Millennials struggling to find their financial footing

[JPhillips]

Originally Posted by Arles

I wouldn't ever buy an apt/condo/townhome unless it is below market in a busy city area. Even then, they are hard to sell as most people with money and buying are looking for a house.

Depends on what you mean by busy downtown area. That's true in mid-sized cities, but you can always sell in the big East Coast urban areas.

[Arles]

But if that's the case, you will be paying full sticker price for the condo to begin with. Selling places that people don't want to own (when compared to other similarly priced properties) is always a dicey proposition. There are always exceptions, but I wouldn't spend my money that way.

[CU Tiger]

An FHA product is just about the worst loan product on the market. Never ever ever use one of those.

With a 650+ and likely even a 625+ you can get a traditional Fannie with 5% down today and not have to pay refi costs to get rid of PMI. New FHA loans PMI is forever unless you finance out all together. You will also have about a .35% higher interest rate on FHA vs conventional.

And higher closing costs. And and and.

[EagleFan]

Originally Posted by Marc Vaughan

Much as I'm in favor of home ownership that is hugely misleading - if you're renting then you pay only a minimal cost for repairs (ie. minor things you can't be arsed to get the landlord to do) ... if you're a home owner then when something goes wrong its down to you to repair it.

I find that a running tally on repairs to my house in Florida is probably around $700-1,000/month - sound high? ... well often my cost during a month is $0, but it only takes one month with a high bill to bring it up to that average, last year it was replacing the air conditioner unit, the year before that the water conversion system went kaput ... every year without fail there is something which requires a serious repair to do with the pool system etc.

That sounds very high.

In the 56 months I have had:
Once in a lifetime storm
Well pump replaced
Well replaced
Washer replaced
Dryer replaced
Oven replaced
Hot Water Heater replaced
Plumbing issues
Septic pumped twice

That all totaled out to about 25K. That's less than 500 per month on average. That is still less than the difference per month between the mortgage and rent.

[CU Tiger]

FWIW owning 18 rentals for 5 years now my running average maintenance and repairs are $110/ea/month. CapEx adds another $145/ea/month.
Water Heater, Roof, HVAC, re plumb, re wire, foundation are cap ex.
Everything else is maintenance.

Most landlords around here are responsible for appliances.

[RainMaker]

Originally Posted by ISiddiqui

Is there a reason that folks are so quick to toss out 'apartments and smaller townhomes' from rental numbers? Do folks not also buy condos or townhouses were y'all are from?

Different properties with different costs associated with them. Nothing wrong with either, but it's unfair to compare the rental price of an apartment to a house. Apartment is splitting the upkeep of things like a roof, landscaping, etc with the other units.

Apartments are also in higher supply which diminishes their cost in many areas.

[ISiddiqui]

Originally Posted by RainMaker

Different properties with different costs associated with them. Nothing wrong with either, but it's unfair to compare the rental price of an apartment to a house. Apartment is splitting the upkeep of things like a roof, landscaping, etc with the other units.

Apartments are also in higher supply which diminishes their cost in many areas.

But we aren't necessarily comparing an apartment to a house. We are comparing renting vs. buying living space. And people also buy condos and townhomes (esp in major cities) where people split upkeep through an HOA.

And, of course, in many places, demand for apartments is ludicrously high, which means that the supply isn't necessarily being met and therefore apartment complexes are going up like mad (ie, like in the City of Atlanta right now)

[Arles]

Originally Posted by CU Tiger

An FHA product is just about the worst loan product on the market. Never ever ever use one of those.

With a 650+ and likely even a 625+ you can get a traditional Fannie with 5% down today and not have to pay refi costs to get rid of PMI. New FHA loans PMI is forever unless you finance out all together. You will also have about a .35% higher interest rate on FHA vs conventional.

And higher closing costs. And and and.

Are you talking about the 97 loan? If so, you still have to pay PMI and it's only good for your first home purchase. Unless you put 10+% down, you are going to have some form of higher rate (because of the risk). Last year, Obama cut down the PMI for FHA loans by half a point - so it's a better option for home loans under 270K:

The Obama administration estimates that by lowering the FHA's annual mortgage insurance premiums by half a percentage point, as many as 250,000 new buyers will be able to purchase a house. That's great news and overdue. The FHA almost priced itself out of competition with giant investors Fannie Mae and Freddie Mac by raising its premiums several times in recent years. The FHA made itself too expensive and its market share has plunged.

So who is best positioned to take advantage of the new, more consumer-friendly mortgage pricing? Here's a quick overview.

Start with your FICO credit score. If you've got a score of 620 to 719 and you have a down payment of 5% or less, the FHA is likely to become your first choice in terms of monthly payments. It will cost you less in principal, interest rate and mortgage insurance charges compared with what you'd pay for a "conventional" loan eligible for purchase by Fannie Mae or Freddie Mac with private mortgage insurance.

Consider this example using data provided by MGIC, one of the major private insurance underwriters. Say you want to buy a $220,000 first home with a 5% down payment. You've got a slightly-below-average FICO score between 680 and 699. Before the premium reduction, your monthly payment using a 30-year FHA loan at current interest rates would have been $1,225. The same conventional loan with private mortgage insurance would have cost you $1,168 a month — $57 less than the FHA. After the premium reduction, the monthly payment on the FHA loan will drop to $1,138 — $30 cheaper than the conventional alternative.

The FHA is also more flexible with debt-income ratios (conv won't go above 45%, while FHA will accept up to 55%) and doesn't count deferred student loans (whereas conventional does). But, if you have a FICO score over 760 and more down money, the conventional loan is a little better (you can get slightly lower rates). I would do whichever loan you can afford (or get approved) between the two and if you go FHA, just refi in 2-3 years to get out of PMI. If you are smart with the purchase price, you should be in good shape even if you can't refi immediately as the PMI is only 0.85% now (compared to 1.35% in 2014). Still, either option is better than the 20% down example by CrescentMoonie that prompted this whole discussion.

[CU Tiger]

Originally Posted by Arles

Are you talking about the 97 loan? If so, you still have to pay PMI and it's only good for your first home purchase. Unless you put 10+% down, you are going to have some form of higher rate (because of the risk). Last year, Obama cut down the PMI for FHA loans by half a point - so it's a better option for home loans under 270K:


The FHA is also more flexible with debt-income ratios (conv won't go above 45%, while FHA will accept up to 55%) and doesn't count deferred student loans (whereas conventional does). But, if you have a FICO score over 760 and more down money, the conventional loan is a little better (you can get slightly lower rates). I would do whichever loan you can afford (or get approved) between the two and if you go FHA, just refi in 2-3 years to get out of PMI. If you are smart with the purchase price, you should be in good shape even if you can't refi immediately as the PMI is only 0.85% now (compared to 1.35% in 2014). Still, either option is better than the 20% down example by CrescentMoonie that prompted this whole discussion.

We will agree to disagree
I understand your points. I think there are some other factors being left out.

[CrescentMoonie]

Just wanted to toss in this article from a couple of years ago about who may really be the entitled generation.

[albionmoonlight]

I'm square in the middle of Boomers and Millennials, which gives me a little perspective on both.

And I, of course, love many Boomers on an individual level. They are my parents and teachers and mentors and aunts and uncles.

But, as a generation? Not even close. The Boomers have treated the planet as their own personal sewer and treated the world economy like a credit card that they found in the parking lot at Wal-Mart and figured that they'd try to max it out before anyone caught on.

And, now that the natural, obvious, and inevitable consequences are coming due? They look at the millennials and ask "how could y'all ever let it get this bad?"

They crippled the economy and mortgaged the future in order to make their lives marginally more comfortable. OK. Fine. What's done is done. They made their choices. But can they please just lay off with the lectures? It comes off as almost kind of sadistic at this point. Like a "Why you keep hitting yourself?" bully.

[bob.1]

Honestly I believe any generation would have done the same given the opportunity. People are people.

[Butter]

So why should it be?

[bob.1]

I'm not sure I understand the question.

[heybrad]

You and I should get along so awfully

[Marc Vaughan]

Originally Posted by bob.1

Honestly I believe any generation would have done the same given the opportunity. People are people.

I'm almost certain this isn't the case - the present state is down to a cultural mentality which champions short term thinking and selfishness above the good of society.

This isn't just an issue in the US, its also increasingly the case elsewhere - most notably (and disappointingly from my perspective) in the UK.

I expect this to actually rise somewhat initially in the next decade as the jobs continue to decline until its accepted that everyone being employed isn't something which is going to happen and we (will hopefully) move away from a purely capitalist creed ...

[Galaxy]

Three interesting articles:

Professionals reflect on hiring millennials | The Baylor Lariat

Log In - New York Times

Bosses complain that Millennials want 'success on a plate' | Daily Mail Online

[Marc Vaughan]

Originally Posted by Galaxy

Bosses complain that Millennials want 'success on a plate' | Daily Mail Online

Please use more credible sources than the Daily Mail - a far right wing blog from a person with known mental issues for instance ... anything but the Daily Mail, they're a scandal rag in the worst tradition of such things

However if you believe they're accurate then this might be of interest to you - things they claim cause cancer ...

Things which cause cancer - Daily Mail articles

[Galaxy]

Originally Posted by Marc Vaughan

Please use more credible sources than the Daily Mail - a far right wing blog from a person with known mental issues for instance ... anything but the Daily Mail, they're a scandal rag in the worst tradition of such things

However if you believe they're accurate then this might be of interest to you - things they claim cause cancer ...

Things which cause cancer - Daily Mail articles

I was thinking about that. I posted the left-wing papers such as NY Times for balance.

[CrescentMoonie]

Poor Housing Investment Gets Worse in Tax Plan - Bloomberg Gadfly

[albionmoonlight]

Originally Posted by albionmoonlight

I'm square in the middle of Boomers and Millennials, which gives me a little perspective on both.

And I, of course, love many Boomers on an individual level. They are my parents and teachers and mentors and aunts and uncles.

But, as a generation? Not even close. The Boomers have treated the planet as their own personal sewer and treated the world economy like a credit card that they found in the parking lot at Wal-Mart and figured that they'd try to max it out before anyone caught on.

And, now that the natural, obvious, and inevitable consequences are coming due? They look at the millennials and ask "how could y'all ever let it get this bad?"

They crippled the economy and mortgaged the future in order to make their lives marginally more comfortable. OK. Fine. What's done is done. They made their choices. But can they please just lay off with the lectures? It comes off as almost kind of sadistic at this point. Like a "Why you keep hitting yourself?" bully.

Haven't changed this opinion one bit.

[dubb93]

I have nothing to add on to the general idea of this thread, but on a personal front I decided to ask my boss for a raise after talking with my wife. I decided to ask for a 10% wage increase(didn’t really expect to get quite that much), today approximately a week and a half later I got called into my bosses’ office. He told me I was getting a 20% wage increase! Pretty exciting day. He expressed that he wanted to make sure he didn’t lose me and decided to give me more to show how much I mean to the company.

I was contemplating making a move to a different company prior to today for a variety of reasons (not really sure salary was one of them as I was being compensated extremely fairly before, was actually going to take a pay cut for cheaper insurance and less of a drive). I think they made me forget those silly notions today though. We are actually contiplating the wife staying at home with the kids now.

[cuervo72]

Nice!