Young, wild and free: Start now or wait?

[Fareed Khamitov]

Hello World!

I am a 21 years old computer science student. I started listening to the BP podcast back in May and listened to a lot of episodes since then. Me and my wife both wanted to be in real estate investing for the longest time. We saved up money and now have the money to buy the house. But the market seems so high right now in my area , and almost all books that I read or podcasts that I listened are saying that "you get reach buying". 

The question is: should we wait a little bit more for prices to drop a little and meanwhile invest in stocks or pull the trigger and buy a house? 

Anything will help!

Thank You

[Chris Szepessy]

I'm going to use a $200,000 house as an example. 

Conventional Loan

$200,000 (purchase price)x20% (down payment) =$40,000 down.

FHA Loan

$200,000 (purchase price)x3.5% (down payment) =$7,000 down.

If PMI is 1% of purchase price, thats $166/month or $2,000/year.

So, you can save $33,000 on a down payment but have to pay an extra $166 a month in PMI. 16 1/2 years later, you will have paid $33,000 in PMI. However, you can refi out into a conventional loan in a year or two and get rid of the PMI. You will have some closing costs, but even at $5000 for those, you'd still be ahead $20,000ish. Hope that makes a little sense.