the near future. Should he wait until he has the cash to pay for a house outright, or is a mortgage okay?

QUESTION: Sam wants to buy a house in the near future. Should he wait until he has the cash to pay for a house outright, or is a mortgage okay? Dave says a mortgage is all right but within certain guidelines.

ANSWER: I love the idea of paying cash. It’s a great time to buy for sure. I do think the mortgage you’re considering is a little rich. Your mortgage on a 15-year fixed rate shouldn’t be more than a fourth of your take-home pay.

It would be okay to either ratchet down the purchase price you have in mind or wait a little while. Either one is fine. It is a good time to buy. Interest rates are low and prices are great. But you are 18. There’s nothing wrong with waiting a few years and putting some life under your belt before you saddle up with a mortgage.

I would advise my 18-year-old son to wait. That’s what I would do. Let some more life happen for you. I’m not making fun of you because you’re 18. I think you’ve done an amazing job. I think you should pile up cash and see what your life looks like in two or three years. You’ve still got plenty of time to buy property and make plenty of money. You’ve got a huge head start already!

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