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Old 01-16-2012, 01:51 PM
 
4 posts, read 19,389 times
Reputation: 10

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I been with my girlfriend of over 3 years now. We both work full time, and both live with our parents.

I am 30, and she is 28. We are ready to get out on our own. I basicly have been living with her at her parents for the past 3 years. We are together every single day, so i know us being on our own will be not much different.

Now we were looking to rent, we live in PA near Lancaster county. We are looking for a 2 or 3 bedroom because she has a 5 year old daughter that i took in as my own also. We want to have some room, and not be cramped. Perfect for us would be about 1200sq ft. 3bdrm townhouse, semi, or condo. Newer construction.

The average place like that around here goes for around $850 a month in rent. So we started looking at buying. But there are some issues..

I dont make alot of money. I make $25k a year (no overtime) but been there 6 years.
She makes $23k a year and been there over a year. Both full time, and both have available overtime anytime if needed.

We have been looking at houses to buy. Condos, half houses, ect. We found a few that interest us around the $80-90k range.

The bad: My credit score is around 650 due to a previous credit card that had a balance that i forgot about, or never knew.
My girlfriend has a previous forclosure on her record on her last house her and her ex bought due to him being abusive. She left and nobody paid on the house. This was a $145k house.

The good: She has no bills except for insurance and cell phone. I have a few small credit card bills, and $3k left on my jeep loan. Cell phone, and insurance (full coverage is $55 a month for me)

Around here taxes on a 80-90k condo/townhouse will be around $1900-2000 a year total.

We have $2500 in savings, but her dad is willing to help us if we need more of a downpayment. From what I was told, some loans I may qualify for will require 0 down, just pay closing costs because my credit score is not good enough to get a better loan to put down a downpayment?

So just to be safe, we both make combined $45k a year. Combined we have about $350 in monthly payments/bills right now with cell phones, car insurance, my jeep loan, and some small credit cards. We would have more money saved, but we like to go out and do things on weekends. Beach, casino, eat out, ect. Of cource we know we will have to cut out that stuff if we buy a house.

Rent, buy, what can we afford?

Thanks, and sorry this is so long. Trying to get as much info out there as we can about us.
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Old 01-16-2012, 02:23 PM
 
333 posts, read 1,022,527 times
Reputation: 192
How many years since your gf foreclosed, and what is her credit score?

You might qualify for a FHA loan, but will need 3.5% down.

Would be smarter to save up a little more, pay off debt completely, and in the process improve your credit score. You would be amazed at how much you can do in just 6 months if you really get focused and budget.
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Old 01-16-2012, 02:39 PM
 
4 posts, read 19,389 times
Reputation: 10
I understand that. My credit score was 618 just 5 months ago. I was told to keep some of my credit cards, and make sure everything is paid on time. i did, and it went up like 30 points.

The biggest thing with me is my $3k debt for a current vehicle loan. I think interest is like 16% because I got it a year ago and no banks around here would approve me. I had to go with a lender type/non bank company. A year ago my credit score was 590.

So i must be doing something right. Im working on paying off this credit card i didnt know was there thats holding my score down now too.

Do you suggest we rent, and save money or try while renting?

This forclosure on her record is 3 years ago, but by the time the house was sold, and everything went through it was on her report for the 1st time in 2011... i think.

Even though she is my girlfriend, and will be living with me. Can i use her income added with mine? Or do they HAVE to use her credit score if they use her income? Becuase just my income alone it will be close.

Im not sure what my girlfriends score is but i know its not good. I think its around 530 due to the forclosure. It also says on her report she owes like $80k for some reason which she is trying to figure out with her lawyer whats going on there.
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Old 01-16-2012, 03:05 PM
 
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,642 posts, read 81,368,328 times
Reputation: 57887
Based on you income, with good credit you would qualify for about $1,100/month mortgage payment. For a $90,000 house with 10% down you are looking at about $600. The problem is that lenders these days are looking for near-perfect credit. If they do lend to you they would require a larger down payment, higher interest, and PMI which could bring the payment up. More landlords are doing credit checks so it could be difficult to get a rental too. I'd suggest looking for a small, private owner renting out a house that may be more flexible, then do your best to fix the credit issues before trying to buy.
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Old 01-17-2012, 09:49 AM
 
333 posts, read 1,022,527 times
Reputation: 192
The biggest problem is going to be the foreclosure in the last 3 yrs on her record.
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Old 01-17-2012, 11:50 AM
 
Location: Boise, ID
8,046 posts, read 28,502,218 times
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I agree, the foreclosure is going to be a major problem. I just got a list from a local lender outline what the current rules are for various types of loans. It says that for an FHA backed loan (the kind you are most likely to qualify for given what you've said), the rule is "3 years from completion date". Since the completion date was just last year, she won't even be able to help buy the house. If she can't be on the loan, that means you will have to qualify with only your income, which means you can't afford much. That is about the least strict of the rules, too (unless you qualify for a VA loan, but you didn't mention military service). She also hasn't been at her job long enough. Many lenders right now want to see 2 years (or 1 year plus prior experience in the same field).

In addition, I never suggest ANYONE use all their savings to buy a house. You should only be buying if you have enough saved up to live on for at least 6 months worth of expenses should one of you lose your job. That is in addition to the money needed to buy the house. You are talking about going into the deal with $0 in savings, at the same time as you take on more expenses than either of you have had in the past.

Also, you said you had a relative willing to help out. Be aware that not all loans allow that. There are many that require you to have x% of the purchase price of YOUR money, not gifted money. One way around this would be to get the money several months ahead of when you intend to buy, in which case, it will at that point be your money. Your relative may not be willing to do this, though.

I suggest you go talk to a lender, find out what steps you need to be taking in order to qualify, and how long you are looking at before the girlfriend can even buy a house.

In the meantime, what are your options? You are both currently living with family, which I'm sure you would like to get away from. But would moving out mean that you have to pay for child care after school every day? That is super expensive, too. If you only have $2500 saved up despite the fact that you only have $350 in monthly bills, and you are talking about adding rent and utilities (anywhere from some to all, which could add another $500/month) and child care on top of that, I don't see how you can make ends meet. I would suggest you take a hard look at where your money is going every month, and figure out why you haven't been able to save more.

I would suggest that you keep living at home for a while longer (assuming that your parents aren't kicking you out), and for 6 months, pretend that you are already spending all that extra money. Take whatever you would have spent on rent, utilities, and child care and put it in your savings account. If you can successfully do that for 6 months, that will accomplish two things. It will give you a feeling for what that feels like, and whether you can live on the amount left over, and it will increase your savings like 5 or 6 times what you have now.
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Old 01-17-2012, 12:41 PM
 
95 posts, read 172,603 times
Reputation: 60
Your savings is extremely low.

I would live at home for another year BUT set aside the 850 or 1000 dollars or more a month you would need to pay for rent or mortgage into a savings account. After a year, that's 10k to 12k more than what you have now.

This way you'll be able to adjust needing to pay for a mortgage/rent. The money saved can be your down payment or emergency fund.
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Old 01-17-2012, 12:45 PM
 
Location: Lending in all 50 states
214 posts, read 811,550 times
Reputation: 143
Quote:
Originally Posted by saltfisher0 View Post
I been with my girlfriend of over 3 years now. We both work full time, and both live with our parents.

I am 30, and she is 28. We are ready to get out on our own. I basicly have been living with her at her parents for the past 3 years. We are together every single day, so i know us being on our own will be not much different.

Now we were looking to rent, we live in PA near Lancaster county. We are looking for a 2 or 3 bedroom because she has a 5 year old daughter that i took in as my own also. We want to have some room, and not be cramped. Perfect for us would be about 1200sq ft. 3bdrm townhouse, semi, or condo. Newer construction.

The average place like that around here goes for around $850 a month in rent. So we started looking at buying. But there are some issues..

I dont make alot of money. I make $25k a year (no overtime) but been there 6 years.
She makes $23k a year and been there over a year. Both full time, and both have available overtime anytime if needed.

We have been looking at houses to buy. Condos, half houses, ect. We found a few that interest us around the $80-90k range.

The bad: My credit score is around 650 due to a previous credit card that had a balance that i forgot about, or never knew.
My girlfriend has a previous forclosure on her record on her last house her and her ex bought due to him being abusive. She left and nobody paid on the house. This was a $145k house.

The good: She has no bills except for insurance and cell phone. I have a few small credit card bills, and $3k left on my jeep loan. Cell phone, and insurance (full coverage is $55 a month for me)

Around here taxes on a 80-90k condo/townhouse will be around $1900-2000 a year total.

We have $2500 in savings, but her dad is willing to help us if we need more of a downpayment. From what I was told, some loans I may qualify for will require 0 down, just pay closing costs because my credit score is not good enough to get a better loan to put down a downpayment?

So just to be safe, we both make combined $45k a year. Combined we have about $350 in monthly payments/bills right now with cell phones, car insurance, my jeep loan, and some small credit cards. We would have more money saved, but we like to go out and do things on weekends. Beach, casino, eat out, ect. Of cource we know we will have to cut out that stuff if we buy a house.

Rent, buy, what can we afford?

Thanks, and sorry this is so long. Trying to get as much info out there as we can about us.
Hi Saltfisher0,

It sounds like your best bet is going to be a no money USDA Direct loan. How long ago was your gf's foreclosure? It's kind of hard to tell since you've been with her for at least the last 3 years?

The down side to the program is that the home has to be in a rural area but if you plan on staying in the Adamstown area you're in luck since it's eligible.

You also have to qualify under the county income limits but it looks you do. The maximum for a household of 3 in Lancaster County is $49,400 per year.

You can use the link below to contact the local office that serves your area.
[SIZE=2]http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=pageLoad&requestInfo=D irectContactInfo&NavKey=contact@11[/SIZE]
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Old 01-17-2012, 02:11 PM
 
577 posts, read 1,001,696 times
Reputation: 629
Quote:
Originally Posted by saltfisher0 View Post
I understand that. My credit score was 618 just 5 months ago. I was told to keep some of my credit cards, and make sure everything is paid on time. i did, and it went up like 30 points.

The biggest thing with me is my $3k debt for a current vehicle loan. I think interest is like 16% because I got it a year ago and no banks around here would approve me. I had to go with a lender type/non bank company. A year ago my credit score was 590.

So i must be doing something right. Im working on paying off this credit card i didnt know was there thats holding my score down now too.

Do you suggest we rent, and save money or try while renting?

This forclosure on her record is 3 years ago, but by the time the house was sold, and everything went through it was on her report for the 1st time in 2011... i think.

Even though she is my girlfriend, and will be living with me. Can i use her income added with mine? Or do they HAVE to use her credit score if they use her income? Becuase just my income alone it will be close.

Im not sure what my girlfriends score is but i know its not good. I think its around 530 due to the forclosure. It also says on her report she owes like $80k for some reason which she is trying to figure out with her lawyer whats going on there.
For now, don't think about anything but paying that jeep off. That is a guaranteed 16% on your money. I would even take some of the savings to do it if it were me.

Also I couldn't find where you mentioned your total credit card debt, only that it's small monthly payments. I'm always concerned when somebody mentions the monthly payment rather than the total debt. Pay those off as well.

Once those are out of the way, then shift your focus to buying a home.
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Old 01-17-2012, 02:37 PM
 
4 posts, read 19,389 times
Reputation: 10
Thanks guys. My girlfriend had her forclosure put on her record about a year ago.

I have a total of about $1k credit card debt. I have 5 credit cards and used them just to try and get my credit higher, quicker, by paying everything on time and only use them a little bit and none are over 50% of the limits.

I agree too that paying off my jeep would give me about a extra $150 a month. Plus I can always lower my insurance from full coverage to liability so save another $35 a month.

Her daughter will be in 1st grade the end of the year, so thats full time school and daycare may not even be needed since I get done at 2:30pm and can pick her up right away from school.

My credit score is 650 right now, so would it go up if i pay off my jeep loan, and pay off all my credit cards?

My other option, is going back to school part-time nights or online classes (im only 30) so can still get a better education since i have high school only. Im really good with computers, so was thinking of going for IT, or computer repair, or something similar. say I do that for 2 years, and land a better job by 32. I can still put 30 years in that job if not more before im ready to retire. But thats a different story.
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