Freya,
A couple of notes. My utilities are only about 40 a month so I really pay 1050 which is still well over a third of monthly income after taxes, which leaves me with about $32 a day after my major expenses are paid; gym; cable; phone; homeowners insurance and netflix. This is not much for those of you who know New York, but I am happy as a clam - I cut most of my costs on food - eating nutri grain bars for two meals a day and eating at my staff cafeteria for lunch. I have also stopped drinking alcohol which is a total money zap. I use the money i dont spend on Zara Men and airline tickets to places like Palm Springs, Australia and Egypt. It's a fine life on 40K. One thing I am well aware of: not all of us bashed our jaws when we were, and if you did your parents just assumed it was your own fault - Not I. so hence the ability to put down such a huge down payment. That said, most people know reasonable adults who have something to contribute to you (anywhere from a 5k to a million depending on if you're Nader or someone a bit more average). Go to them with a smart, well thought business plan and a realistic estimate of what you can spend in a month. They will be happy to help if they realize how smart you are being. I am a 25 year old homeowner in Midtown Manhattan - dreams can come true - and I dont even live in a shoebox.
Friday, December 1, 2006
Holiday Season those Assets
Ha, I'm such a sucker for a play on words.
Back to bizness: Lenders also look at your Assets. Typically they want to see 6 months PITI (Principal, Interest, Taxes, Insurance) reserves in a bank account with YOUR name on it seasoned for at least 2 months.
Math Example: PITI is $2000 x 6 months = $12,000.
Now, let's be honest here. Not many of us young twenty-somethings have been able to accumulate and save $12,000 . I mean, we'd rather blow our measly savings on a much needed but completely undeserved vacay to Toronto for the Weekend just to see some Schoolmates you haven't seen since College...wait, that's just me.
Regardless, POINT IS: it doesn't necessarily have to be YOUR money, your name just has to be on the account. That means that you need to convince mommy and daddy to deposit at least $10,000 into a joint checking account with your name on it with the promise that you will not touch the money bc TADA, it's show money baby, and Lenders insist on seeing some Assets.
So this Holiday Season, spend that money Grandma Harriet puts under your pillow, take that obnoxious overly indulgent weekend trip to Aspen, but don't forget to present a logical, coherent and passionate argument to your parents that renting is for suckas and putting $10,000 into a joint checking account with your name on it is just the first step in qualifying for a Mortgage and securing and building wealth as a young, sometimes irresponsible but eagerly entrepreneurial twenty-something.
Back to bizness: Lenders also look at your Assets. Typically they want to see 6 months PITI (Principal, Interest, Taxes, Insurance) reserves in a bank account with YOUR name on it seasoned for at least 2 months.
Math Example: PITI is $2000 x 6 months = $12,000.
Now, let's be honest here. Not many of us young twenty-somethings have been able to accumulate and save $12,000 . I mean, we'd rather blow our measly savings on a much needed but completely undeserved vacay to Toronto for the Weekend just to see some Schoolmates you haven't seen since College...wait, that's just me.
Regardless, POINT IS: it doesn't necessarily have to be YOUR money, your name just has to be on the account. That means that you need to convince mommy and daddy to deposit at least $10,000 into a joint checking account with your name on it with the promise that you will not touch the money bc TADA, it's show money baby, and Lenders insist on seeing some Assets.
So this Holiday Season, spend that money Grandma Harriet puts under your pillow, take that obnoxious overly indulgent weekend trip to Aspen, but don't forget to present a logical, coherent and passionate argument to your parents that renting is for suckas and putting $10,000 into a joint checking account with your name on it is just the first step in qualifying for a Mortgage and securing and building wealth as a young, sometimes irresponsible but eagerly entrepreneurial twenty-something.
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