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Well, the What Are We Doing Still Renting? bug has finally hit and we want to buy our first home? Our serious issue is lack of a lot of money to put down on downpayment. We rent a three bedroom apartment right now and doing the math on how much we spend a year was, frankly, staggering and almost disullusioning.
We're hoping for a four bedroom with at least 2.5 baths. There are actually more than a few homes that meet that criteria in our area for $100,000-$150,000. One in particular our 13 year old daughter is eyeing. But again, very little money to put down on it.
What are some options we should look at? My wife suggested a debt consolidation place to get our monthy payments down some so we can then start putting money away for a down payment.. We have a credit card that we owe a lot on, one car and one loan payment. Everything else is rent, utilities and groceries, etc.
Go talk to a loan person. Have you compared the cost of renting versus buying. Going from a 3br apt to a 4 br house should cost more, if you can't save for a down payment now, you can't pay down your credit card, how will you cover your cost of utilities, taxes and major repairs?
Are you living off your credit cards , does the balance increase every month? You need to cut them up. Debt consolidation will probably have you do the same , but you should get the education and budget.
You have two choices 1) make more money 2) reduce spending. No need to over think it. Get an additional job, cut coupons, less vacations, whatever it takes to pay off those high interest credit cards.
Joe, you are going about this the wrong way. You are shopping for a house before you figure out how to pay for it. This will only lead to frustration. First of all you need to work on getting your debts down and credit score up. A debt consolidation service will only extend your debt out longer and make it worse.
Start by working with a good mortgage loan officer at a local bank. They will tell you what you can qualify for today and offer you help as to which bills to pay off to improve your position quickest. It may take a few months to get things under control, but then you will know how much you can afford and then you can shop for a house.
Your 13-year-old daughter has no idea what it takes to own and maintain a home. Basing your purchase decision on what she wants could be a recipe for disaster. The people who will be paying for the house get to make the decision on what house is purchased.
If you are talking about debt consolidation, it is likely that you have too much debt and need to get that under control before taking on the even bigger debt of a mortgage. In addition to professional advice, you might benefit from researching the kind of additional expenses you will have as homeowners (property taxes, insurance, maintenance like saving for a new roof and painting, etc., HOA fees, utilities, water, purchasing lawn care/snow removal tools, and other possible fees like trash) to get an idea of what home ownership will really cost. It might turn out that renting is actually better for you at present until you get the rest of your finances in order.
Joe, you are going about this the wrong way. You are shopping for a house before you figure out how to pay for it. This will only lead to frustration. First of all you need to work on getting your debts down and credit score up. A debt consolidation service will only extend your debt out longer and make it worse.
Start by working with a good mortgage loan officer at a local bank. They will tell you what you can qualify for today and offer you help as to which bills to pay off to improve your position quickest. It may take a few months to get things under control, but then you will know how much you can afford and then you can shop for a house.
This.
DO NOT even tempt yourself with buying a house.
There is a reason you are renting. You are unable to save enough for a down payment. Hence, you are renting.
I was in your shoes for many years. The answer is to pay down your debt and start saving money. Period. There is no other shortcut.
Plan for your three to five year horizon. Make bigger payments until the card is paid off, then get into the habit of not charging any more than you can pay off each month. Do eBay, have yard sales, take a part time job. Clip coupons. Cancel expensive cable service and just watch tv on Netflix via the internet. Start monitoring how much you might be spending on going out, eating junk food, etc. Tell your daughter if she is keen on a house, she will need to chip in and help economize.
Put away a certain amount ($200, $1000, whatever you can afford) every month into a savings or money market account and DO NOT TOUCH IT. Expect that you will be making a purchase in 3-5 years.
Banks look at your debt to income ratio before they decide they will loan you money. It is supposed to be below 36%.
This is gonna sound cruel but you're not ready for a house. You shouldn't be buying. Making the house payment is not the problem for most. The repairs taxes insurance along with day to day expenses is what makes it tough. You stated that you don't have the money for a down payment. Then you don't buy. Having CC payment car payment etc is a burden too.
My suggestion
Get yourself debt free and then you can save for a down payment. Buying a house because you are comparing renting cost to house monthly payment cost is wrong. You need money set aside for issues. Replace roof? 12-24k slab leak 2500. Sewer line break 4-5k. Water heater 8-900. Most don't have the cash for those repairs and they usually go borrow. Which in turn makes them pay more now they surpassed what the rent would be. No house ever has no issues. Deferred maintenance is either gonna cost more later or you lose money on the sale. There is no free lunch in a house.
I would sit back and do a complete view of your finances and where is your money going. Going in debt to simply buy a house because it's equal to rentin is the worse reason to buy a house. Some may see my advice to you as wrong but all you are doing is piling more debt on to already existin debt in your life. Good luck in your decision
Well, the What Are We Doing Still Renting? bug has finally hit and we want to buy our first home? Our serious issue is lack of a lot of money to put down on downpayment. We rent a three bedroom apartment right now and doing the math on how much we spend a year was, frankly, staggering and almost disullusioning.
We're hoping for a four bedroom with at least 2.5 baths. There are actually more than a few homes that meet that criteria in our area for $100,000-$150,000. One in particular our 13 year old daughter is eyeing. But again, very little money to put down on it.
What are some options we should look at? My wife suggested a debt consolidation place to get our monthy payments down some so we can then start putting money away for a down payment.. We have a credit card that we owe a lot on, one car and one loan payment. Everything else is rent, utilities and groceries, etc.
Hey, mortgage companies do not allow for Debt Consolidation, or Credit Counseling, to be in effect during the mortgage.
For God's sake do not do one of those scumbag companies where you don't pay your bills and they "settle" them. That's a fate worse than bankruptcy.
Depending on credit, you can look for a 5% down conventional loan, or an 80/10/10, or an FHA 3.5% down, with the seller paying taxes, insurance, and fees.
Or - either of you ever serve in the military? Are you searching in an area that might be USDA approved?
Hey, mortgage companies do not allow for Debt Consolidation, or Credit Counseling, to be in effect during the mortgage.
For God's sake do not do one of those scumbag companies where you don't pay your bills and they "settle" them. That's a fate worse than bankruptcy.
Depending on credit, you can look for a 5% down conventional loan, or an 80/10/10, or an FHA 3.5% down, with the seller paying taxes, insurance, and fees.
Or - either of you ever serve in the military? Are you searching in an area that might be USDA approved?
This is just an aside-- I shocked by the number of people on here who talk about having a USDA loan. I had thought (mistakenly apparently) that these were only available in rural areas, but a lot of the places that are approved for them are not what I would call rural...
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