Should we buy off-campus housing with our college student child?
Question of the week: Should we purchase off campus housing with our college student child?
Answer: Maybe.
With colleges and universities starting classes in the near future, many of you will be moving your kids into dorm rooms, and double checking the room and board fees for the upcoming semester, or quarter, wondering why it costs so much.
On-campus housing is a very under-reported cost of higher education, and to me the most egregious of the expenses paid by parents and students.
In most college areas, off-campus housing is usually less expensive than dorms, or Greek society housing with fraternities or sororities. Consider paying up to $2000 per month, or more, for a five to six hundred square foot room shared with one, or two, other students, with a bathroom down the hall, or shared with another room of students.
Using today’s interest rates of 6.00% for a 30-year fixed rate mortgage, $2000 per month is the monthly payment for a $335,000 mortgage. Pretty low given the median prices around the country. However, what if you add rent for two other students at $1500 per month each—less that what they would be paying for a dorm room. Now you have $3000 per month in rent, which is a $500,000 mortgage.
Depending on where your student is attending college, with 10% down you can purchase a $555,000 home off-campus, use the rent to pay the mortgage and your savings from not making the payment for a dorm room to pay insurance, taxes and likely still have funds left over.
Assuming your child is over 18 years old, they can be on the loan, which enables you to have owner-occupied financing.
A bonus is that because your son or daughter is also an owner with you, they are the landlord and learn responsibilities of homeownership and property management.
When your child graduates, if they decide to leave the area where they went to college, you can either retain the property as a rental to future students, or sell the property. If you sell there are many options for the proceeds, including transferring to another home to co-sign/own with you child, or taking your initial costs of purchase from the sale proceeds and use the balance to payoff any student loans, or give to your graduate as a graduation present.
Although we could not afford to purchase an apartment in New York City for our daughter to live in, two years ago our daughter moved out of the dorms and into an apartment with three roommates. Between dorm costs and mandatory food plans, we estimate the savings at more than $9000 per year that was either not added to student loans, or paid out of pocket.
Living on campus is a fantastic experience for most students, however weighing the costs and benefits of on- versus off-campus housing, many families find choosing off-campus housing is the way to go.
Schedule an appointment to discuss your options if you are considering purchasing a new home or property, or refinancing an existing one and want to know the mortgage options available to you.
Have a question? Ask me!
Rates for Friday August 9, 2024: Ohhhmmmm….investors and markets took a deep cleansing breath this week, settling down to a “normal” market after last week’s tumultuous ending. To start the week rates continued to decline. Then, on Wednesday, the Treasury Department auctioned about $42 million in 10-year notes and had a hard time finding buyers without pushing yields up. As a result, mortgage rates bounced recent lows, and rates are up a bit from last Friday’s large drop.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.00% Up 0.125%%
30-year high-balance conforming 6.75% Up 0.250%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
I’ll admit to not being sad in certain events when American athletes miss out on a gold medal to an athlete from a country that has never won gold in an event. Or, as in the case of Julien Alfred in the women’s 100-meter race, the athlete wins the first gold medal ever for their country, in Alfred’s case Saint Lucia. To me, that is one of the best aspects of the Olympics, a competitor from a nation the size of Phoenix, with a population smaller than Huntington Beach, winning medals, especially gold, for the first time.
What always amazes me is how close so many of the competitions are. Everyone was slack-jawed at the finish of the men’s 100 meter race when American Noah Lyles and Jamaican Kishane Thompson finished with identical times of 9.79 seconds, but Lyles’ torso crossed the line two inches ahead of Thompson’s.
Two inches in a foot race is the equivalent of two feet in archery. In the men’s final American Brady Ellison and South Korean Kim Woo-jin each shot three straight “10s” (bullseyes) in their final set to force a shoot-off. The gold medal shoot-off is decided by a one-arrow sudden death. Woo put his arrow in the center 10-point ring. Ellison’s arrow ended up three millimeters outside the 10-point ring, and ended up with the silver.
Did you ever think archery could have an exciting finish? I didn’t until I happened to sit down to watch Ellison and Kim go at it while walking through the family room on Sunday with the television planted on NBC’s Olympic coverage.
The personal stories, the triumphs and tragedies, the competitors at the end congratulating each other, add up to a wonderful two weeks every four years.
For those who read last week’s WR&MU, our extended relative Nikki Hiltz cruised through qualifying and semifinal heats and will be racing in the women’s 1500-meter final tomorrow at 11:15 PDT. Go Nikki!!!
