Economics - Home Finances
How do you buy a house when you are 19?
Our son pulled it off with hard work, and more than a little help from his parents
*****
Our son Seth read this story and gave his permission to share it
How do you buy a house when you are 19? The answer in our case is hard work, lots of saving and a whole lot of parental help.
My husband and I have four children of whom Seth is the oldest at 19. I’ve always enjoyed keeping an eye on the housing market, and after I learned Seth was interested in buying a house, my eyes were glued to the daily real estate listings.
It wasn’t long before one came to my attention due to its low, low price. It was a 920-squarefoot, 72-year-old small house on a large lot, right in town, listed for $315,000. To put the price of this house into perspective, in our town right now there are 16 houses listed between $385,000 and $777,000.
We set up an appointment to see the house the very day it was listed and it had already had five views and one offer on it. We looked at it at 5pm and put in an offer a couple hours later that same evening. As my son says, he went to work without an idea that he would even be looking at a house that day, never mind putting an offer on one that very evening. This was the first house he had looked at.
He started at 13
Seth started working at McDonald’s at 13. We live in a town where if your family is trying to limit screen time and your kids aren’t really interested in sports, there isn’t a lot to do. So, that meant there was lots of time to work Saturdays and a couple hours for a couple days a week after school.
The rule we made for our kids when they started working was that 10% of what they made went to church, 10% to spend on what they wanted, and the rest went to savings. These savings could only go towards something big, like a car or a house. As this was something we also did with their allowance when they were younger (although different percentages) it was a natural progression, and did not come as a shock to the kids. As we provide everything our children need, we didn’t want them to have access to huge amounts of spending money – we did not think this was wise, or a fair representation of what life as an adult is like.
Baggie budget
Also, wanting our children to learn more on making wise financial decisions, at age 13 we instituted “baggies.” We take plastic Ziplock baggies and mark them with an amount and a description, and every month we fill them with the amount listed on the baggie. Money in the baggie can only be used for what it says it is for on the baggie.
For example, we have a baggie for clothes that is $45/month. Every month we fill that baggie with $45 which the child uses for all his/her clothes needs. The child can decide to shop the sales, save the money for a couple months for a larger purchase, buy second-hand or even possibly have to wait for a couple weeks if money is not spent wisely.
Some other baggie examples we have used are for gifts and school supplies. We started out with a lot more categories, but eventually found these to be most useful.
Invest low
During the spring of 2020 when the stock market crashed, I talked to Seth about investing his savings under my name as he was too young to open an account himself. I used this time to teach him how to look for solid companies, read financial documents, search for past dividend payment history, and explain the difference between owning a part of a good company versus gambling your money away by putting it into meme stocks hoping to get rich quick.
By 2024 Seth had saved up $30,000 for a down payment, and having graduated in 2023 he was working full time at a small company. Actually, more than full time: he was picking up an extra half hour each day of overtime, as well as working any Saturdays that he was offered.
A day or two after we put in our offer, we got word back that the seller was willing to work with us. I think the seller picked us over the other offer partly due to the fact that we did not make the offer subject to financing, and because we were willing to consider taking on the renter (a relative of the owner) with the property.
Help from mom and dad
Probably the biggest factor in being able to buy this property was that we, the parents, were willing to use the equity that we had in our own house to take out a loan to cover the other house. We bought our own house 7 years ago and since then it has almost doubled in value according to our BC assessment. So we actually hold the mortgage that Seth pays for – all three of our names are on the title to our son’s house. As soon as Seth is able to take on the mortgage amount himself (as he pays the mortgage down and gains equity in his own house) he will do so, and we will take our names off his title.
Another way we have helped out is that Seth lives at home rent free (he is renting his house out at $1900/month), with the understanding that the extra money he makes will go towards making extra payments on his house. This arrangement won’t be long term, as we will be reassessing in a year and a half. After that he can either move into his house or try to find a smaller, cheaper rental for himself so that he is still making extra by renting out his house. We could allow him to stay, either with or without rent, but we think it is also good for young people to struggle a bit, not always relying on their parents, because, as the Apostle Paul says (in a different context), suffering produces endurance, and endurance produces character, and character produces hope, which does not put us to shame (Rom. 5:3-5).
The pros to the situation include the obvious: that not only was Seth actually able to purchase a house without a huge down payment, but also that, with our names on the title, it brought his house insurance down as we haven’t ever had a claim.
Probably the most concerning con is that lending and borrowing between family members can lead to strain and resentment and family discord (according to Dave Ramsey). Another concern for us is that if Seth ever needed to make an insurance claim it would probably affect our own insurance rates in the future.
From 25 to 10 years
Right now, Seth pays $683 bi-weekly with only $212 of that going towards his principal. His mortgage is 25 years, but he makes as many extra payments on his principal as possible, which will hopefully see him paying off the house within 10 years. It is pretty crazy to see how much interest there is on a 25-year loan and how little your regular payment actually goes towards paying off your debt. On the other hand, it is amazing how putting extra payments on your mortgage can take months and even years off the mortgage payment schedule.
I feel like as parents we have tried to teach our children to be good stewards of their money, tried to open their eyes to different opportunities and tried to show them how to use the gifts that God has given them in ways that glorify His name.
News
Saturday Selections – Dec. 14, 2024
Why you shouldn't lie to your kids about Santa...
...or else this will happen! For more lies check out this follow up.
And for a more serious take on why not to lie to your kids about Santa, check out "Yes Virginia, there was a Santa Claus."
Responding wisely to pop psychology
Much that trades on the name of "Science" is trying to claim for itself that same credibility that we all found in our basic physics and chemistry classes back in high school. Drop that ball and it will fall at a steady 9.8 m/s² every time. But the "science" of evolution is not reproducible like that. And in the field of medicine, the human body is so complex that the same treatment on two different people could result in two very different outcomes. So there's certain science, and then there is a whole realm that shares this same name but which involves guesswork, assumptions, and even philosophy.
Christians need to be aware that psychology isn't as measurable as physics – it isn't that sort of firmer science – and it has, over the decades, had trends that at times were clearly unbiblical, like the 1980s self-esteem trend. Christian counselors that leaned too hard on popular psychology then baptized this trend with the biblical text "love your neighbor as yourself" and put a twist to it, saying self-esteem was important because you can't love your neighbor if you don't love yourself. Which isn't at all what Jesus was saying.
This isn't a long article, and it is worth a slow read.
Did Pangaea really exist?
"Today, we have seven continents scattered across the globe. North America, South America, Africa, Asia, Australia, and Antarctica. But once upon a time, did all of these continents link together to form one single supercontinent?"
More scrolling = more marital problems
Smartphones are causing problems for our children, but did you know more smartphone usage is also associated with lower marital happiness, a higher inclination toward divorce, and infrequent sex?
5 ways the world would be worse without Christianity
...and number 5 is the big one.
The one thing that'll free you from FOMO
When you look upward, with a heavenly mindset, you won't be obsessed with FOMO – the Fear Of Missing Out. God is better than anything here, so don't make your life about experiences – make it about Him.
Today's Devotional
December 14 - The great feast
“Then I saw an angel standing in the sun, and with a loud voice he called to all the birds that fly directly overhead, “Come, gather for the great supper of God.”” - Revelation 19:17
Scripture reading: Revelation 19:11-21
Christ is coming to meet all who are opposed to Him. He is going to tread the winepress of the fury of the wrath of >
Today's Manna Podcast
Confidence in the face of Uncertainty
Serving #691 of Manna, prepared by James Zekveld, is called "Confidence in the face of Uncertainty" and is based on Matthew 7.