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Hello all, looking for input/friendly advice on my situation.
I am beginning to plan a move from Pa to Fl. Currently renting, looking to invest in a small fixer-upper (I paint, caulk, replace fixtures, sand etc.)
I have found small (900SF or less) places with good bones for $35,000 or a bit less (I searched mostly foreclosures, short sale, or bank owned as I know I have a teeny tiny budget). -According to those stupid "how much house can I afford" calculators, current income warrants no possibility of a house. Potential income is a different story, it actually suggests I could get more than I would like to spend on my first house.
It is just myself and my pets, so I don't need anything big or fancy for my first home, and I enjoy making a space into my own.
My debts include
a schooling loan with approx. 6,000 left to pay @ 125$/mo.
credit card debt of about 3,000 on a 5,000 limit (one "late payment"-I actually paid it too early, so it was included on the previous billing cycle!)
currently paying off car loan, but only a handful of payments left so that will be entirely paid before the move.
My current work pays less than 12,000/yr, have been here 10 months and truly struggling with this income, even with my small amount of bills to pay. I am a certified professional pet groomer, highly skilled and highly employable, so much so that I have already had 2 job offers in the past month in my goal city in Fl making approx. 30,000/yr to start even part time, plus tips, and basically the quicker I work, the more income I can produce, so the 30k is not a limit, rather just a starting point.
I can come up with a $2,000 down payment, and will be able to scrounge about 6 months worth of payments to the loan and a bit set aside for emergency repairs, but not much else by the time I spend the rest of my savings on 1,100 miles of transportation.
I will set up a job before moving states, but I also need a place to live as well, so trying to figure out this financing is confusing and overwhelming and my income restrictions are extremely frustrating.
Is there a possibility a lender will look at my new income to qualify for a loan?
How far fetched is the idea of my new employer signing a statement agreeing to employ me for at least six month, just to appease a lender?
Not going to lie, I am so frustrated. I work my butt off over 40 hours a week to barely scrape by when I could make more, I just have to get out of my small town. Please, friendly advice only, and yes I do have common sense: I will "pay down the credit card debt" and work on the school loan, and no I haven't had any extra to spend on myself, so cutting back on luxury items doesn't really apply right now. I have no life. And I need that to change. My life is 100% dedicated to work because I simply cannot afford to do anything otherwise.
Have you lived in the area you are moving to before and are you familiar with where exactly you want to live? My once piece of advice on moving to a new place is get to know the area before you commit yourself and your investment to a single property in a brand new area to you.
You are NOT in a position to buy now. The main issues:
1. The vast majority of banks don't offer mortgages under $50-75k because there is so little money to be made in the transactions and interest. The majority of people buying $35k homes are investors paying cash.
2. Even if you could find a bank/mortgage broker who does loans, $12k of stated income (regardless of future potential, a mortgage officer is going to examine your current financial position) and a $2k down payment (not even 10% of purchase price) won't get your loan approved.
I also just think it's a bad idea in general for someone with little to no savings to take on home ownership. Even if you can paint and caulk yourself, can you do HVAC work ? Or plumbing? Or foundation repair? Or replace a roof? Because those are the expensive things that will wreck you when you buy a home. Whether it's needing to pay $200 toget a plumber out ASAP on the weekend or replacing an old hot water heater for $1000 or so, house repairs are costly and often things you don't have time to save for when you need them.
It sounds like your income is about to increase, so my financial advice is to rent something small & cheap when you get to your new town and save, save, save. Try to keep mentally living on close to your old income while using the incremental income to pay off your debt and build up your savings account. I bet within a few years you will be a homeowner (with a legit down payment PLUS a well-funded emergency account with 6-9 months of living expenses) if you really focus on building savings!
In response to the living in area question, no. Visiting in may and networking. Even though I may not be in the ideal scenario to buy, I am not able to rent any more. My current landlord is a friend who knows how I maintain my animals and has no problem with them, but I cannot find any rental housing in the area within budget that allows my animals. I dump more and more money into rent without getting anywhere except broke-er.
Why do I see articles on first time homebuyers assistance, or terms like "as little as 3.5 or 5% down?"
How did my parents get approved for a mortgage with NO MONEY DOWN, just paying closing costs? Average home costs in my home town rarely get above 75k (those are the fixer-uppers) and how am I supposed to gain more savings if I cant escape the financial limitations my birthplace has set me in?
In response to the living in area question, no. Visiting in may and networking. Even though I may not be in the ideal scenario to buy, I am not able to rent any more. My current landlord is a friend who knows how I maintain my animals and has no problem with them, but I cannot find any rental housing in the area within budget that allows my animals. I dump more and more money into rent without getting anywhere except broke-er.
Why do I see articles on first time homebuyers assistance, or terms like "as little as 3.5 or 5% down?"
How did my parents get approved for a mortgage with NO MONEY DOWN, just paying closing costs? Average home costs in my home town rarely get above 75k (those are the fixer-uppers) and how am I supposed to gain more savings if I cant escape the financial limitations my birthplace has set me in?
1. Did your parents buy their zero-down home before 2008-2009? Because loans like that, especially to people with high debt-to-income ratios (not saying your parents have high DTI), are part of what caused home prices to crash around 2007-2010 (depending on your part of the US). They were risky loans for those banks to take on and the banks got burned as soon as the economy tumbled and people who were already over leveraged lost their jobs. IF a "zero down" loan product exists today, you would need a sky-high FICO score along with a much higher income and savings to qualify. It's just too risky for banks otherwise. Also, zero down loans usually carried really high rates, like 8% back when the APR's for good credit were 5-6%.
2. If the homes in your hometown sell for $75k, there are banks that will take mortgages for that amount (as I said above, $50-75k is usually the lowest mortgage amount a bank will finance). $35k is less than half of $75k, not even close to qualifying. Start by calling your bank to get the pre-approval process started. I think their response will help you understand this is a no-go right now.
3. Cold hard truth: home ownership isn't a "right". As much as I adore my dog, neither is pet ownership. You can be horribly offended by my saying that but it is the truth. If your finances aren't strong enough for you to buy, you rent. Those are your two options! If you can't find a place to rent to you because of your pets, you may need to temporarily re-home them until you can afford to buy your own home or pay enough rent to find a place that takes pets. $12k income and a couple thousand in savings likely means you can't afford to buy a home OR own pets.
4. You ask a good question, "how do I increase my savings"? There are only 2 ways to increase your savings: cut expenses (likely not possible for you) or make more money. I'd focus on making more money. Can you take a second job, even if it's house cleaning or babysitting or something else you can work around your other job's schedule? Do you have an artistic talent where you could make & sell jewelry or invitations on etsy? Since you're handy, can you free-cycle old furniture and restrain / repaint it to sell?
OP, maybe your parents bought before the bubble burst when you only had to be breathing to get a loan? At any rate, you need more savings and to take time before you buy. Please listen to those of us who learned the wrong way...we once purchased a house without living in the city and it was the biggest financial mistake of our lives. Even though the government loves to brainwash people to think "everyone deserves a house in America" that just isn't the case. It's a huge financial obligation.
With what as collateral? You DO NOT have enough/make enough money to afford a mortgage - period.
But what Im asking now is, someone stated above it wouldn't be a profitable mortgage at 35k.
Doesn't it have the potential to be a profitable personal loan though?
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