when saving for a downpayment on a house? (Dallas, Irving: lease, insurance)

[keepingme]

Doesnt it make more sense to stay in a cheaper place rent wise to save more money? I pay $635 a month for rent no utilities included and have a car payment of $300 a month minus insurance. My husband wants to move into a bigger, better place which means more rent money. But I only financed my car because our rent was so cheap and we could still save. If we get a bigger place we will be stopping our savings. So isnt the point of renting a cheaper place to be able to save for a downpayment? We are hoping to buy in 4 years and secure a home loan of $200,000. At the most for our first home. Right now we're in Irving and hopefully we wont be here long.

[compSciGuy]

To me it makes sense to rent cheap. However, when I was renting, I would make exceptions if going 'too cheap' interfered with personal safety, perhaps property safety and 'reasonable' issues to you. An issue for me was noise, I wouldn't want to save money on rent if I couldn't sleep through the night and it caused me to lose my job, etc.

[MckinneyOwnr]

If you're looking to buy then saving as much money as possible is key. Tell your husband to keep his eyes on the prize... by saving as much as you can now, you'll be able to afford that much bigger house much sooner than if you move into a bigger apt. now.

Also... even though you've probably seen that mortgage rates are at record lows... banks have been EXTREMELY stingy on who they are willing to loan to. I'd say you'll need at least 10-15% to put down to be safe, and even that may not be enough, they may want 20%.

I had excellent credit, records of previous home ownership, steady employment, yadda yadda yadda. But when I moved back to TX to take a new job, I tried to buy a house with less than 1 year of employment with my new employer, and the bank forced me to take an FHA loan, even though I could put down 20%. Chase denied me for a conventional loan after saying I was preapproved and taking my money to lock in a rate, I didn't bother applying for FHA through them after they pissed me off.

Long story short, the more money you have to bring to the table on the home you want to purchase, the better off you will be, and that means saving as much as you can.

[pinipig523]

Be cheap for now and save save save.

[Squirl]

If you are safe enough, I'd at least stay until your lease is up. Saving is always a great idea!

If you can qualify for a Homepath or HUD house, there are some deals out there if you are selective that will not require significant down payments and could get you a reasonable house payment, maybe about the same as what your DH is thinking about for more rent. If you can't qualify for a loan in the near future, saving is important. But, owning a house is not everything its cracked up to be. There are so many costs involved in homeownership and the loss of flexibility in moving that sometimes it really makes sense to rent.

[DaveG99]

Originally Posted by MckinneyOwnr

the bank forced me to take an FHA loan, even though I could put down 20%. Chase denied me for a conventional loan after saying I was preapproved and taking my money to lock in a rate, I didn't bother applying for FHA through them after they pissed me off.

whats wrong with a FHA loan? Arent those pretty good?

[skids929]

Originally Posted by DaveG99

whats wrong with a FHA loan? Arent those pretty good?

they're capped at certain amounts I know that so it can be limiting

[MckinneyOwnr]

Originally Posted by DaveG99

whats wrong with a FHA loan? Arent those pretty good?

FHA allows people who do not have 15-20% to put down to buy a home. You can sometimes get by with putting down 5% (the requirements have changed, so I don't know the minimum anymore.) However, the downside of going FHA is that you are then forced to pay for UFMI (upfront mortgage insurance, similar to PMI.) Well, I didn't want to pay that, because I had 20% to put down. So it forced me to pay a couple thousand upfront, and then about $100 a month. I have to do that for 5 years, which is crap since I had the full downpayment ready.

Originally Posted by skids929

they're capped at certain amounts I know that so it can be limiting

Yeah, I think the cap was around 450k IIRC. We were only looking for a max of 300k though, so no problems with that.

[skids929]

Originally Posted by MckinneyOwnr

FHA allows people who do not have 15-20% to put down to buy a home. You can sometimes get by with putting down 5% (the requirements have changed, so I don't know the minimum anymore.) However, the downside of going FHA is that you are then forced to pay for UFMI (upfront mortgage insurance, similar to PMI.) Well, I didn't want to pay that, because I had 20% to put down. So it forced me to pay a couple thousand upfront, and then about $100 a month. I have to do that for 5 years, which is crap since I had the full downpayment ready.



Yeah, I think the cap was around 450k IIRC. We were only looking for a max of 300k though, so no problems with that.

Its $450k? I thought it was much lower than that, like $280k or something. Good to know.

[nsumner]

FHA loan limits are as follows:

Dallas, Denton, Collin and Tarrant counties as well as most counties in north Texas is 271K. This is for single family homes. 347K for duplexes (both sides), 419K for tri-plex and 521K for a 4-plex.

The minimum downpayment is 3.5% but even if you have 20% to put down, you are required to pay that MIP for 5 years unless you refinance. This is usually the scenario for people that have poorer credit and can't do a conventional loan.

So if you want to buy a 320K and have poor credit, you may be able to do an FHA loan and get the 271K loan and put up the difference in cash.

MckinneyOwnr, the lender forced you to go FHA because you only had 1 year in the job. It sounds like you changed lines of work or had a very long break between jobs. All the lenders I know will require at least 2 years of employment in the same line of work. If you are past your 2 year mark in employment, you should refinance and get rid of that MIP.

OP, I agree that you should keep renting for a while and save up. You may want to speak to a lender so they can assess your credit worthiness so there are no surprises when you are ready to buy.

Naima