Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I am 21 years old, and I am looking to buy my first home. I have about $25,000 saved up, and I am looking to buy a home in the $100-125,000 range in Indiana, which has some OK houses for that price range. Do you think I could get approved for a loan? My credit history is not bad, but also it is not good. It's is pretty much blank, with no negatives or positives. Are there any special programs for first-time home buyers or young home buyers that I could take advantage of? Any advice would be greatly appreciated.
Also, some finance websites suggest to wait towards the end of 2008 to buy a house, as they seem to suggest that the market for a house will be much cheaper by then.
Michael
Good for you, it seems as if you are on a great track for the future.
The fact that you will have more that 20% to put down will work in your favor.
I would recommend talking to the bank that you have a realtionship with. Ask them about the different "options" they might recommend a "no doc" loan if you have the income along with your downpayment. It might be .5 to .75higher rate but you never know.
Be careful of "mortgage brokers" there main concern is getting you "bought" they will throw all sort of "fancy" loans at you and they can charge a hefty fee for their services.
There are some first time homebuyer programs out there.
One thing I would recommend is getting your credit report(free once a year) and paying the few dollars for the scores. That way you can show it to the banker and you won't end up with a lot of inquires.
Take your time and ask questions
Most important look upon this as a "learning project" if you keep the emotions out ( omg I love this house have to have it) it will help keep you clearheaded and enable you to make clear choices .
Good luck let us know what happens.
karla
Most special programs I have seen for first time homebuyers involve low or no down payment options. Financially it's not a great move to put little or no money down, and you have the money saved, so put it down. 20% down will get you out of paying for PMI.
Buy a copy of "Home Buying For Dummies." It's excellent.
Honestly, as long as you have a steady source of income, plus the 20% down, I don't think you'll have much trouble getting a mortgage. Talk to your local bank...also in the Sunday newspaper there is usually a box in the real estate section telling you average mortgage interest rates for different banks in the area.
Buy when it's right for you. Maybe prices will go down and maybe they won't. If you buy and stay put for several years, prices might drop a bit but eventually they go back up again.
If you qualify for a mortgage of that size really depends on your income so without knowing that it would be hard to answer your questions. Check with your bank and see if they have any first time home buyer programs, they probably do. You county might have something as well. Those usually are very good programs to take advantage of if you meet the income guidelines. Buying a house is a great investment.
I doubt that you will have any trouble as long as you have worked the same job for at least a year and your credit score is at least average. Do some homework on different types of loans. Try to get a fixed rate. My best advice would be to go with a 30 year loan, because of the price range you are looking at you may be able to add a little money on the principle each month. The idea is to save as much interest as you can..Good luck. Let us know..
Hi Guys,
I am 21 years old, and I am looking to buy my first home. I have about $25,000 saved up, and I am looking to buy a home in the $100-125,000 range in Indiana, which has some OK houses for that price range. Do you think I could get approved for a loan? My credit history is not bad, but also it is not good. It's is pretty much blank, with no negatives or positives. Are there any special programs for first-time home buyers or young home buyers that I could take advantage of? Any advice would be greatly appreciated.
Kind Regards,
Michael.
It is awesome that you are in this financial situation at 21. As a fellow Hoosier and an information junkie, I can tell you that you have two logical avenues of pursuit, with lots of options for each.
First, the two major avenues:
1) don't buy a house, just invest your money in stocks.. with a little investigation you can do this yourself, or if you don't want to take a crash course in how to choose a stock, hire an investment manager and give them at least 20k of your cash - they will probably be able to achieve a decent 10% per year rate of return... at least that much.
2) Buy a house, but understand that it is a lousy market right now... real estate is not likely to go up in value over the next 3 years the way it did a few years ago... especially in Indiana. This doesn't mean "don't buy" what it means is that now more than ever before, make offers on homes you want below the asking price; try to get a real deal. You need to do this, otherwise when Indiana's real estate drops the projected 2-5% in value this year, you'll be worse off and suffer a loss on investment. Also ensure you understand that real estate is about the land.... location - not the building itself. "Location, Location, Location"
Now for the options... you have a ton of them. First, for your mortgage - absolutely and without doubt or deviation, seek one not from a mortgage broker.. but from a banking institution that is willing to tell you that they will keep ownership of your loan themselves (verify this... this is critical). There's a ton of sound reasoning for this, I cannot articulate all of it in a quick forum post. Of additional incredible performance... get a standard 30 or 15 year mortgage... nothing with a variable rate, balloon payment, nor a HELOC associated. Among many reasons, the biggest is that rates are about to go up AND you want to get equity in what you buy (interest-only/balloon payment/funky mortgages will not enable you to make much headway in the equity area). Lastly, ensure you get a rate right near the ideal rates offered today... don't buy into any crap that a loan officer might give you about short-credit history or higher risk cause you to have a 1-3% penalty. If you cannot get a rate as of today at or lower than 6.75% pass on this whole idea.
Personally, in your situation, I'd go with choice #1... the reasons are numerous... most importantly, you're young and have just started your journey of independance. I wouldn't tie up money, especially regular monthly money (monthly payments) in something like real estate because right now unless you are going to collect rent with it to help pay it off it isn't likely to go up in value in the next few years (at least not keeping pace with inflation). Likewise, please don't let the money burn a hole in your pocket and encourage you to buy a car (among the worst ways to **** away your money). Really, investing in "value" companies (stocks), small-cap or large-cap, and even in emerging markets, and of course in the standby... energy industry, will likely yield great returns on investment. If not you certainly aren't likely to experience catastrophic losses in the worst case scenarios if you aren't super agressive in your investment approach.
Last edited by belovenow; 04-14-2007 at 06:15 PM..
I would go with stocks too. You are young and have nothing to lose. You can recoop the money.
I watch Jim Cramers Mad Money on CNBC Monday-Friday and the man has a wealth of knowledge.
I just started last month investing and have very little, well below the $10k he recommends, but I am up 21% on my JSDA stockholdings. I got in late, otherwise I would be up 120% =O
I would go with stocks too. You are young and have nothing to lose. You can recoop the money.
I watch Jim Cramers Mad Money on CNBC Monday-Friday and the man has a wealth of knowledge.
I just started last month investing and have very little, well below the $10k he recommends, but I am up 21% on my JSDA stockholdings. I got in late, otherwise I would be up 120% =O
Go stocks.
That is rather risky. You could go easily under if you are not watching what you are doing. None the less though, congrats on the 21% return it is definitely something to brag about! =)
To the future homeowner. The RE market is crashing right now so try to stay out of it. Put your money in the stock market in a nice diversified portfolio. Personally I would go with foreign stocks (europe, asia, the pacific, emerging markets) just because the US economy is running into a lot of obstacles in the years ahead. Rent the cheapest place possible and stock up cash (no pun intented lol). I could easily see you paying 100% down when you are 25, easily.
My next door neighbor, whom I have known since he was 3, bought his house one and a half years ago at age 19. He wasn't buying it for an investment. He got a very good job right out of high school, married his high school girlfriend, and is going to college nights. They have a new baby, and he loves owning his own home.
Do you have a job? Can you afford the payments, insurance, upkeep, etc? Are you buying it for a place to live or as an investment? If you are thinking of it as an investment, consider a two-unit home where one unit will pay the mortgage and the other unit can be your home or you can rent that out too and bank any profit. When I was young, that was a very popular way for people to make a little money in real estate.
Good luck.
Mimi
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
mortgage at 18
