Buy or Wait?

Dear Dave,

I'm 18, and I have a job making $30,000 a year. I've also got about $40,000 in stocks and $10,000 in savings. I want to buy a house in the near future. Should I pay cash and buy it outright, or is a 15-year mortgage okay?

Sam

Dear Sam,

I love the idea of paying cash for a house, but I'm even more impressed that you've got $50,000 you could put toward a house and a job making $30,000 a year at age 18. Man, you're really kicking it!

It's a great time to buy a house. Interest rates are low, and prices are great. But the thing that keeps sticking in my mind is that you're still just 18 years old. Now, there's nothing wrong with being 18, but there's also nothing wrong with waiting a few years and getting a little more life experience under your belt before you saddle up with a mortgage.

At times like this, I think about what I'd tell my own 18-year-old son. And honestly, I think I'd advise him to wait and let life happen for a while. I'm not putting you down because you're 18. You've done some amazing things. But I think the best thing would be to keep piling up cash, then take a look and see how you feel and what your life is like in two or three years.

You've got lots of time and a huge head start already. Plus, there will still be plenty of properties out there. Then, when the time is right, either pay cash or do a 15-year, fixed-rate mortgage. And if you take out a mortgage, make sure the monthly payments are no more than 25 percent of your take-home pay!

Great job, Sam!

-Dave

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