My wife and I have been renting since we got married. During the past 15 months, we have spent approximately $10,500 in rent, and what do we have to show for it?
By the time I complete my bachelor's degree, if rent does not increase, we will have spent $33,600 on rent, with nothing to show for it.
After discovering how much money we were flushing down the toilet, I called a mortgage company. My wife has great credit, I have OK credit, nothing is outstanding, and we are always on time with payments. After some discussion they told us that we would qualify for about $130,000.
Most of the homes we have seen for that price are scary. The areas are unsafe and the homes themselves are rundown. This is what a "buyers market" looks and feels like?
While I was talking to the gentleman, he also said something that scared me: "Now be careful, we generally will approve you for more than you can afford."
Let me get this straight: The country is in a mortgage meltdown, homeowners are facing foreclosure, and he is saying that he is going to approve me for more than I can afford? He told me that monthly payments on a $130,000 loan with interest and 100 percent financing would be slightly more than $1,000 per month, about a quarter of our monthly income.
No wonder our economy is spiraling downward.
This spiral can even be seen in the equity of homes. USA Today's Sandra Block reports that according to the Federal Reserve, at the end of 2007 the average equity in homes fell to 47.9 percent. That's the lowest equity since 1945. What was going on in 1945? That's right, the end of World War II. Not exactly a beauty mark in our economic timeline.
After examining our situation carefully, my wife and I talked and decided to do something a little different that not many kids our age do: save up!
The 100 percent financing would cost more than we want to admit, and more than we want to calculate, for that matter. With 10 percent ($13,000) as a down payment, we would save $150 a month. That might not seem like a lot, but for the life of the 30-year term, it would save us $54,000.
We decided to take a certain amount from all of our checks and put it in our savings account.
If only I had been able to figure all this out before we got caught in this whirlpool of rent and debt. Now, instead of being able to put a down payment on the table and get into a home while it is a "buyers market," we have to stay in our duplex and throw $675 per month down the drain. We have nothing left to do but shrug our shoulders for right now.
Save up, people. It's not impossible. All it takes is a couple of nights a week. Instead of going out and spending $60, we stay home and cook for $10. Then we put that $50 we saved into a savings account. Within one year, at $100 a week, we will have $5,200. And that's not including interest.
I am not speaking from experience in buying a first home. Rather, I am speaking as someone who wishes they had the opportunity to experience the satisfaction of buying a first home.
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* TYSON RYTTING is a student at Salt Lake Community College.
