Can I legally buy a house when im 18 or 19 in Los Angeles?
I'm 19, my friend 18, and my girlfriend 18 1/2 all live in LA and yes we all have jobs
I make $2,156.00 a month
My friend makes 1,891.00
And my girlfriend makes 2,450.00 a month
Yes I do have a saving I've been saving money since 6th grade so I got 10,000.00 in case of emergencies. So I'm 1
Asked By: Riley Smith - 4/20/2011
While you can legally execute a contract at 18, it really doesn't look like you'd qualify to buy a house. (And many banks won't do a mortgage unless you're 21+.) It is very tough to get mortgage loans right now, not only do you need to have enough down (20?ikely for you), you need excellent credit. No credit is not excellent credit. Excellent credit takes years to build, the bank needs to see that you can borrow, and pay it back, and have been doing so for years.
It is very tough to get a mortgage with someone who is not your spouse, even for very long term boyfriend/girlfriends (10+ years), or relatives (usually they will make one person the primary, who must be able to qualify for the loan on their own). The bank needs to know it will be paid back, and with so many people involved, it becomes complicated and they prefer not to loan to groups of unrelated people. Also, debt must be taken into consideration, it's not only your income, but how much you owe. If you haven't had your jobs at this income for 2+ years, that will be another issue. How long have you been paying rent equal to the mortgage amount? That's another thing the bank looks at to see if you can afford to pay a mortgage.
Even if there was a bank that would loan you the money, and you put all 3 of your incomes together, you couldn't afford a decent home, maybe $250,000, if you all 3 had perfect credit and no debt, with the $10,000 down -- which is a problem, that amount is too little down for most loans you can get, and there is no money for closing costs, which run into the thousands, probably $5000+ for a $250,000 house. You'd also have to pay PMI, insurance because you didn't put down 20?which would probably be $100 - $200 a month.
In LA, even in a very rough neighborhood in Highland Park, a small house costs more than $250,000.
Remember, there are additional expenses, like property tax, which would be about $3000 a year on a $250,000 home, homeowner's insurance at least $500 a year. Maintenance on homes is very expensive, you can expect to spend thousands a year, even on a relatively new house, which $250,000 doesn't buy, it buys a home that needs lots and lots of work. New roof, heater, plumbing, electrical work, etc. It's always something!
Be careful, because in your situation you're a target for scams, and there are lots of home buying scams out there, especially rent-to-own foreclosures. Honestly, no legit bank will loan the three of you the money to buy a home. The three of you would have a tough time qualifying to rent a nice 3 bedroom apartment. Many landlords prefer to rent to 21+.
You really really don't want to own property with others, even a spouse if you can help it. They can get into debt and put your part of the property at risk, force a sale when the market is down, not pay their part of the mortgage, etc. It's bad enough to rent with roommates.
Congratulations on being so responsible at such a young age! Keep saving so you can buy yourself a home on your own down the line. Even if it doesn't happen for several years, don't give up, keep looking toward the goal. Maybe start with a small condo and go from there.
Answered By: maliboo_girl - 4/20/2011