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.
My husband and I have been renting the same place for 7 years at $1095/month. Our scores are 720 me, 760 him as of last week. We make $92,000/year. We would like to buy a home and get the tax credit. However, we are currently paying for his daughter to go to college. She will be done in 2 years and that will open up around $1200/month that we are spending towards her tuition, room, child support we have to pay her until she is 22, etc. We also owe on credit cards in the amount of apx $15,000 that we are paying off due to a jobless situation a few years ago and should have paid off in 2 years at the rate we're going. We own 2 cars paid off.
Would it be foolish to try to buy now to take advantage of the tax credit and the low interest rates, or would you advise we wait 2 years to have the burden of tuition off us and pay our cards down? Of course, I'm not even sure we could get a mortage with owing on credit cards though we always pay on time--just owe a lot. We would be looking at buying in the range of $150,000. Thanks for any insight into this.
If you make 92,000 a year, then no more than $27,600 should go towards debt per year (that is 30%). Lenders will go higher, but they shouldn't with a few exceptions, IMO.
If you pay $900 a month in credit card debt and $1200 a month in child support then that is a total of $25,200 a year that you are paying in debts. That would leave you $2400 to dedicate to a mortgage per year.
Wait two years and get your debts paid off. If you try and dive into the real estate market with those numbers, you may end up being one of the many facing foreclosure.
Your situation doesn't sound too unique. Depending on where you live, your income looks good, your rent payment is rather high, and your credit card debt, while not good - isn't is bad as others with similar debt due to hospital bills, etc. Again - it depends on your tolerance for debt, how secure you feel about your income, your ability to continue to whittle down your debt, and housing prices where you live.
I don't you should have trouble securing a mortgage as long as you have a sufficient down payment.
I'd wait until you have fewer expenses, and give yourself time to save up a larger downpayment. The higher credit scores and lower debt to income ration should help you out with the interest rate, and if you can put at least 20% down, you'll save even more by not having to pay PMI. Also, with so many colleges raising costs these days, it might be good to budget a little extra for that over the next 2 years.
I would think they can easily get an FHA loan on a 150,000 home and pay less than they do now. They need 3.5% down.
If they have that go for it. Sure if somebody loses their job you can't make the mortgage payment. Then again now if someone loses their job you can't pay the rent. So go for it...
If you going to pay that amount for rent, then the smart thing to do, would be buy. You could easily be using that toward ownership, and several lenders would work for you. Hook up with someone who knows how the rural loans work, and you can purchase with no money down, and start being an owner. Good luck, and keep us posted.
If you have a the funds to buy right now I would go for it. I am not sure what you are looking to spend on a home but if you are looking in the $150k range with 6% interest you will still be paying around the same amount each month for a mortgage that you are now. If you have the money for a down payment and a few extra grand for closing cost I do not see a reason why you would not purchase now.
Do some number crunching and see how much your monthly payments would be taking your down payment and lack of having to pay rent into account. There's a ton of mortgage and "How much can I afford?" calculators on the internet.
I had someone tell me that I was insane for buying a house - ANY house - because my husband and I have student loan debt. I told them, no, I was crazy to be paying over $1700/mo in rent (pretty cheap for where I lived around NYC). My husband's job is very stable, and we are buying a house that is under 30% DTI. That said, you said you went through a period of unemployment as recent as two years ago. How stable are your jobs now?
Personally I would wait until my debt was paid down and I did not have college expenses. Even in a "cheap" city like Dallas you could not buy a nice house and pay your mortgage, property taxes, insurance, etc. on $1095 a month.
You also did not mention whether you have anything saved up for a down payment. Most lenders have gotten rid of their 100% mortgage products.
I think some debt is unavoidable and if everyone waited until they had every penny paid off before buying a house then how many people would purchase?
Student loans, hospital bills, things like that are common and often unavoidable. What if you are debt free and purchase a house and then get hit with huge medical bills. Lot's of people do and they still manage to pay their bills and their mortgage on time.
It's all about not being "house poor". Don't purchase more than you can comfortably afford after setting aside money life's unexpected moments.
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.
