Help for 25-and-Under Crowd Who Want to Buy First Home
Barely 25, Tan Rezaei suddenly found himself on the verge of becoming a junior real-estate tycoon.
First, he gave up his $1,200-a-month rental this past spring for an "affordable" $230,000, two-bedroom condominium in Orange, Calif. About the same time, he came across a cheap $80,000 condo that he considered a great investment as a rental property.
But as Mr. Rezaei prepared to close on the two properties in the same week, reality came crashing down. "I had maybe $35,000 to my name, and about $12,000 in student-loan debt, so at the last minute I decided to bail out of the investment property," he says. He did close on the two-bedroom.
A year later, he's glad he didn't go for broke. "I have friends who stretched themselves too thin to buy their homes, and now some of them are struggling," he says.
Mr. Rezaei belongs to the fastest-growing segment of homebuyers -- the 25-and-under crowd. The number of homeowners who are below age 25 nearly doubled to 1.5 million in 2002, from 792,000 a decade earlier, U.S. census data show. The National Association of Realtors says a surge in younger buyers has driven down the median age of a first-time homebuyer to 31 in 2001, from 36 in 1993.
It isn't just historically low mortgage rates pushing the trend, says Susan Wachter, professor of real estate at the Wharton business school in Philadelphia. Hefty down payments aren't as critical to lenders as they once were.
"Over the last five years there's been a down-payment revolution," she says. The advent of credit-scoring and data-mining techniques have made it much easier for lenders to gauge risk. "The changes have freed lenders from relying on what had been the best predictor of risk, and the biggest hurdle to young buyers -- a big down payment," she says.
But, as many young people have discovered, buying a home and being able to afford one are two different things. Responding to the siren song of low mortgage rates and breakneck home-price appreciation, some younger workers are leaving themselves financially vulnerable by taking on an enormous amount of debt well before they've reached their peak earning years.
If you're intent on making such a significant investment so early in life, you may need to modify some tried-and-true financial-planning rules in ways that will help minimize your long- and short-term risks. Here are some things to consider.
Shore Up Your Finances
Odds are, at this stage you're likely carrying student-loan debt, a car loan, credit-card debt or some combination of the three. Adding a down payment, closing costs, monthly mortgage payments, real-estate taxes and home maintenance costs to the mix can lead to an overwhelming financial load.
So put down that home-shopper circular and start shoring up your finances.
First, determine whether you're carrying too much debt to afford a home. This SmartMoney.com calculator can help. If your debt load is big -- but not a deal breaker -- the next step is to "manage" your debt in such a way that it garners you the best possible credit score when you apply for a mortgage. Lenders track your borrowing habits through credit-reporting agencies, and come up with a "credit score" that gauges how risky it is to lend to you. The higher the score, the better the mortgage deal. (Read more about improving your credit score here.)
How to manage debt? If you're carrying a number of student loans and haven't consolidated yet at one low rate, get on it. Student-loan consolidation rates have never been lower, and the interest is tax deductible. (For more on student-loan consolidation, read here.) If you have a lot of credit-card debt, shop around at the Online Journal's Bankrate center here or a site like CardWeb.com to find the lowest-rate card available. Consolidate your debt on that card and begin aggressively paying it down.
Finally, do yourself a favor and take good care of that clunker you've been driving. Though zero-percent financing deals may give you the urge to splurge on your first new car, the longer you can avoid monthly car payments and costly insurance coverage, the better.
If you haven't taken on any student-loan or credit-card debt at all, now is the time to start building your credit history. Lenders will want you to show a pattern of responsible borrowing before they extend to you the best mortgage rates, so apply for a credit card and begin making and repaying small purchases over a few months before you apply for a mortgage.
Defining 'Affordable'
If you feel ready to move ahead, the next question is, how much can you afford?
The single-biggest mistake younger homebuyers typically make is letting industry professionals tell you how much home you should buy, says Keith Gumbinger, an analyst with HSH Associates, financial publishers in Butler, N.J.
"Younger buyers typically rely too much on their realtors for guidance, and they don't ask enough questions," he says. "They need to ask things like, 'What's a typical mortgage for my financial circumstances?' 'How long am I going to be in this home?' and 'How high could my mortgage payment go if rates increase?' "
Affordability also doesn't mean just what you can afford right now. People in their 20s and 30s are much more likely to find themselves in between jobs than older homeowners, so you have to factor that into your decision-making process. Buying a lot of house on the assumption that your income level will be higher in a few years can leave you in a precarious financial position if you -- or your significant other -- suddenly find yourself out of work.
"Young buyers are in a good position in that they've got their peak earnings years ahead of them," says Brad Bond, a certified financial planner in Pittsburgh. "But we're in a different economic environment right now, and you can't assume sharp increases in salary over the next few years -- or even guarantee that you'll have a job at all."
Online financial calculators, like this one in the Online Journal's Money Toolbox, can give you a rough idea of how much house a person -- in general --can afford. Remember that the resulting figure is a borrowing limit -- meaning, the very highest amount you could borrow, not what you as a younger person should -- and aim at purchasing a home that would require you to borrow less.
The Equity/Debt Equation
Coming up with the cash for the down payment is the next hurdle. It's increasingly common for young homeowners to buy with no money down. One good option for younger cash-strapped borrowers is a so-called 80/20 piggyback loan -- a loan that combines a first mortgage for 80% of the home's price with a second one for 20% of the selling price.
You'll pay a slightly higher interest rate than a traditional loan -- typically a half percentage point or slightly more -- but you'll avoid paying costly private mortgage insurance, which can add up to $100 to your monthly mortgage.
Adjustable-rate mortgages also are a favorite of young borrowers, HSH's Mr. Gumbinger says. While fixed-income mortgages typically are the best bet for older homeowners who plan on staying put for a while, ARMs can be a lower-cost alternative for 20- and 30-somethings who are likely to sell their homes and trade up in a few years.
Mr. Gumbinger notes that 5/1 hybrid ARMs, which are fixed for five years and then covert into 1-year ARMs for the remainder of the 30-year term, are popular among younger borrowers. "A 5/1 hybrid today is at 4.83%, that's just $790 bucks a month for $150,000 loan," he says. "That weighs favorably against a 6%, 30-year fixed mortgage, which would be around $899 a month."
The very real danger here is the threat of rising interest rates. But odds are if you're single or a DINK (double income, no kids) at this age, you may not stay in your first home long enough to face the dreaded adjustable rate.
Don't Sacrifice the Future
Okay, you've dealt with your student loans, credit-card debt, your car and have still managed to move into your new home. Now you start to worry. What about retirement? What about college savings? What about …. Help!
While budgeting in long-term savings may seem like an unaffordable extravagance for young homeowners, waiting even a few years to get started can dent your retirement savings.
The beauty of compounding is best illustrated by this eye-opening scenario that financial planners like to trot out when they're courting young clients: A 25-year-old starts saving $1,000 a year for retirement for 10 years, then he stops and never contributes another dime. His twin brother doesn't start saving until he's 35, but he continues to contribute $1,000 a year from then on until his retirement at 65. Who wins? The early bird, of course. Assuming an annual return of 8%, the brother who started saving early would have $157,435 by age 65, compared with just $122,346 for his twin.
Saving $1,000 a year is doable for most young workers, especially if socked away in small, bite-sized chunks and especially if that money is invested in an employer-sponsored retirement account. For a worker at a marginal tax rate of, say, 25%, every $100 you invest in your employer's tax-deferred plan is actually taking just $75 out of your pocket.
That said, monthly mortgage payments and a crushing debt load may make it impossible to reach that elusive benchmark of saving 10% of your annual income. So don't. Give yourself a break -- at least until your debts are under control -- and commit to saving at least enough in your employer-sponsored plan to get matching contributions (typically 2% to 3% of your annual income). This way, you double your savings without breaking the bank.
What about college savings? If you're a young married couple with a little one on the way, you can probably skimp on college savings until the preschool years -- but not much longer. As with retirement savings, the longer you wait, the greater the amount you'll need to sock away each month, and more likely it will be that you won't have enough to foot the bill when the time comes.
In the interim, consider setting up a tax-advantaged college-savings account like a 529 plan and drop some not-so-subtle hints to friends and family members that when it comes to birthday or holiday gifts for baby, nothin' says lovin' like cold hard cash.
给初次购房年轻人的建议
年仅25岁的雷扎埃(Tan Rezaei)险些成为一名年轻的房地产"大腕"。
今年春天，他退掉了月租金1,200美元的房子，在加州购置了一套两居室公寓，觉得23万美元的价格"支付得起"。几乎在同一时间，他又发现了一套售价只有8万美元的公寓，认为非常适合用来租赁。
但就在雷扎埃准备在一周内买下两套房的时候，现实让他冷静下来。他说："我帐下大约有3.5万美元资金，1.2万助学贷款，因此在最后一刻，我决定放弃公寓投资。"但他贷款购置了那套两居室的公寓。
一年后回想起来，他很庆幸自己当时没有倾囊而出。他说："我有的朋友为了购置房产倾其所有，现在其中一些人过得很辛苦。"
雷扎埃属于购房群体中增长最快的一个组成部份－－25岁以下的年轻人。美国统计数字显示，2002年，25岁以下的购房人数从十年前的79.2万人增长到150万，几乎增加了一倍。全美房地产经纪人协会(National Association of Realtors)称，由于年轻购房者的增加，首次购房者的平均年龄从1993年的36岁下降到了2001年的31岁。
沃顿商学院(Wharton Business School)房地产教授苏珊(Susan Wachter)说，推动这一趋势的不仅是创下历史新低的抵押贷款利率，银行降低首付额度也是一个主要原因。
她说："过去五年，首期付款经历了一场革命。"信用评分和资料勘探技术的诞生，给债权人评估风险提供了极大便利。"这些变化让债权人从对最佳风险预测历史数据的依赖中解放出来，也扫除了对年轻人来说最大的障碍－－过高的首期付款。"
但正像许多年轻人已经意识到的那样，买房和能支付得起房款是两回事。在低抵押贷款利率的诱惑和房价即将上涨的预期之下，一些步入工作岗位不久的年轻人在远未达到收入高峰的年龄就背上巨额的贷款，将自己置于脆弱的财务状况之下。
如果你有意这么早就进行如此重大的投资，就需要对一些经过检验的财务规划惯例进行调整，使其有助于最大限度降低长期和短期风险。以下是一些需要考虑的因素。
增强财务实力
问题在于，你在这个阶段很可能背负著助学贷款、汽车贷款、信用卡债务或三者中的某一两种。再加上住房首付、房地产买卖手续费、抵押贷款月供、房地产税和房子的维护费用，这种沉重的财务负担就能将你的腰压弯。
因此，你应将那些售楼广告放置一旁，开始增强自己的经济实力。
首先要确定你现已背负的债务是否过于沉重，无法再负担一笔房款。SmartMoney.com网上计算工具能对你提供帮助。假若债务负担虽然沉重，但还不至让你放弃购房，下一步就要对你的债务进行"经营"，使你在申请住房贷款时获得可能情况下的最高信用评分。债权人是通过资信报告机构对你的借款习惯进行追踪，然后评估出向你提供贷款风险程度的"信用评分"。你的评分越高，越有利于取得抵押贷款。
如何对债务进行经营呢？如果你背负著大量助学贷款并且尚未合并贷款以取得一个低利率，就要赶快行动了。助学贷款合并利率达到了有史以来的最低水平，而且利息部份的税款可以扣除。如果你负有许多信用卡债务，请在《华尔街日报》网络版(
http://online.wsj.com)的Bankrate中心浏览一下，或者查看像CardWeb.com之类的网站，弄清可以获取到的费率最低的信用卡。将债务合并到这张卡上，并开始积极偿付。
最后，善待你正在使用的旧车也是给自己提供方便。尽管零首付融资可能激起了你重金购买第一辆新车的欲望，但能避免支付购车贷款和高额保险的时间越长越好。
如果你没有任何助学贷款或信用卡债务，现在就要开始建立信用记录了。债权人会希望看到你以往一系列良好的信用记录，才会向你提供最佳贷款利率，因此你要申请一张信用卡，在申请贷款前几个月进行小笔的贷款消费并及时偿还。
怎样才算"支付得起"
如果上述步骤你已准备就绪，下一个问题是，你的支付能力有多强？
新泽西州金融出版公司HSH Associates分析师冈宾格(Keith Gumbinger)说，年轻购房人通常最容易犯的错误，就是在确定买房价位时听从业内人士的意见。
他说："较年轻的购房人往往过于依赖房地产经纪人的建议，而没有问清很多问题。他们应当问问：以我目前的经济状况，典型的住房抵押贷款是怎样的？我将在这所房子里住多久？如果利率上调，我所支付的抵押贷款会增加到何种程度？"
支付能力不仅意味著你眼下能支付多少。和年龄更大些的购房人相比，二三十岁的年轻人更可能处于工作的过渡期，因此你在作决定时必须将这个因素考虑在内。如果你的大量购房行动是基于收入在几年内提高的设想，万一你或你的配偶突然失业，财务上就陷入被动了。 匹兹堡理财顾问邦德(Brad Bond)表示："年轻的购房者处于优势地位，是因为他们的收入高峰期尚未来临。但目前的经济环境发生了改变，不能想当然地认为今后几年收入会大幅提高，就连能否保住工作也很难说。"
《华尔街日报》网络版的Money Toolbox的网上理财计算器能让你对一般情况下人们的买房支付能力有个大概的了解。记住，计算出的数字是借款限额，也就是你能借的最高额度，而不是作为一个年轻人应该申请的额度。以这个数字为参照，把目标放在那些所需借款数额低于该数字的房子上。 权益/债务等式
下一个障碍是拿出首期需要支付的现金。年轻购房人买房不支付现款的现象越来越普遍。对手头缺钱的年轻人来说，一个理想的选择就是所谓的80/20附带贷款(piggyback loan)－－由房价的80%和卖出价的20%两重抵押贷款组合而成。
你支付的利率会比传统贷款略高，通常高出半个百分点或更多些，但你可以避免支付高额的私人抵押贷款保险。这种保险会使你的月供提高数百美元。
HSH的冈宾格表示，变息抵押贷款(ARM)也受到年轻人的青睐。尽管固定收入抵押贷款通常是年长一些、计划在一定时间内按部就班还款者的最理想选择，但对那些可能在几年内换更好住宅的二三十岁的年轻人来说，变息抵押贷款可能是花费更低的替代选择。 冈宾格强调，5/1混合变息抵押贷款在年轻人中十分流行，即利率固定五年之后，30年贷款中余下年份转为一年变息抵押贷款。他说，5/1混合变息抵押贷款的利率是4.83%，15万美元贷款的月供只有790美元。而30年期、利率6%的固定抵押贷款月供大约需要899美元，因此前者更受欢迎。
一个很现实的风险就是利率上调的威胁。但问题在于，如果你在这个年龄是单身或者丁克家庭(双职工，无子女)，可能不会在第一处房子住太久，也就不会面临头疼的利率调整问题。
不要牺牲未来
好，假若你已还清了助学贷款，信用卡债务和汽车贷款，房子也买了，就要开始担忧了。退休金怎么办？孩子的大学教育金又怎么办？谁来帮帮我！
对年轻房主来说，尽管长期储蓄计划看似无力承受的奢侈行为，但仅推迟几年开始，就会让你的退休金储蓄大大减少。
关于复利的作用，我们可以从理财顾问在面对年轻客户时爱举的一个例子中看出来。一个人在25岁开始连续十年每年储蓄1,000美元作为退休金，之后就一分也没再储蓄过。他的双胞胎兄弟在35岁时才开始储蓄，但从那时开始直到65岁退休，每年都要储蓄1,000美元。谁的退休金更多呢？当然是先飞的鸟。假定年回报率为8%，到65岁时，早动手储蓄的一个已经有157,435美元，而他的兄弟只有122,346美元。
对有工作的年轻人来说，每年储蓄1,000美元是可行的，特别是在分小笔储存，并将其投入有雇主补助退休金帐户的情况下。对于一个边际税率25%的职员来说，每在雇主延迟缴税的养老金计划中投入100美元，需要自己掏腰包的实际只有75美元。
这就是说，抵押贷款月供和沉重的债务负担可能让你积攒年收入10%的目标无法实现。那么就不必强求。至少在你的债务得以控制前放松一下自己，并致力于在雇主补助的养老金计划中存入足够的钱，以获得相应的补助(通常是你年收入的2%或3%)。这样，你就可以在不掏空兜底的情况下获得加倍的储蓄了。
大学教育金又怎么办呢？如果你们是刚刚结婚并且打算要小孩的年轻夫妇，可以在孩子上学后再开始积累教育金，但不要推迟太久。像退休金一样，开始得越晚，每月需要拿出的钱越多，而且还有可能在需要用钱时捉襟见肘。
在过渡期内，可以考虑建立一个像529计划之类享受税收优惠的大学教育金帐户，并且较明确地暗示朋友和家人，在给孩子送生日或节日礼物时，没有比直接送钱更实惠的了。
