Rebecca Lagarde, an interior design junior, and professional skateboarder Tony Hawk have something in common. Both bought their first home before they were old enough to legally drink.
When Lagarde received an inheritance from her grandparents, she put a down payment on a condo, making her a 20-year-old homeowner.
“It feels very strange,” she said. “This is nothing that I’ve done on my own. It’s been a blessing.”
When Lagarde graduates, she plans to sell the condo. Other condos near hers are selling for $10,000 to $15,000 more than their original cost, she said.
“Basically with rent you put in and put in, and you get a living space, but you don’t get anything back,” she said. “It’s more of an investment.”
Buying houses for students is not a new trend, said Keith Howell, president of the Louisiana Mortgage Lenders Association.
When he was in college in 1986, he knew students whose parents bought their house. But with interest rates at their lowest in 30 years, houses are more affordable than in the past, Howell said.
In four years, a house can appreciate nicely and parents can use that money to recoup some of the cost of sending their child to college, he said.
“Instead of spending money for rent, they put it to a house note,” Howell said. “Instead of losing money, they make money.”
Howell said an anemic economy caused the low interest rates, but they are starting to rise. The week of Aug. 22 a 30-year fixed income rate was 6.22 percent. The next week ended at 6.25 percent, according to the Mortgage Bankers Association of America.
Depending on the loan, Howell said buyers can still get a 6.25 percent interest rate, bringing the monthly costs of renting and buying closer together.
For example, the monthly mortgage on a $75,000 condo with a 6.25 percent interest rate is about $461, and a $100,000 condo would be $615 per month, both of which are easily comparable to an apartment of similar size, he said.
Howell said rising interest rates have a snowball effect and he doesn’t know where they will stop. So if low interest rates are a primary motivation to buy a house, he suggests acting quickly.
Kelley Pace, director of the real estate research institute on campus, said buying a house or condo should not be a rushed decision.
While four to five years is the time it will take to break even, buying a house as a freshman is not always a good idea, he said.
Many students move out of Baton Rouge after graduation, and if students need to sell in a hurry commission for a real estate agent can use up the money they made selling the house, Pace said.
“There’s a lot of fixed cost when buying and selling a house,” Pace said.
The cost of owning a home is more than the monthly mortgage, he said. People can spend the equivalent of six months rent on the fees and other costs involved in buying a house.
While maintenance may not be a big daily issue, Pace said people often encounter expenses when they want to sell their home.
But for students owning their home is not all about the bottom line. Aside from the financial benefits of owning her condo, Lagarde said it makes her more independent.
“It gives you a better sense of ownership, because you can’t just call someone,” she said. “If you screw something up, you own it.”
Jennifer Oncale, a psychology junior, said her father bought a condo that she will move into in October. For her, one of the advantages is the control she will have over her home.
“The plus for me is that I can pick all my roommates,” she said. “It’s my place so I can say who comes and who goes.”
Because Oncale has control over who she lives with, she said she is not concerned about her condo falling into disrepair.
“When he sells it back, he’ll get all his money back and then some,” she said. “Interest rates are so low, you can’t beat it. For the same price you couldn’t rent a place as nice.”