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I'm sure you all get this time and time again. Now its my turn.
We (girlfriend and I) would looove to get a house. We see a house as a place we can start a family. Will be purchasing an engagement ring with my tax return! A place where I can go in my backyard and do what I want. If I want to have a garden and grow pumpkins....I can. We can decorate and paint walls as we fit. It is our home. Some people don't want to have to fix things and save for house emergencies. I will happily take their place!
I make 27.5k right now and in March I will get a 40 cent raise and in September another 40 cent raise and in March of 2014 another 40 cent raise. It slows down after that though to a certain percent every year. My girlfriend makes just over 24k with yearly raises and a promotion in the works.
After looking at houses we could settle on a 100k house OR LESS. We don't want to get out of hand and get some 150k or more loan even if we could. The 100k or less houses we have looked at have everything we need and want and are in decent neighborhoods in Ohio.
We both have some debts. She has a 19k student loan and I a 10k loan. Some other small ones that will be paid for before we even try to get a loan. We will be "snowballing" our debts and in 8 years we will have everything paid off and that is just throwing $50 into the snowball throughout the 8 years.
So to the questions.
1. Since some of you have received loans and everything and may know more about this. Do you think we could get a loan for 100k at the very most? Not now...in a few years. Also with only the 29k in total (combined) student loans...the rest of the debts will be paid off. By the end of the "snowball" we will be paying $479 a month compared to the minimum $67 for the last school loan.
2. How will they figure out how much of a loan can we afford?
We rent an apartment now and they went by 40hrs a week when I was working in a warehouse that worked us 12-16 hours a day. So with the OT I made another maybe 10k or more than what they expected me too make. Also I could easily work some OT at the new job and get to 30k a year without even considering the 40 cent raises.
3. We are young. I'm 23 and she is 26. How much can a house drop in say 30 years? We would probably pay it off sooner, but the 30 year mortgage sounds better if we fall on a rough patch.
4. I also must ask...why is it such a huuuuge deal if you lose say 25k on selling price when you bought it at 100k. Obviously losing money sucks for just about anyone, but 25k over 30 years isn't that bad. We want a house to enjoy, not to make money in the end. The memories of raising kids and making your house your own I would think be worth it in the end....no? Like I said I'm young....losing 25k isn't relative to me at all.
5. Do you have to put 20% down? I highly doubt we could save 20k at the most in a couple of years.
Appreciate any and all answers. Idk if this would be the correct subforum...made sense though.
Jeff.
Last edited by packer43064; 12-21-2012 at 11:33 PM..
The answer is no. You can't afford a $100,000.00+ mortgage, even at today's low interest rates (for which you are not eligible). Find something affordable, or rent until you are making more money and have paid off your debts.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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When we were your age we made about the same, with no student loans or other debts, and
bought our first house for $50,000. This was back in the 1970s when 7% was considered a great interest rate. I had just been promoted so the house payment was all covered by the raise. Without that we would not have tried to buy a house. When you talk about a raise in terms of cents per hour it's not going to be significant or make a difference in buying a house.
You need to make enough that the payment with insurance and taxes are less than 1/3 of your income and have the down payment in hand. The closer you are to that 1/3 the bigger the down payment will be required.
(We stayed 7 years and sold it for $95,000, and that house sold last year for $400,000).
This will tell you how much home you can afford given your salary. Play around with it. Given the numbers you have provided I took the liberty to crunch them in the calculator.
With you and your fiance's income at 4% interest rate, it indicates you can afford a home worth over $228,000 per year. However, that doesnt mean you SHOULD do it. Stick to the 100k.
Getting a home through FHA at 3.5% down for a 100k house = $3500. Then you will need probably at least $500 to $1000 for the earnest money.
Say you get a loan for 100k. This would mean a mortgage payment of $477 per month @4% for 30 years.
Then you would probably pay 700 per year in home insurance and your property taxes would be roughly $1300 to $1500 depending on the area could be higher or lower.
700 per year home insurance = $59 per month. $1500 per year property taxes = $125 per month. You will have private mortgage insurance on your loan at probably $50 per month as well.
$477 + $59 + $125 + $50 per month = $711 per month.
The lender will set up an 'escrow' account , which will take that amount and pay it all for you.
Part of the lenders requirements is you have 2 months of cash in the bank to cover that payment. So you will also need to show $1500 in the bank as 'cash reserves' .
I think if you guys are serious, save up about $8000 bucks then go get a lender to get you an FHA loan. Once approved for your $100, 000 limit , then happy shopping for a home.
It does not make sense with your current income and stage in life. If you or your spouse lose a job and are unable to find jobs locally, you may have a foreclosure on your record. You may end up having to move for better employment prospects, anyway.
Many people end up moving for better employment prospects, especially in this economy. Unless you are a doctor, there is no guaranteed employment in every city.
First, yes you can $100k or under, not over. When you're married, and when all debts have been paid, and when you decide you aren't having children. You will not be able to comfortably pay for a 100k house AND kids on that income ($50k jointly).
Not that it can't be done, if you don't want to do things like, eat for example. Kids are expensive, houses are expensive. I would spend the next 8 years paying off all of your debts, and getting a great education that will get you higher paying jobs. Then you can talk about the house and kids.
4. I also must ask...why is it such a huuuuge deal if you lose say 25k on selling price when you bought it at 100k. Obviously losing money sucks for just about anyone, but 25k over 30 years isn't that bad. We want a house to enjoy, not to make money in the end. The memories of raising kids and making your house your own I would think be worth it in the end....no? Like I said I'm young....losing 25k isn't relative to me at all.
.
Hmmm - because nobody likes to lose money? Because with the interest you pay over the course of 30 years, you aren't really paying $100K for the house? Because contrary to what you think at age 23, you might not last in that house 5 years, let alone 30? It's great if you pay $100K for a house and are happy to walk away 30 years later wirh $75K, though.
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