College Connect: Planning for that future house

Posted By David Wilhite

By Rebecca Nauth

College students are always trying to find ways to save money.

If given an option between buying a new $200 textbook or buying that same book used, water-stained, and a little torn for $50 from Amazon, it’s safe to assume that most college students would gravitate towards the second option.

But when it comes to looking for a place to live, college students likely have many questions about how much money is appropriate to save and spend.

College is usually where most students are first introduced to elements of the real world and have to think about important decisions like this. Thus, determining when and where to buy a house and how much money to shell out is an important concept know.

Karen Tinsley, a professor for housing and community development at the University of Georgia, shared her insight on some tips that students should consider.  She acknowledged that most college students would not be able to afford their own house while still in school, or even a few years after graduation.

Tinsley said she recommends graduates typically should wait about 5 years after finding a job before committing to buying a home.

“Unless you have family helping you out, I would suggest renting a place for now,” said Tinsley. “Buying a home usually means that you are planning to stay for a while. I would suggest doing some research to figure out if that is where you really want to live.”

Tinsley said after starting a job, future home buyers should save at least 5 percent of each paycheck toward the purchase.  “Once you become more stable, you should be able to save more and put that towards buying a home,” she said.

A potential home buyer also must understand what is affordable.

“The rule of thumb is to not spend more than 30 percent of your gross…pretax… income on your mortgage,” said Tinsley. “And this should include things like water, electricity and other utilities that directly relate to the house.”

Tinsley said that the reason not to spend more than that is because there are other expenses for things including maintenance, phones and cable television.

Even though most college students may not know how much is the correct amount to save, some have already begun to plan ahead.

“I have thought of a plan for once I start working,” said Naureen Sial, a biology major at UGA. “I am thinking about putting 15 percent of my monthly income into a savings account for buying a house.”

And when the time comes to purchase the house, Sial said she does not plan to spend more than 25 percent of her income on her mortgage.

“I’ve heard about the 30 percent rule before, but I’m not planning on buying a brand-new home,” Sial said. “And I agree with the advice. I think I’m going to wait about five to six years before I decide to buy a home. I have to think about my student loans first, and then once I get that taken care off, I’ll move on to thinking about a house.”

Sial said she’s not worried about such a future purchase because she knows she will be prepared.

“I’m being responsible right now,” said Sial. “I’m making sure to pay all of my bills on time and I have good credit which I know is important for buying a house in the future.”

Rebecca Nauth is a student at the University of Georgia.

 

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