Considering 1st home buying decision (loans, interest rate, escrow, property tax)

[Proud Marine Dad]

My wife and I have never bought a home and with the low prices and lowest interest rates in years we are considering finally buying something but I have a few concerns.
First off, we have credit card bills that are fairly high and would like to be able to have a lender put them into the mortgage although I have heard some people say that lenders are no longer doing that. Anyone have any info on that?
Secondly, we don't have money saved for a down payment.
I have heard that first time home buyers can get 0% down and so forth but I don't know if that is true.
Any info you all could give would be appreciated.

Thanks

Mike

[texdav]

You don't sond like a candaite for buying. Teh credit card debt and the no savings are obvious reasons.Your too likey to endup i forclosure like so many are experiencing now.Get out of credit card debt and start svaing.

[Proud Marine Dad]

Well we always pay our bills on time and the high CC bills is why we have no money saved. I am 47 years old and paying off the CC bills and saving up for a home is not much of an option now. A mortgage that would consolidate the CC bills along with the house payment would work out to be less than what we pay now for rent plus the CC bills.
If that is not an option then I guess we are screwed!

[texdav]

That is what so many thought and why they are over their heads in debt on mortgages now. You may have paid your bills but face it if you have no savings and credit card debt;you have spent more than you earned.That is why you have credit card debt at the rates at high rates.To buy a house you really need a down paymjent and a good credit rating. The cost of a house is not the payment on the cost of the house but there is closing cost;homeowners insurance;Taxes and then maintenance cost.

[Proud Marine Dad]

I can get a house here now for $299,000 that was $600,000 2 years ago.
The equity can only go up not down.
If the banks don't want to finance people like me then fine let them sit on all these houses they own due to their greed.

[mobster75]

Originally Posted by Proud Marine Dad

The equity can only go up not down.

That's what people have been saying the past 6-7 years and why we are in this big mess!

The banks never wanted to get to this point! Banks do NOT want to take ownership of homes. They aren't set up to efficiently manage them and process them. That's why we're seeing homes just sitting and rotting while the banks hold onto them and can't get rid of them fast enough.

What banks DO want are folks who are trying to buy a realistic home (based on their qualifications) who statistically have demonstrated financial responsibility and are not likely to go into default. The banks look at:

* How much house are you trying to buy?
* What is the going market price, measured by a comparable analysis of recent sales for this type of house and area?
* How much money do you make?
* How much are you spending on your other bills? (Particularly credit accounts)
* On top of your current bills, can you afford a house payment (which includes mortgage principal & interest, property taxes, homeowners insurance)?
* What is your debt repayment history like? Do you tend to take on more debt than you can realistcally manage? (Credit history is very important)
* How much down payment can you contribute to the equation? The banks want to see the homebuyer putting some money of their own into the transaction because 1) it reduces their liability a bit and 2) you're more likely to be careful and proper when you're at loss of losing some thousands of dollars if you default on your mortgage.

Getting in a position to buy a home doesn't have to take forever. But it does take a plan. You should come up with a plan which outlines:

* How long it will take to get your credit card debt paid off
* How long it will take you to save up enough cash to use a 5% down payment for the kinds of homes you are wanting to buy. (Don't forget to add another $3k-$5k which will cover closing costs and initial funding of your escrow account)

Homes that WERE worth $600k a few years ago are not guaranteed to be worth $600k necessarily ever in the future. Can you afford the monthly mortgage , taxes, and insurance payment for a $299k house and still have a LOT of room left over for living expenses, savings, and a maintenance fund?

For a $299k home, you would need to be looking at around a $15k downpayment, plus extra for closing costs and to initially cover your escrow account. That leaves you about $284k to finance. You're looking at about a $1500/month payment for mortgage principal & interest. Probably another $50/month for insurance, and approx another $260/month for est. property taxes.

That's about $1,810/month before savings, utilities, and all the other living expenses.

BTW, you'd never be able to roll credit card debt consolidation into a mortgage. Assuming you were fully approved for a mortgage, the bank is only going to give you money to cover purchasing the home itself up to the market value. So, if your sign a contract for a $299k home, but then market analysis comes back and says its only worth about $280k then the bank will only give you up to the $280k. Your home is only worth what the market is willing to pay. On the day you close on your home, it is worth whatever the purchase price you paid and not a cent more. So there's no room left over to pull money out to cover debt consolidation. Using your home like an ATM to cover discretionary spending is (IMO) one of the worst things you can do.

[f_m]

Originally Posted by Proud Marine Dad

I can get a house here now for $299,000 that was $600,000 2 years ago.
The equity can only go up not down.

That's not true. They're still going down in many areas. Not by as much, but still dropping.

[Proud Marine Dad]

Originally Posted by mobster75

That's what people have been saying the past 6-7 years and why we are in this big mess!

As I said, this is now not the past 6-7 years!

For a $299k home, you would need to be looking at around a $15k downpayment, plus extra for closing costs and to initially cover your escrow account. That leaves you about $284k to finance. You're looking at about a $1500/month payment for mortgage principal & interest. Probably another $50/month for insurance, and approx another $260/month for est. property taxes.

That's about $1,810/month before savings, utilities, and all the other living expenses.

$1810 a month would be less than what we are paying now for rent plus CC bills and that was my original point. If banks don't want to finance me then fine, let them suffer more because of their greed. I don't really care.
I am just trying to find a way to pay less and gain some equity, I am not looking for easy money like these people who so easily got 40 year interest only loans just to gain equity and buy a bigger house. I am glad those types lost their homes as they deserve it for being so greedy.

[mobster75]

Is there any way you can come up with a 2-3 year plan to pay down all your credit card debt (even if it means heavy sacrifices). Once the debt is paid down, you'd be able to save up a nice down payment after 6-12 months assuming you save the money you'd have previously been paying to the credit cards?

In 2-3 years, prices will most likely be similar to today or lower (given how less people can really qualify now to buy) which will put you in a good spot to buy!

2 years ago I had $13k in credit card debt and $5k in open credit debt, my fiance had $4k in unpaid medical bills. However, we came up with a plan when we decided to marry and were debt free this past April (aside from our car payments), then we saved $8k in a few months time for a down payment and closing costs. This past October we were able to buy a small 2-br condo that we are happy with. A single-family-house would have been nice, but being married with a baby on the way next month and only my income, the condo was reality. I highlight our story just to point out that it *IS* possible, it just takes a lot planning and sacrificing and making sure you don't deviate from the plan.

[texdav]

Originally Posted by Proud Marine Dad

I can get a house here now for $299,000 that was $600,000 2 years ago.
The equity can only go up not down.
If the banks don't want to finance people like me then fine let them sit on all these houses they own due to their greed.

But can you keep up a 600,000 house;because maintenance isn't going down.If the equity can only go up then why wouldn't the bank holdon to it. Besides their not going to finance your credit card debt with no equity.