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 appreciate everyone's helpful and sobering advice.. So much for having an 820 or whatever credit score.. It's not going to do me much good living in the Pacific Northwest..
It is not about discipline, it is about being heavily taxed, working for small family business and spending all my money on rent, utilities , car payments, etc..
I don't eat at fancy restaurants, go on vacations, buy extravagant designer clothing or blow a weeks pay on the bars like many other people do. I haven't had a vacation in 3 years. And since when is having a wife and kids a sign to finance companies that you are more financially stable? If anything those could be looked at as more potential risks, especially with how many people get divorced and bail from their houses and all the expenditures for having children.
Anyhow, my problem is living in one of the most expensive places in the country and not making enough money. Perhaps, I will have to consider either moving somewhere cheaper if I want to buy or actually save money. I do have some business prospects and I am planning on starting a side business in addition to my current business which I hope maybe can help me make a down payment in the near future.
Making only $60k a year and being taxed heavily and living in an area where most people's combined income is $150k a year is the reason I have no money saved.
I was hoping maybe my stellar credit could help a bit, as it helped me buy a car and other items, but it doesn't look like it.
I want to say again that I appreciate the input of everyone here and it is has been helpful.. I will just keep on renting and hope I can start making extra money.. I can see credit is not really that helpful in financing a home until you have a good chunk of change in the bank.
Oh yeah, maybe I should add.. I am employed as a private contractor right now and work from home.. Would there be any potential tax deductions I could make on a purchased home compared to a rental? With a rental , I pretty much cannot deduct anything (except like 10% of the rental, an office bedroom , e.g.) as my standard deduction would still be higher, since my current job, working for small family business as a contractor (for tax reasons) doesn't result in me performing many deductions.
I was told somewhere that there are a lot of tax benefits of owning a home and operating the business from your house. . I'm not sure on the details of that either ...
I worked as an independent contractor out of the home I owned for quite a few years. One bedroom done over as an office, just as you have. I had a CPA doing my taxes for me. For the home itself, all I could deduct was a percentage of my mortgage payment equivalent to the square footage of that bedroom subtracted from the rest of the house. Exactly what you're doing. The CPA decided he could not deduct the cost of my home phone landline since I had phones all over the house; he did, however, deduct the total cost of my cell phone, specifying that it was reserved for work use, and the monthly cost of my internet service. I could also deduct standard mileage and gas costs for work-related trips, postage and printing costs related to specific projects, office supplies, and computer hardware. But the CPA made me give him original receipts for everything and mark which expenses related to which customers. I can't see how any of that would have been maximized by my owning the home. People who run businesses out of offices they rent can deduct their entire office rent, but they have separate living expenses (mortgages or rent payments) that aren't deductible at all.
As for your question about buying a home with no down payment and no savings, at this time I doubt you could even get a mortgage from any credible source, no matter what your credit score is. Years ago I got a mortgage with a 5% down payment and not a ton of savings, but it was a city-backed mortgage to purchase a house in a neighborhood marked for rehabilitation. I had to sign something swearing I would live in the house for more than five years while I improved the property. I did and made out like a bandit when I sold the house 13 years later, but to be honest, that was the only real estate deal helpful to me I ever made. Keep renting.
However, I do believe with current trends, that places like Snohomish Country are going to only go up in value, because the prices of rentals in Seattle are exponentially higher than the suburbs and people are going to flee to the suburbs as the living situation in Seattle is becoming less and less desirable , especially with the salaries not matching the increasing rent costs. If anything, I think Seattle's urban core may go bust as even a 1 bedroom in Belltown now is worth more than a 2000 sq foot home in most of Snohomish county.
Again, I am no expert on the market, just using my own logic of living in the Pacific NOrthwest for so many years and seeing the kinds of people moving in and the trends of housing here over the year.
15 years ago I could rent a 1800 sq ft in Southwest Portland for $900/mo.. I cannot even rent a 1 bedroom there for that anymore.
I grew up in south snohomish county and now live in seattle. The houses there used to be priced higher than comparable homes in seattle, now it's exactly the opposite. What changed over the past 20 years was seattle again became a desirable place to live and raise a family, whereas snohomish county became a mess of suburban sprawl with long commute times. Snohomish county has a few desirable places to live, but most of it is going to end up like lynnwood or mountlake terrace - just another aging suburb with run down houses.
The reason it's cheap relative to seattle is because it's not attracting residents the way seattle is. Time is money, and commutes are getting worse quick. With our failed regional transportation system, those areas are becoming more remote and 'cut off' from the core metro area. Some people want that, but most people paying top dollar do not.
You won't be able to get finance without any deposit whatsoever, but I don't think you should give up on the idea of getting a house completely. Just because you don't have a down payment now, it doesn't mean you can't save for one.
I was probably similar in my late thirties, single, no kids, great credit, great lifestyle, no debt, but also no real savings. It's very easy to do and I have no regrets. But I did eventually reach a point where I knew I needed to get serious about making a commitment to my own financial security. I spent three years getiing a deposit together, basically by not going out much and not buying stuff, being much more thoughtful on how I spent money.
There's no getting around it generally being harder to get into home ownership as a single person, because of just one deposit and one income, but maybe think of looking at town homes or condos instead of single family homes, there are some clever designs around.
Interest rates have actually gone down again, so by the time you have saved enough to buy, we may still well be in a low interest rate environment. And even if they have gone up, that may then dampen prices. Either way, you'll at least have a deposit or the start of one. Go see a mortgage broker and get them to tell you what you'll need to qualify. Start going to open homes and getting a hands-on feel for the market in the areas you are interested in.
I think your instinct to buy is sound, but it will take time and discipline to achieve. Don't be discouraged.
I don't eat at fancy restaurants, go on vacations, buy extravagant designer clothing or blow a weeks pay on the bars like many other people do. I haven't had a vacation in 3 years. And since when is having a wife and kids a sign to finance companies that you are more financially stable? If anything those could be looked at as more potential risks, especially with how many people get divorced and bail from their houses and all the expenditures for having children.
For the record, I don't think anyone was suggesting that a wife and kids would signal anything to finance companies; I think the point was that a family is a big expense, and if you don't have that expense and you still haven't managed to put any savings aside, that's not a good sign regarding your overall financial situation. On the other hand, since you don't have a family you don't have to worry about living in a "good" school district, which is one of those weird things that drives up real estate costs, so that's in your favor.
I don't think we're living in a time when anyone can buy real estate as an "investment" -- it's more like buying a scratcher lottery ticket; there's a reasonably good chance you'll make a little bit of money, and a small chance you'll make a lot of money, but also a very good chance that you won't make any money at all. We own our house because we love it and want to live in it forever, and owning it and paying a fixed-rate mortgage ensures that we know how much it will cost to live there -- ie, no landlord can raise the rent and force us out. That being said, taxes will keep going up and home repair is inevitable, so we're constantly ready for the monthly cost to rise, and in addition to making mortgage payments we have a little savings fund set aside for the day the roof leaks or the sink breaks or whatever. So, when you think about how much your monthly payments will be, be sure to multiply that by about 1.7 to account for taxes, insurance, and savings. I say that because our mortgage isn't much more than $1,000 per month, but we also pay $300/month in taxes, $100/month in insurance, and $300/month into the "just in case something crazy happens" savings account. (These are rough numbers, but it gives you an idea of what to imagine...of course YMMV depending on your home and the taxes and upkeep associated with it.)
All that being said, I think considering a condo is also a really nice idea. Our first purchase was a condo, which meant that we were immediately part of a community of 20 homeowners, and the other 19 people or families had way more experience than we did as far as home ownership was concerned. A lot of big expenses, like a new boiler in the basement or repairs to the roof, were budgeted and paid for as a community, and so we learned a ton about what to do and were shielded from unexpected costs. Of course, we had a great condo association and a good management company, but since we met with these people before we bought the place we had a good sense of what we were getting into before buying. We broke even when we sold the condo, but that was fine by us, because the experience of owning it helped prepare us for owning our house, and in the meantime we really did love our home and our neighborhood.
Don't be discouraged, but do start looking at home prices and start saving up for a down payment. Your credit score IS worth something; it will help you get a good interest rate and it will allow you to make a somewhat lower down payment than you would be required to make without it. Start talking to banks now, and look for good deals -- a few years ago, my bank had a program where you could start a special savings account with the goal of eventually using the money to make a down payment on a home, and if you set aside X amount per month for X number of months the bank would reward you with a bit of bonus money, as well as offering a competitive interest rate if you used them for your mortgage in the end. I've seen other major US banks offer similar programs, and they are definitely worth checking out.
You can still buy on 5% down. With your income, credit, and the 5% down you'll probably qualify for around a mortgage up to 200 to 220k. If you're going to live somewhere for 10+ years, owning is much safer than renting. If you are not going to stay there, owning is silly.
I understand your concerns. I did a great deal of research before buying a house. Mortgage rates are very attractive and if they remain low over the next two years I may purchase an investment property or two.
You can get a USDA guaranteed loan. Many of the areas you mention are in eligible areas, and your income isn't higher than average for the areas. No down payment is required.
Look for a home where your total monthly payments would be lower enough compared to what you currently pay in rent. Then you could save money for repairs and maintenance.
It may not be a popular option here, but it is doable.
I don't have any savings at all.. Just living day to day.. Of course, my main expenditure is rent and taxes, which I fork out 25% of my income.
However, I am open to change spending habits.. I thought if I could pay less in mortgage than rent and gain some tax benefits, maybe the spending would even out a bit and I would actually gain equity. Of course, there will be repairs and other expenditures.. I was also considering renting out a room possibly to help bring in extra revenue. I'm single, no kids, so I don't have that burden.
I'm sure many would say the Seattle area is bound for a bust, but I also think there is potential for it to also just keep rising. The area is growing more and more every year and it is now becoming more attractive to not only people seeking employment, but many retirees. I have this personal feeling that Seattle will go the way of San Francisco, but I am not going to bet the farm on that.. I am expecting I may also lose in the short term, but this would be a longer term investment. However, I do believe with current trends, that places like Snohomish Country are going to only go up in value, because the prices of rentals in Seattle are exponentially higher than the suburbs and people are going to flee to the suburbs as the living situation in Seattle is becoming less and less desirable , especially with the salaries not matching the increasing rent costs. If anything, I think Seattle's urban core may go bust as even a 1 bedroom in Belltown now is worth more than a 2000 sq foot home in most of Snohomish county.
Again, I am no expert on the market, just using my own logic of living in the Pacific NOrthwest for so many years and seeing the kinds of people moving in and the trends of housing here over the year.
15 years ago I could rent a 1800 sq ft in Southwest Portland for $900/mo.. I cannot even rent a 1 bedroom there for that anymore.
Buying a brand new car when you have zero savings of any kind whatsoever and then buying a house with no money down is not good money management...sorry!
I appreciate everyone's helpful and sobering advice.. So much for having an 820 or whatever credit score.. It's not going to do me much good living in the Pacific Northwest..
Having an excellent credit score is a great thing! But that alone doesn't pay the mortgage.
I agree with everyone else that if owning a home is important to you, you need to get much more disciplined about saving so you can put away money for a down payment plus cash reserves to cover 3-6 months. A lender will be looking for that cash on hand, particularly with a low down payment loan.
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.
