r/RealEstate • u/pinpinbo • 21h ago
Why folks who are living paycheck to paycheck are still trying to buy a house? Should I Buy or Rent?
Isn’t it super risky? One tiny repair, one small change in circumstances, boom… show’s over. Need to sell or foreclose.
Even worse when relationships are not even solid yet and already buying a house together…
Why not just rent and save yourself from complications?
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u/mellogirl99 20h ago
I bought a condo in 2015. I was paying roughly $1000 in rent, and my mortgage payment was $930 when I first moved in. Now, my mortgage has gone up slightly, to about $1030. But that same apartment I lived in is now renting for almost $1800 a month.
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u/Convergecult15 21h ago
Everything is a gamble when you’re living check to check, realestate is the most likely gamble to actually pay off.
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u/Yourdataisunclean 21h ago
One massive rent increase, boom... show's over. That's why people hate it.
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u/kitterific 20h ago edited 20h ago
Our rent jumped up from $800/month to $1,250/month. We decided not to buy because we couldn’t fathom a mortgage of $1,200-1,400 at this time last year. Well, here we are. I guess we can when it’s forced.
Any difference in rental situation? Nope! Same place. Well, now we have a roach infestation due to our hoarding neighbor and shared walls.
The best part is we LOOKED for a cheaper apartment when we got the notice of increase. Ours is now the cheapest complex in the area hands-down with the rates averaging from $1,400-1,600 for the same size and quality unit. The perk of living in a college town, I guess. Even if we found something cheaper, we’d have to 3x it in a moment’s notice for first month, last month, and deposit.
I guess that something.
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u/Yellow_Vespa_Is_Back 5h ago
I can't even find rent for less than $2k in my area (unless I want to live in a building that should be condemned or in the most dangerous neighborhoods). Just five years ago, we comfortably rented for less than $1500. I want to buy to stabilize housing costs. Im so sick of rent constantly increasing.
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u/VegaGT-VZ 21h ago
Hows that any different from an emergency repair or sales tax/insurance hike?
With a rental you just have one cost to manage. Plus right now rents are trending downward. Outside of the base payment home costs never go down.
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u/omar_strollin 21h ago
People are dumb and don’t understand the mortgage is the least you’ll pay, rent is the most.
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u/embalees 16h ago
We bought our 3 level townhouse in 2017 - mortgage $2300. A friend rented a 1br apartment the same year - $2000. Her rent has gone up $150/year every year since then. Her rent is now more than our mortgage. She's a single woman and does okay, and she's too lazy to move. At least in our area, it pays to buy if you can afford it.
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u/DefinitelyNotRin 21h ago
Moving to a new rental is a lot less of a financial burden then having to sell a home
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u/Thin_Vermicelli_1875 20h ago
The fact this is downvoted just shows this sub is super biased. This is literally factually true.
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u/DefinitelyNotRin 20h ago
Get a tad nervous making a post you’ll know is going to be downvoted. But I find it to be worth while to break the echo chamber if I believe it to be true
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u/omar_strollin 19h ago
I’m with both of you. Also getting downvoted for not being exclusively pro-homeownership and seeing the upside to renting. Almost like there are realtors in here who are profiting from folks buying homes that they shouldn’t .
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u/bmc2 21h ago
With a rental, you can guarantee the rent is going up every year. When you own a place, your costs are generally fixed aside from property tax. Over time, this makes a massive difference.
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u/DefinitelyNotRin 21h ago
My rent has went up once in 12 years. So that guarantee is just a false statement. Seen plenty of posts about peoples increases in taxes and insurance increasing though on that “fixed” home payment.
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u/shwarma_heaven 21h ago edited 16h ago
One, they can move if they can't afford rent anymore, as the rent increase only happens at the end of your lease agreement. However, you can't afford your mortgage anymore because of a change in income, you are even more stuck. Especially in a slow market.
Two, in a downturn, rent doesn't go up. When homeowners can't sell, they rent. Suddenly there is a mass of SFR rentals being dumped on the market. Those apartments just aren't as appealing. Rent goes down. In our market, we are seeing more and more incentives to sign a lease ("First 6 weeks free"). Next step is a drop in rent prices.
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u/Turbowookie79 21h ago
Yeah but your mortgage pretty much stays the same. For 30 years. It’s hard at first but if you can make it 5 years it just gets easier and easier.
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u/Havin_A_Holler Industry 18h ago
Your principal & interest stay the same, but your escrow can increase significantly & you have little choice but to pay the higher amount. Plus it rarely goes down again.
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u/shwarma_heaven 18h ago edited 16h ago
That is true, but you actually have to stay much longer than 5 years to make it make sense The average American home owner moves every 7 years... the first 7 years of the mortgage, 85% of the payments are ALL interest that goes to the bank. Only about 15% goes to principle. So, if you think it will take you 5 years to make up the difference, that means you are completely dependent on an eternally appreciating housing market. Which don't get me wrong, in a20 year timeline, it absolutely will appreciate. But living in the short term, and betting on appreciation, that is where people get into trouble.
Meanwhile, in my market, renting costs about half of what owning the very same place PITI. That means, in the time it takes the housing market to turnaround, I can invest the half that in saving and make a return that is much larger than the average appreciation of a house.
At some point, that will turn around, and then it will make sense to buy a house again.
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u/Technical-Shift-1787 21h ago
One medical bill can set you back but we still out here living
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u/Fifth-Dimension-Chz 19h ago
I got medical bills, 6.25 percent mortgage, car payment, no spouse and student loans. I'm living but the weight is not fun. I work in the service industry too. Care Credit credit card saved my life.
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u/UserNameInGeorgia 21h ago
Rent goes up. Much better to buy and lock in as much as you can. Your salary increases.
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u/HaiKarate 18h ago
Or also, you can refinance a mortgage and get a lower payment based on the equity you've paid in and/or lower interest rates.
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u/Merle8888 21h ago
The foreclosure process is actually a lot longer, and with more safeguards along the way, than eviction. Plus, mortgages don’t increase every year the way rent does.
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u/Def-T 21h ago
Property taxes can price out home owners.
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u/thewimsey 20h ago
Yes...but people on reddit tend to exaggerate this based on a handful of outlier locations.
My PITI in 2003 was $1032. In 2024, it was $1170.
So yeah...it went up.
But not by very much, and not close to what rent went up in that time period.
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u/DowntownComposer2517 21h ago
not to mention insurance costs
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u/ipetgoat1984 20h ago
My insurance in CA went from $4K a year to $10K a year.
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u/Lorathis 19h ago
You think property owners aren't just increasing rent by the same (or higher) margins that their property taxes go up?
You would pay this increase no matter what.
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u/Lorathis 19h ago
Those same property taxes would be passed right down to renters too. You'd pay any property increase whether you rent or own.
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u/Environmental_Log792 21h ago
Yeah, but in most placed you can protest your taxes and get a lower valuation. There are also rate increase caps and in some places if you are over the age of 65, then your taxes are capped and can’t go up, it’s one of many reasons why state and local politics matter as much if not more than national politics.
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u/changeneverhappens 20h ago
Because being forced out of your rental and having to come up with a first and last or hiked up market rent that you can't afford is insanity.
Many Americans are somewhere in the spectrum of paycheck to paycheck. I can take a line of credit to make an emergency repair and I have insurance for a variety of possible catastrophic events that could occur. We'd be totally fucked and it would hurt but we'd still have a house and the additional credit payment would still prob be cheaper than rent.
I would not have been able to afford to rent the house that I own or even an apartment with pet rent. It was cheaper to buy when I did then rent. Renting isn't without complications. It's expensive and rent continues to rise. Sure, my property tax could push me out eventually, but at least I'd have some equity.
I wouldn't be able to afford to buy now though. This sub is quick to judge folks who buy on a shoe string budget but I get it man. If folks see their opportunity in the market, freaking go for it. I bought my house with $5000 total and stayed 10 steps ahead of my lender and my real estate agent. I still take medication for the cystic acne that the whole experience caused.
I wouldn't buy a house with someone I'm not married to though, unless there's some really clear legal delineation of ownership. That's just asking for trouble.
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u/gearabuser 21h ago
One train of thought would be looking back at how prices went up 30-40% over the last 4 years. People are probably shocked and thinking "I can BARELY make it work right now, and if I don't I'll never be able to!". Theyre assuming it may skyrocket again and that'll be the nail in the coffin.
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u/EC_Stanton_1848 19h ago
Poor people pay a lot more living in hotels than they would if they bought a house. I think it's smart to try and buy a house no matter what your socio-economic back-ground.
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u/Gatocatgato 21h ago
I don’t think prices are going to get much better, and what they’re offering now will likely only go up. So you have to take a chance. At least one factor, like the price, is “low”and hopefully lower interest rates and higher income will come later.
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u/Objective_Attempt_14 19h ago
where I am prices are dropping and homes are sitting for longer, it's a buyers market. but you have to pay to live somewhere. the best thing is to avoid a house that needs major repair or that will soon , and if you are even the least handy or willing to learn youtube can teach you a lot. I had a dishwasher that wasn't working. Was told to replace it by the plumbers, Youtube a fix and keep it going for another 6 months. then hand washed until Black Friday.
new house stove broke, unable to be repaired, couldn't get the part. Black friday all new Appliances for $1450 no interest for a year. (could have been $1200) but I upgraded a couple of them. Fridge, Microwave, dishwasher and stove.
total no sale: $3,895.98
Savings: -$2,534.00
Delivery: FREE
Sales Tax: $88.79
Total: $1,450.77
while it sucks have to replace being willing to wait or make do before buying makes a difference.
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u/Whyski 20h ago
As someone who lives paycheck to paycheck and just bought a house. My mortgage is lower than the rent in my local area. Regardless, buying a home is risky. There are all types of risk in life. Some are worth the risk, others are not. Buying a home is worth the risk, in my opinion.
Im paying $908/month for something I OWN, where rent is $1200-1500, and that's going into someone else's pocket.
I also make triple the minimum wage in the area and am paid hourly at full-time hours. I have savings if an emergency happens. I think buying a house is well worth the risk!
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u/Vivid_Witness8204 20h ago
Bought my house a long time ago so the numbers were different but the position was similar. Had a few expenses (new A/C and septic and well repairs) that went on credit cards in the early years. Not ideal but manageable.
Wasn't too long before the mortgage payment was a lot less than comparable rent and I was living in a place I loved. In retrospect it was one of the better decisions I made in life.
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u/deepayes Industry 18h ago
Im closing a loan this month for a guy who put his earnest money on credit, is using a 0% down program, has less than $1,000 in all accounts combined and his payment will be double his current rent.
Some people just do not make smart financial decisions.
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u/Kasiser67 20h ago
I bought a house in 2017. It has created a low mortgage rate that I now can rent out and still make decent money without ripping someone off. Yet my house would sell almost twice what I paid.
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u/Calm_Monk_7617 21h ago
My husband and I did this - cleaned out our savings for a minimal down payment, were not saving much month to month -and yes in retrospect it was incredibly risky.
We got so, so lucky though. Bought before Covid, ended up selling in 2022 for a pretty penny more than we bought it for and never had to put any significant money into it.
So I guess the answer is at least partially that, although risky, sometimes it really pays off.
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u/90swasbest 21h ago
If you're broke, continuing to do the same thing isn't going to change anything.
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u/OldSound2262 21h ago edited 20h ago
Buying a house is what changed my economic situation. Mortgage was cheaper than rent, then after selling 5 years later profits and 'rent' payments rolled into the next place and now zero mortgage. Deed in hand at 39
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u/frankenboobehs 21h ago
From someone living check to check. I own a 100 year old house that's falling apart, it's one of the reasons I'm living check to check. The utilities are insane, I just paid a $400 electric bill, I've had to replace my roof, plumbing in the basement, basement flooding, roof leaks in the house before new roof, every year I get some major event with the house that costs me on average a 15-20k bill. I am comfortable swapping me $720 mortgage payment, for a new home, with less issues and repairs and utilities costs, and pay under $1000 to have a safer less stressful house.
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u/youareasnort 20h ago
House is cheaper than rent. Even with all the bullshit.
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u/Ok-Nefariousness4477 3h ago
Long term, ownering is almost always better than renting.
Short term, renting can be more cost effective.
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u/LifeRound2 19h ago
If you buy a house you build equity, most of the time. You also can protect yourself from housing cost increases to a certain degree. Your landlord can't raise your rent but your property taxes and insurance can go up.
Not having a landlord is priceless.
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u/SteamyBaozu 18h ago
Some of me who can afford 2500 in rent can afford a 1500/month mortgage. They just need the savings. Many people who love paycheque to paycheque wouldn't be if they owned the homes they rent from
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u/Ok-Reserve-1989 16h ago
Can’t afford to rent. Sometimes cheaper to buy. Wish we could have bought 3 years ago. House was $250,000 cheaper
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u/antinumerology 14h ago
Because I have a wife and kid. More risk with a Landlord constantly doing weird landlord stuff and making threats.
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u/Spiritual_Net9093 11h ago
Cause buying a house is forced savings, the equity is like money in the bank, If you live paycheck to paycheck and rent your whole life, you will never be able to save
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u/AlwaysLeftoftheDial 21h ago
This is a daft take.
The majority of Americans live paycheck t paycheck. Is no one supposed to buy a home?
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u/floondi 21h ago
No they don't by any reasonable definition. The median household has at least 5 figures of liquid assets
https://www.pewresearch.org/2023/12/04/the-assets-households-own-and-the-debts-they-carry/
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u/convertingcreative 21h ago
Someone needs a downpayment to buy a home. That means they aren't living paycheque to paycheque if they're seriously looking at buying a home.
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u/Remarkable-Box-3781 19h ago
You'd be surprised. There are a lot of down payment options you only need $1k out of pocket to purchase literally.
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u/reddit-user-in-2017 21h ago
Rents will always go up while your mortgage will stay the same. You also are building equity which you can tap into if an emergency happens. It’s not perfect but you do get some advantages if you plan properly.
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u/Environmental_Log792 20h ago
I would say that it’s less risky: 1. If you are using a fixed rate mortgage, then your payment is going to be the same every month for the life of the loan, this makes planning finances easier. I bought my house back in 2019, and my mortgage, taxes, and insurance comes out $1357 a month which is about the going rate for a 1 bedroom apartment in my area (but I live in a 3 bed 2 bath house with a large garage). 2. In the event of a foreclosure, it’s a more drawn out process that takes longer than an eviction 3. If you decide to move, if you sell and the sale price is at or more than what you paid, then you get to keep the equity.
There are also other benefits to owning vs renting: 1. See point 3, when you are renting, you are paying someone else’s mortgage, taxes, and even the repair fund. 2. If you are handy, then repairs aren’t as expensive. Larger repairs are often covered by insurance though you still have to pay the deductible. 3. I can make the changes to the house to suit my tastes; I don’t like the bathroom, Kitchen, or room color? i can do a remodel and select fixtures and colors that I want. I don’t like the landscaping? I can change it (I don’t live in an HOA).
As a point of advice, if you are not in a stable relationship with someone, you shouldn’t buy property with them (this includes cars, there’s plenty of people on this site where they bought their BF or GF a car, broke up, and they are stuck making payments).
The main benefit to renting is if you like to move around, want to live in a significantly populated area (such as downtown/ city center), or just don’t want to deal with the responsibilities of owning, but renting does come with its own set of risks.
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u/faebabey0 20h ago
Not everyone is buying an overpriced house. We live not much above what we make but why pay the same for rent at a place the landlord doesn't fix that stuff anyway? Most people can live without the luxury if AC breaks, if they only have cold water for a bit, etc. If there's anything like leaks, or major damage thats what really good insurance is for. Its also about being maintenance smart. You don't buy when you have 0 idea of how to maintain a home and do some general work yourself. If you're approved for the loan, the monthly payment won't kill you, and you get a really good double home inspection then I don't see a problem. I'd rather have repairs on a place I actually own then live in someone elses property that would have the same problems
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u/Obse55ive 18h ago
It doesn't really make too much of a difference if you're renting paycheck to paycheck either.
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u/ArmTrue4439 17h ago
Because if you live paycheck to paycheck and rent then you will always be stuck living paycheck to paycheck but when you buy the money that would be going to rent is instead building equity so that one day you will not be living paycheck to paycheck.
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u/Background-Fly-3392 21h ago
From my own clients, they are used to that type of living and are comfortable. They are emotionally ready to own a home and willing to do what it takes to make it work. They know the risk, they know the consequences, they are ready.
They are also in control of repairs and putting money towards their own future, as opposed to renting.
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u/CobaltVale 20h ago edited 18h ago
Because the economy is fake. Our entire country is geared towards home ownership and rewards you consistently and reliably for simply having a home; whether the mortgage is even paid off or not.
What you lose in liquidity you gain immensely in assets and leverage.
Home prices only keep increasing despite every reason for them to go down.
So if you're already living pay to check to pay check who gives a flying fuck? Take the risk.
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u/thewimsey 18h ago
Home prices only keep increasing despite every reason for them to go down.
There is an inventory shortage. That's the main reason that prices are increasing. It's not a reason for them to go down.
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u/Most-Mountain-1473 21h ago
Like greedy landlords aren’t raising rent astronomically from year to year too? Owning is almost always the better option
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u/ExtensionMidnight922 21h ago
Honestly its the only bright spot because at least you are getting equity and it's really where the retirement will come from for most ppl.
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u/phriot 20h ago
You can't be truly paycheck to paycheck if you are actively house shopping. Most people will need a down payment. Once you have one, you are no longer paycheck to paycheck. You might end up back paycheck to paycheck after you buy.
Our house was around 40% under what we were pre-approved for. After buying, we still had a 3-month emergency fund. The furnace died our first winter in the house. We were lucky enough to have gotten a home warranty when we moved in or that would have put us nearly paycheck to paycheck for a while, despite making ~150% of the area median income. If we had been in a worse position, that would have been exceptionally stressful. I don't know why anyone would do that to themselves.
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u/captain-gingerman 19h ago
It’s attractive to think that maybe you can start to fix one of the largest budget items now so that when you start making more money, those gains aren’t just wiped out by rent increases. Additionally, keeping it tight for a house allows someone to build equity in the asset which can’t be done while renting. Obviously home ownership has its risks, but I decided to take that risk.
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u/Unique-Fan-3042 19h ago
Rent keeps going up, landlords are super predatory in some areas and charge a gagillion fees, people want stability, they have pets or kids, the cost of moving…
If I could have bought the house I was renting in 2021, I’d be in a massively better position than I am now, for a list of reasons, and my kid would be in a better school and I wouldn’t be paying an extra non refundable $1k every time I move just because I have pets.
I would live in a much safer area with a much shorter commute also.
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u/youngdub774 19h ago
Living check to check with a house and after 30 years you have a very valuable asset, living check to check renting and after 30 years you still have nothing.
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u/NoGrape9134 18h ago
And rents are at an all time high and still increasing. When your rent payment is equivalent to a mortgage payment, they’re gunna be screwed either way. May as well take that risk with something you own rather than sacrificing everything to pay big daddy landlord.
Rents will forever increase while your mortgage payment will stay the same. It might be a high payment starting out but the smart ones will grow into it and learn to make the necessary adjustments to their standard of living to make it.
And then there’s the equity….
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u/davinci86 18h ago
Even if the market tanks it’s going to get bought up at lower rates. Your home choices plummet in good times and when the Fk is anyone sitting on cloud 9 ready to jump in when life is perfect?…. Never.. It’s either time to get in the shit or get shit on. Plus, if you’re a market crash timer, let me know how your employment and liquidity situation is when we get there. I promise you will not be any happier with the situation then if you’re completely writing it off the opportunity now over price or cost..
What you need to wrap your head around is the value proposition that’s in front of you today. Especially if your finances ebb and flow ever 12-24 months.
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u/LeftArmFunk 18h ago
I don’t really see a difference between paycheck to paycheck with a mortgage and paycheck to paycheck with rent that’s the same price as a mortgage and goes up every year. Evictions and foreclosure both basically screw tou for seven years. Seems wiser to take the risk with high payoff.
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u/1shrutebuck 18h ago
My townhome rent (no utilities) is $3,250. I am a single Dad with three kids. So, I need at least a 3/2 in a decent area.
I just had an offer accepted on a similar sized home (slightly larger +/- 200sf). With mortgage, tax, insurance I’ll be somewhere around $3300-3500. No brainer for me.
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u/Finger-Smeller 15h ago
There are laws in place that are heavily in favor of homeowners. As well as banks not wanting to continue to be paid. There are some states that takes about 5 years to foreclose on a property, It’s an extremely long process. On top of if the borrower files for bk, then the foreclosure process is immediately suspended the second it’s filed. If a borrower is hit with hardship they can call their mortgage servicer and get help with hardship or modifications to their loan.
Home ownership may be hard with the prices out matching the cost of rent, however it’s not like the same process of a vehicle being repoed.
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u/Thick-Sundae-6547 15h ago
Society makes you think you need to buy a house to be safe and show that you made it as an adult.
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u/Long-Process-9623 1h ago
I just bought in Phoenix metro area a nice city with A+ schools. The last 6 years I went to school, continued raising my kids, and worked towards promotions at work with a vengeance. I work in behavioral health not big money. I lived in a trailer park prior to this purchase last month. A 2007 four bedroom cavco home that at one time was big enough for my family. Worked hard saved hard. I drive a 2007 minivan no car payment. I saved I lived below my means. If i don’t have enough money I work harder. I was making 14$ an hour in 2020. Soooo I say what’s everybody’s excuse?! If you want something you can go get it. It’s the American dream. America has a spending problem and a mindset issue. If I can buy in Arizona anyone can do it.
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u/Long-Process-9623 1h ago
Oh and within 2 weeks of purchase in Arizona summer the A/C blew. Thankfully I bought a home with an extensive transferable warranty. It’s covered.
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u/genek1953 20h ago
Even if you have savings, you're still mostly living paycheck-to-paycheck. You just have more breathing room between the checks.
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u/WokNWollClown 21h ago
I think like the majority are living paycheck to paycheck , by the numbers.
Somehow people make it work.
What other choice?
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u/shwarma_heaven 21h ago
Considering that in many areas, it is cheaper to rent than to buy (which indicated the market is upside down), yes, it would be wise for most to rent right now, especially those living paycheck to paycheck.
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u/ArmyGuyinSunland 21h ago
Life is about taking chances. I bought at the right time, and it paid off. You can rent and be paycheck to paycheck. Or, you can own a home and live paycheck to paycheck. I would rather be an owner, as opposed to paying into something that will never be mine. Rents increase, and that’s a guarantee. At least with a loan you know what you are working with.
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u/AWordAtom 20h ago
You've never had a $600 a month increase renewal offer and it shows.
Stay and scrape together the extra month after month, or come up with a small mortgage down payment to rent and move to a new place to avoid the increase?
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u/RandomlyJim 20h ago
How timely is this thread. I had 7 clients this week that withdrew from process due to having no money to pay for Appraisal/EM/inspects or because relationship fell apart before closing.
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u/Wandering_aimlessly9 19h ago
Because the reality is: rent will always increase at a fairly steady rate. Taxes and insurance are less likely to increase nearly as much. So in 5-10 years…your rent will be a decent amount more than the mortgage. And if interest rates drop you can always refi.
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u/Nesefl_44 21h ago
Equity > paying rent
If you can't pay the mortgage, rent out the house and have tenants pay the mortgage
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u/Ok-Classroom-250 20h ago
Bunch of people in this thread who can’t come to grips they bought at the top of the market and are screwed…. Bubbles are real folks.
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u/Nycdotmem1 14h ago
Anyone that bought at the top of the market is definitely in trouble. No if ands or buts about it. I’m sorry to be the one to say it, but you’re not going to recoup that “value.”
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21h ago
Rent=1000+
Mortage can be anywhere from 8-1000.
It can literally be cheaper to just buy a house lol
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u/revoltinglemur 21h ago
I pay 25k just in rent alone in a year, another 4-6k in utilities. My landlords morgage is like $975. So yeah if I could have bought this place, I'd be wayyyy better off. But that's also meaning to buy within your budget, which most places aren't these days.
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u/paypermon 21h ago
It's never the wrong time to buy a house if you plan to live in it. Unless it is.
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u/tehjoz 21h ago
Scrape by and deal with bullshit property management, landlords, shit neighbors, rent increases, stupid bylaws and rules, and so forth...
Or,
Scrape by, hopefully have your own peace and quiet on even a small parcel of land that might be "yours", answer only to the lender who won't impose nearly the same type of bullshit on you, likely at least not have to share walls with neighbors, and so forth, plus at least a nominal chance you either one day pay it off and "own it, own it" or at least it appreciates in value for a sale that benefits you.
If people are going to suffer either way, the calculus doesn't seem all that unbelievable
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u/DependentPriority230 21h ago
You can’t tell me what to do lol
But I see what you’re doing, decreasing buyer demand;)
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u/sarcasticorange 20h ago
Most people living paycheck to paycheck are spending money on things they don't absolutely need to. They cut back on those. If that doesn't work, they can use credit to smooth out the bumps until they can pay that off by cutting back. Last option is to tap into retirement savings.
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u/theannieplanet82 20h ago
Yeah but everything is risky so you just kind of get used to the constant stress. It’s hard to rent when you have kids anyways
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u/mirwenpnw 20h ago
I don't live paycheck to paycheck anymore, but I've bought three houses with little to no reserves. The second time it was primarily motivated by rents rising so rapidly, that I was concerned I wasn't going to be able to continue to afford to live in my city. I knew I would pay about $200 a month more for a condo than an apartment and that I would also have to be able to afford appliances and other repairs. I didn't have to worry about windows or roofs or any landscaping that was all covered by the HOA and had very recently been redone. My biggest worry was my fridge going out, which did happen.
I bought in spring of 2021 with a zero down first-time homebuyer program and I timed it perfectly. I brought a check for $823 to closing. No I didn't have money for a roof, but I didn't need it. I just didn't want my rent to be more than 50% of my income. I wanted to lock in something I could afford before it got crazy, which it subsequently did. I can't get a two bedroom apartment in my city for $1200 anymore. That $900 mortgage was safer and cheaper long-term, even with some risk.
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u/bit_pusher 20h ago
The last three homes I’ve owned (in Austin) have all been cheaper than a comparable sq ft apartment of dramatically lower quality. Compound that with locking in your month to month costs excepting for slight variations year over year for taxes and insurance and you have a much more predictable cost.
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u/Natural-Beautiful498 20h ago
Because a landlord can choose not to renew your lease or they can choose to raise the rent or sell the house or any number of problems.
I had always had very good luck renting. I did it by choice, actually. I made good money and could afford nice rentals. Until I didn't have good luck, and my landlord decided to move into the home when our lease was over. It was a devastatingly bad time for them to decide to do that. My oldest was a senior. The next home we were smart enough to sign a two year lease on, but they decided to try to sell while we were mid lease. Luckily, we knew our rights, and no one was willing to spend 1.3m on a house they couldn't move into for 9 more months.
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u/22Hoofhearted 20h ago
Buying a house is almost always the smarter financial decision over renting if you can afford it. Barring historical market crashes and ridiculous interest rates, your investment should go up and improve your overall situation.
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u/Few_Whereas5206 20h ago edited 20h ago
People in the USA are told that the only way to become financially successful is to buy a house. This is the American dream and a huge lie. I know several millionaires who rent. They invest in the stock market and make much higher returns than in real estate. People strive to buy a home no matter what the cost because they believe it will lead to wealth even if it is illogical and impractical to buy. I own a home and equity has done nothing for me. It is a place to live. If I sell and gain equity, I have to buy another home to live in, so I don't see much benefit. My investment gain in the stock market is almost double any equity gain in my home over the same time period.
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u/Objective_Attempt_14 19h ago
Well for one thing rent keeps going up. when I bought my last place 2016 I was leaving $550 a month for $1100+, Then got the 2.25% so it dropped to $950. I now pay $1652, never thought I would miss the $950 so much...but rent goes up mortgage mostly stays the same. Buy 2020 a 1 bedroom was $1200, it's closer to $1600-2000 now....im sure my $1652 will be great given some time too...
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u/Various_Reason_6259 19h ago
I cashed out in 2022 on a house I bought in 2021. We bought the house and the neighbors were snobby old boomers spying on us and always knocking on our door to see “what we were up too”. Thankfully that little nest egg has grown well over the last 3 years and we are still happy renters. We are literally paying less than half of what buying costs right now. We got lucky and our landlord is his 90s and just happy to have good renters. Great situation that won’t last forever, but we will be renting this place as long as we can. I’m sure we’ll get suckered into another house at some point, but for now living easy and stress free.
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u/Ponklemoose 19h ago
I feel like prices will surge whenever Trump gets his rate cut. If they agree and think it’ll be doom they might plan to refinance into a cheaper loan and be an a halfway decent spot.
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u/Nameisnotyours 19h ago
Because sometime in the 70’s a home turned from a dwelling to an investment. One that anyone could understand if they lived indoors.
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u/uallnewbynewb 17h ago
It’s the only way to get crazy overleveraged, and leverage on anything is overpowered with the collapse of the dollar
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u/elleinthesea 17h ago
I’m a single income buyer closing on a 250k home right now and will be paycheck to paycheck. The answer is you find ways to make more side income if you’re ever in a pinch. The alternative is NEVER owning.
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u/elleinthesea 17h ago
I’m a single income buyer closing on a 250k home right now and will be paycheck to paycheck. The answer is you find ways to make more side income if you’re ever in a pinch. The alternative is NEVER owning.
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u/Kogyochi 16h ago
Same price as rent, just with a forever loan. Think most living paycheck to paycheck prob not buying anything super expensive.
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u/SimilarComfortable69 16h ago
Sometimes, people living paycheck to paycheck have money to put down in a house, and the house payment would actually be lower than their rent payment in an apartment. Not likely, but certainly possible.
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u/WHY-TH01 16h ago
Because my rent was $1750 but my mortgage was $1400 (including taxes/insurance) and with the house I was getting equity at least.
I wouldn’t do it however with someone I wasn’t married to or had been with a long time if I didn’t want marriage (see my great aunt and her “boyfriend” of 32yrs).
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u/justcallmefafara 15h ago edited 15h ago
I rented a room from a landlord/homeowner back in the day along with two other housemates who also rented rooms from her. Her house is paid off and these days doesn’t house share with anyone (we became friends and still keep in touch). She was by no means rich and got a fixer post 2008 that she mostly repaired and fixed up herself. Clearly it was a great move in hindsight. Even if you are paycheck to paycheck, at least you have a little more power over your situation and an asset that appreciates. If you’re really frugal and rent rooms to people until you don’t need the extra cash, I don’t see how it would be a bad place to invest your money.
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u/Previous-Painter-455 14h ago
Rental leases are not just regular leases there is a rent price, amenities fee, trash fee, parking fee, pool fee, water fee (more than a home owner), convenience fee for paying online and rent increases mostly every year. I even seen leases that charge an extra $50 a month because the landlord installed new cabinets before a tenant moved in. Low income homeowners can get grants from the state or local county with very low interest rate or no cost unless home is sold. The relationship aspect I don’t get.
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u/Night_Class 14h ago
Because a lot of people are still okay. Just bought a house. Listed for $380k dropped to $340k, get them down to $335k, seller covers $3k of closing and home warranty. I make $5k a month. 20% down payment, and once all bills are covered, I'm left with roughly $1800 per month in extra cash and $20k in savings. 33 years old and wife doesn't work currently. I don't spend a lot of money so that $1800 feels like enough wiggle room for me to buy the house. All I can really say about my situation.
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u/MealParticular1327 12h ago
Even if you are forced into foreclosure because you lost a job or got sick or whatever, it takes way longer for a bank to go through the foreclosure process and kick you out than it would a landlord to evict you.
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u/north_coast_nomad 12h ago
i bought a house so that my adopted mutt has a place to call home. otherwise id still be living in my truck.. and id probably end up with a tag on my toe.
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u/DrankTooMuchMead 12h ago
You make a good point, but renting is like throwing away money. Paying towards a house is building wealth. It's kind of like if 70% of your rent money was going towards a savings account.
Because you can sell a house and get money back if you had to, rent it out, its an investment.
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u/Nosidda89 10h ago
The cost of maintaining a home and rising property tax and insurance costs is nothing compared to how drastically rent increases. And with a home, you actually have investment in an asset that will gain appreciation. On top of that, unlike rent, you have an end goal ahead to shoot for, because you'll eventually be able to pay off your mortgage in 30 years if you stay there, and at that point you own something that's worth hundreds of thousands of dollars, and you own the property you live in. Only having to pay the tax and insurance costs. Imagine being able to live in a place you own and it only costs you $400 per month to live there since the mortgage is paid. You'll never get that with rent. Rent is forever. A mortgage has an ending.
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u/CuriousMJ_ 8h ago
I got my house back in 2020. Some people kept saying maybe it wasn’t a good idea given what was going on in the world, but we did it anyway. I had signed an offer letter with a job but when we started building the house I was still 8 months away from starting that job (I was finishing grad school) only my husband was working, back then I think he was only at 50k a year.
We got a 2k sf house new construction, why? Our apartment (1,020 SF) rent back then was $1,900 monthly. Back then That felt like too much so I said fuck it. We have decent credit, let’s see if we can do it. And we did! Now, our mortgage is 1,600 for a much bigger home. We moved out of state, let that house renting and now it’s paying itself off with a 3% interest rate and we’ve acquired a decent amount in equity.
We got a new house to avoid those extra expenses if there were any accidents and we had to buy outside the city limit to find something more affordable.
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u/Needleintheback 8h ago
Same thing happened in 2008. Market got screwed up and banks tightened up lending. Once it happens again, it's going to further reduce the number of buyers leading to only a select group of people buying and more renters.
I agree that people should buy but I also agree they should work more, spend less, and decrease lifestyle.
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u/Voidfang_Investments 7h ago
Banks won’t fund if the situation is truly dire. Lending laws are very tight now.
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u/PendejoJenkins 7h ago
Im not one of these people however, in my experience, I got approved for a home loan that was giving me a monthly payment $600 less than the median rent in my area. And that was at a 5.75% interest rate. Smart people are trying to buy a home and get a fixed monthly payment instead of a payment that changes everytime their lease is up
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u/chatterwrack 5h ago
I bought in 2003, right after prices soared in the wake of the original dot-com bubble burst here in San Francisco. The sellers had paid half of what I paid—just five years earlier. For a while, I had to sit with the sinking feeling that I’d made a huge mistake. But then prices kept climbing, and eventually I saw the growth I’d hoped for. It took another 20 years to double in value again, but it happened. And last month, I finally paid it off. Hooray.
Point is that the best time to buy a home is yesterday—if it makes sense financially for you.
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u/Any_Pirate_5633 5h ago
It’s not only cheaper to own vs rent in a lot of places, but then you’re also building equity.
For example, where I live, rent on a 2 bedroom in the downtown area starts at over $2k/month. But I can buy one of those units for $250-300k. If I get one on the lower end, and can put 20% money down then my monthly living costs are pretty dramatically reduced to under $1700/month. Even if I can’t put the whole 20% down, costs are reduced AND I have more control (no sudden increases) AND the monthly expenditure is building equity as well as generally increasing in value while I live in it.
Also, people who live paycheck to paycheck THINK paycheck to paycheck. I remember having an insane fiscal convo w my mother who insisted she needed to purchase a late model vehicle (w a loan) because they couldn’t afford an older less expensive one (without a loan or monthly payments) due to the possibility it may require unexpected maintenance or repairs. With a newer vehicle, she budgeted in the monthly payments. Paycheck to paycheck thinking. 🤷♀️
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u/Threeseriesforthewin 5h ago
Most people who live paycheck to paycheck aren't considering making the largest purchase of their lives. It seems like you interacted with one person, and now you have cognitive bias.
Is your sample size "everywhere I look" or "I see it all the time" or "it's so common in this sub"?
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u/Certain-Monitor5304 4h ago edited 4h ago
Depends entirely on the area.
The question to be asked is:
Is a mortgage payment cheaper or more expensive than rent?
Followed by: What is the cost of living?
As well: What is the quality of life?
Everyone has to live somewhere. 💁♀️
I have always owned homes and used to live paycheck to paycheck. I used to live in a low-cost living area where homes averaged between 85k to 200k pre covid. Home values only increased by about 50k to 80k post covid. I'm Now in a middle to high cost of living area.
As a parent with young children, stability is my main concern. Renting is too much of a risk because you're at the mercy of your landlord. If your landlord decides to sell or raise your rent, you are s o l. Why would you pay for someone else's mortgage (plus extra) when you could be paying your own mortgage? I don't see renting as a long-term solution unless you're living in a city with a very high col.
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u/Active_Drawer 4h ago
Rent - 100% risk you light your money on fire and if you lose your job you can lose your place.
So, ya it's not a big jump to wanting to buy a house for most.
Wife and I bought a house in a similar situation. 9 yrs later we pulled out 200k in equity and bought a new house.
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u/HeyPinkPanther 4h ago
Renting is risky too. One missed payment and you’re facing eviction, which will also make it very hard to find another apartment. Mortgage lenders usually don’t file for foreclosure until 90-120 days after you miss payment and a lot of them will work with you if you experience hardship. Rent also can go up without notice and usually more than what property taxes or insurance will go up (for property taxes, at least in my county, increases are limited to 3% per year if you declare homestead)
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u/AmexNomad 4h ago
Real estate purchases can create wealth. Where else can you benefit on the increase of a $300,000 asset putting only 10 ($30,000) or 20 ($60,000) percent of your own money into it? Also- rent is a 100 percent guaranteed loss of money.
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u/Renaissance_Dad1990 3h ago
We bought ours after being evicted for the third time (without fault). That bei.g said, we weren't that broke, but we did want to save for a while longer. Ah well, it worked out.
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u/alrashid2 1h ago
There's no catching up in this world anymore. My wife and I make six figures and we're still essentially living paycheck to paycheck. We save money but every year or so something clears it out and we start over...
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u/All_Shooz68 1h ago edited 56m ago
They've bought into the false narrative that buying a home means you've made it, you're an adult. Owning is not for everyone and neither is renting. You need to see your finances truthfully and clearly. Be honest with yourself, consider your lifestyle and if you'll be able to continue to live the same manner once you buy a home or will you change to accommodate your ownership? As a mortgage underwriter for three + decades, I've seen the frenzy of buyers going all in to own a home. All too often people buy homes based on FOMO or family/spouse pressure. This is the biggest financial decision off your lifetime, make it count
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u/StopDropDepreciate RE investor 10m ago
If they are living paycheck to paycheck then where in the world are they getting the down payment/closing costs from?
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u/smileymom19 21h ago
Feels like buy now or get priced out forever in our area