My goal is to own a home: looking for advice
Hey Everyone I'm 26 yo, single, located in Silicon Valley, 100k job, 0 debt (yay me), 30k in sellable stock, 10k in the bank and a traditional 401k which i contribute 18% (max). I was hoping to get some advice on what I can do to start saving to buy a home. I was thinking about changing my 401k contributions to 10% which would give me about 6k extra per year after taxes and invest that money into something. Just don't know what to invest in. Also one more thing I'm keeping in mind is that housing prices are through the roof right now (pun intended). I'm hoping something changes in the next few years and I'll be positioned to buy when pieces come back down.
Get in line little boy.
You are u in the bottom rung of the most competitive segment of homebuyers, I would suggest tripling you income (at least) if u serious about a house
I would not buy a home at this situation. One of the reason is that housing market is too hot in the valley, means that you will pay top dollars for everything. I would invest at least 10% in 401k (if possible Roth 401k) and open brokerage account and invest the money in high quality dividend paying stocks. Ping me privately for more.
Why do you want to buy a home?
I feel like it's a common goal for most people. But I think it would be a smart investment (at the right time, clearly now now) and I would feel better if my money was going to a mortgage for a home rather than throwing it away every month on renting.
Common goal for folks with roots. Youre young and mobility is valuable. Not trying to talk you out of it but rent isnt throwing money away like you would on a car etc.
First of all, congrats on being debt free. For those didn't start making six figures out of college, this is an accomplishment. It's going to take a long time for you to properly afford to own a house in Silicon Valley. For now, save as much as you can, try to reduce your rent costs as much as possible (get more roommates) and try to find ways to earn more (crush it at work or learn a new skill.) Keep saving until you have saved a big payment large enough so that the mortgage won't cripple you with interest. As current house prices and your salary, you should target to have ~$400k+ saved up as a down payment.
You're putting too much in 401k. Just put 6-10%. Save up money to buy a house out of state all in cash. Rent it out and get some recurring revenue. You can use that to rent bigger here. Over time home values appreciate everywhere (i.e. Paper money loses value). Meanwhile study up so you can land a better job. 100k is good, be thankful for that, but also recognize there's a lot more money in the valley.
Congrats on being a 26yo debt free person with a 6 figure salary. You asked about how to get a home (in Silicon Valley) so I will try to address that. You will find it's a much more forgiving market elsewhere like TX, AZ, or even southern CA. The sad reality is that you need more cash for down payment. Competition is fierce and a lot of buyers are putting down cash. The commonly accepted 20% down payment is no longer enough in Bay Area. A lot of people have said many good things you should listen to. I am going to give you one little secret that I hope you can take advantage of. Find a good real estate agent. This step is very critical. A good agent with connections can alert you on houses that are going to be on the market before the public sees it. They can help you cut a deal (legally) with the seller before investors or public sees the deal. Agents don't like open houses as that's extra work for them. They would much rather sell it quicker and get their commission and move on. Sure they will get a bit more money with open houses, but at 4-6% commission (and they are lucky if they get half that) the difference is negligible. Find someone senior in a real estate company, these are agents that have been around for a while. They have good connections and as re respected by their peers. They can connect you to motivated sellers earlier than the public. Believe me, once a home opens up to the public, it usually means multiple offers. Good luck. Oh, best time to buy is around Oct or Nov. Avoid spring or summer. For now: save.. save... save... or move to other states.
If your goal is to buy a house, I wouldn't recommend minimizing your 401k contributions. The exact details are a little hairy, but you can take a tax-free loan out from your 401k to purchase a house, up to 50% of the total principal amount in your plan. If your company provides matching, the 401k would probably get you into a better spot to buy a house more quickly.
i thought there's a 50k cap on 401k loan?
One danger of taking that loan is that if you ever quite or loose your job you have to pay that loan back in full. So it's not to be counted on