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If you scroll up to my post, you will see I indeed do exactly this for the OP.
Even with PMI on a FHA 100k loan , they get a $711 dollar a month payment.
I have no idea if they can rent for cheaper than this, but I doubt it. Even if they could, how much cheaper could it possibly be? So this would not be any kind of financial burden to them above what renting would be.
As for another housing crisis, its not happening. Not in the next 30 years if at all in our lifetime. The system is no longer set up that way.
What these people are asking for is low risk. Very low risk and its a good move for them. They need to save a prudent reserve and then go for it.
We pay $729 a month for just over 1000sqf townhouse. 2 bedrooms no basement....I hate having no basement. Lol
Hi all. Didn't think this thread would get this much attention. Just to clarify a few things. By march 2014 ill be making an extra $1.20 a year. This march of 2013 it will be a 40 cent raise and 2 more 40 cent raises ending i n march of 2014 then it goes up differently each year.
With what you all have said...it probably isn't possible to get a house with the debts. In 8 years going with how were paying bills now all of the debt will be gone. Could be less or more depending on how life goes. The house we would be looking for is in Ohio.
Anyway to maybe get a house say in 5 years when a majority of the debts are paid off and say I'm making 32k a year and my gf 26k. Just throwing out numbers, but I want your opinion. We don't want to rush things and get screwed and have to give up the house.
Also thank you quiltercheck...kind of put things in perspective.
Thank you Packer. Make your goal 5 years, and figure your finances so that you pay off the student loan first, and it will be difficult, but try like crazy not to make any more major bills. You can and should have credit cards; not more than two, and get at least a 750 FICO score. (I think you meant to say $1.20 per hour more by March of 2014). The larger down payment on a house, the better your situation will be. 20% I know can be very difficult for first time buyers. At least try for 10% down. Maybe you could start off with a condo now (with a basement or at least a garage) where the expenses of fixing up etc. may not be a burden and you will still have the satisfaction of owning a home. Yes, you will have condo fees, but other maintenance should be minimal. Stay at your current job; banks like job longevity, and all of this will help you get a lower interest rate when the time comes.
Make you plan and work your plan; it sounds like you are diligent and can do it. But it will take time. Best to you !
Last edited by QuilterChick; 12-28-2012 at 07:15 AM..
Standard deduction is only $5000 . You cant itemize for more than that?
I'm married, so the standard deduction is somewhere around $11,500 ($11,900 this year I think). And no. Every year I have figured both ways, and every year, the standard deduction has gotten me a better result. I always use both TurboTax and TaxAct's free interface to make sure I haven't missed something obvious, and they always come out the same. With no kids, a small mortgage at a relatively low interest rate, and jobs that don't have a lot of expenses, I don't end up with much for writeoffs/deductions.
I'm married, so the standard deduction is somewhere around $11,500 ($11,900 this year I think). And no. Every year I have figured both ways, and every year, the standard deduction has gotten me a better result. I always use both TurboTax and TaxAct's free interface to make sure I haven't missed something obvious, and they always come out the same. With no kids, a small mortgage at a relatively low interest rate, and jobs that don't have a lot of expenses, I don't end up with much for writeoffs/deductions.
Real Estate property taxes, as well as state and local income taxes, all count, but I assume you've included those.
I guess if your mortgage interest is only a couple thousand, your property taxes are only a couple thousand, your state income taxes are only a couple thousand, and you only give a couple thousand to charity, you'd end up under $11,500.
I'm sure you all get this time and time again. Now its my turn.
We (girlfriend and I) would looove to get a house. We see a house as a place we can start a family. Will be purchasing an engagement ring with my tax return! A place where I can go in my backyard and do what I want. If I want to have a garden and grow pumpkins....I can. We can decorate and paint walls as we fit. It is our home. Some people don't want to have to fix things and save for house emergencies. I will happily take their place!
I make 27.5k right now and in March I will get a 40 cent raise and in September another 40 cent raise and in March of 2014 another 40 cent raise. It slows down after that though to a certain percent every year. My girlfriend makes just over 24k with yearly raises and a promotion in the works.
After looking at houses we could settle on a 100k house OR LESS. We don't want to get out of hand and get some 150k or more loan even if we could. The 100k or less houses we have looked at have everything we need and want and are in decent neighborhoods in Ohio.
We both have some debts. She has a 19k student loan and I a 10k loan. Some other small ones that will be paid for before we even try to get a loan. We will be "snowballing" our debts and in 8 years we will have everything paid off and that is just throwing $50 into the snowball throughout the 8 years.
So to the questions.
1. Since some of you have received loans and everything and may know more about this. Do you think we could get a loan for 100k at the very most? Not now...in a few years. Also with only the 29k in total (combined) student loans...the rest of the debts will be paid off. By the end of the "snowball" we will be paying $479 a month compared to the minimum $67 for the last school loan.
2. How will they figure out how much of a loan can we afford?
We rent an apartment now and they went by 40hrs a week when I was working in a warehouse that worked us 12-16 hours a day. So with the OT I made another maybe 10k or more than what they expected me too make. Also I could easily work some OT at the new job and get to 30k a year without even considering the 40 cent raises.
3. We are young. I'm 23 and she is 26. How much can a house drop in say 30 years? We would probably pay it off sooner, but the 30 year mortgage sounds better if we fall on a rough patch.
4. I also must ask...why is it such a huuuuge deal if you lose say 25k on selling price when you bought it at 100k. Obviously losing money sucks for just about anyone, but 25k over 30 years isn't that bad. We want a house to enjoy, not to make money in the end. The memories of raising kids and making your house your own I would think be worth it in the end....no? Like I said I'm young....losing 25k isn't relative to me at all.
5. Do you have to put 20% down? I highly doubt we could save 20k at the most in a couple of years.
Appreciate any and all answers. Idk if this would be the correct subforum...made sense though.
Jeff.
If you can't save 20% down in 3 years or less, you're going to be seriously struggling with the house payments.
Being able to save up a 20% down payment is a good test to see if you have enough cash flow.
Also, what if one of you loses a job? Not impossible these days. A lot of families get in serious trouble because they don't plan for this.
You should also take into account whether you will be able to get to work from the location of this house without a car. At your incomes, a car driven 10,000 or 12,000 miles per year will chew through a lot more of your paycheck than you think. Repairs can be needed when you're least prepared and cost a grand or two, in additional to all the normal expenses.
House repairs can also come up and catch you off guard. If the A/C breaks and it costs $2,500 to fix, will you be ready? Roof repairs at $4,000 ? These types of thing are not at all uncommon and must be prepared for.
Hi all. Didn't think this thread would get this much attention. Just to clarify a few things. By march 2014 ill be making an extra $1.20 a year. This march of 2013 it will be a 40 cent raise and 2 more 40 cent raises ending i n march of 2014 then it goes up differently each year.
With what you all have said...it probably isn't possible to get a house with the debts. In 8 years going with how were paying bills now all of the debt will be gone. Could be less or more depending on how life goes. The house we would be looking for is in Ohio.
Anyway to maybe get a house say in 5 years when a majority of the debts are paid off and say I'm making 32k a year and my gf 26k. Just throwing out numbers, but I want your opinion. We don't want to rush things and get screwed and have to give up the house.
Also thank you quiltercheck...kind of put things in perspective.
If my wife and I can carry a $200K mortgage and live with a smaller budget than yours, it is proof that it can be done. The question you have to ask yourself is....what are you and your gf's spending habits? I'm a true believer that it's not how much you make but it's how much you spend. My wife works for people who makes $150K+ a year and they are living paycheck to paycheck.
IMHO, this is the best time to own a house. Houses are affordable, interest rates are low. In my area, houses are not dropping anymore, it is increasing.
I'm surprised at both those who say "no way, don't do it" AND the guy who said this young couple could afford a $228,000 house (I would say "no way!!!!!!!!!!" to that -- and I can't figure out how a calculator could come up with that for people with a combined income of $51k).
I bought my first house for $135k in 2002. I put 10% down so the mortgage was $121,500. My income at the time was IIRC around $50k. I had a student loan payment of several hundred dollars a month but not much debt besides that (almost nothing on credit cards). My credit score was decent but not stellar (high 600s I think?) -- I do remember there were a LOT of mistakes on my credit report, and I should have checked it before applying for a mortgage. I got mine through a program for first-time homebuyers in New Hampshire; OP, you should check to see if Ohio has something similar.
Given that the OP could LIKELY get a mortgage (including taxes and insurance) that is less than his rent, it seems like buying a house would be a no-brainer, EXCEPT that you also have to budget for things like a new roof, broken appliances, etc. (EG I just paid $15k for a new roof on a house I will never live in again ... it's my old house, which I now rent out. You'd better believe I started budgeting for my current house's roof replacement even though it is, according to inspectors, at least 5 years off.) So I would recommend waiting 2-3 years to save for a down payment (and to have some left over for unexpected expenses).
RE: kids, I know too many people (married and not) who have gotten into TREMENDOUS financial difficulties after having a kid (or a 2nd or 3rd kid) that they really couldn't afford. Some of them, I expect will never get financially ahead until MAYBE after the kids are grown and out of the house. Birth control is well worth the expense until you absolutely, positively can afford a kid or two without straining your budget!!
I agree with you about these folks being able to afford a $100K house. They should be able to handle $100K on $50K. I think what you're seeing is a bit of gun shy due to the meltdown. I don't think that will happen again for another generation (like the last one in the early 90's). Buying a house is also no reason to put off children for years, I've seen a lot of couples do that and regret it. Then again, as I think about it, they all had bought a lot more house than they could afford to begin with, along with having the "right" car and entertaining the "right" people.
I'm married, so the standard deduction is somewhere around $11,500 ($11,900 this year I think). And no. Every year I have figured both ways, and every year, the standard deduction has gotten me a better result. I always use both TurboTax and TaxAct's free interface to make sure I haven't missed something obvious, and they always come out the same. With no kids, a small mortgage at a relatively low interest rate, and jobs that don't have a lot of expenses, I don't end up with much for writeoffs/deductions.
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