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My husband recently lost his job. We are in are early 30's and have plans to have children and buy a home, but both seem a ways off. We have about about 90k in 401k and about 30k in savings, but don't want to touch any of this to buy a home. We would like our home to be in the 450-520k range. Our credit is in the lower 600s, but we have no debt. However, we can't seem to be approved for credit cards. When my husband is working, as he will hopefully will be soon, we make around 140k per year. As we'd like to buy as soon as possible, will 20k for a down payment be able to get a mortgage? what are the possibilities of taking second mortgage out to help wiht down payment and/ or fha loan? Am I in dream world that buying a home is in our future? Thanks in advance for any advice.
My husband recently lost his job. We are in are early 30's and have plans to have children and buy a home, but both seem a ways off. We have about about 90k in 401k and about 30k in savings, but don't want to touch any of this to buy a home. We would like our home to be in the 450-520k range. Our credit is in the lower 600s, but we have no debt. However, we can't seem to be approved for credit cards. When my husband is working, as he will hopefully will be soon, we make around 140k per year. As we'd like to buy as soon as possible, will 20k for a down payment be able to get a mortgage? what are the possibilities of taking second mortgage out to help wiht down payment and/ or fha loan? Am I in dream world that buying a home is in our future? Thanks in advance for any advice.
1. You will probably need to show at least $35K for a downpayment (assume 3.5% down with the FHA plus 2-3% for closing costs) based on the home you are trying to obtain (500K range).
2. Those days of taking out 2nd mortgages are essentially over. No more of this 80% first, 20% second mortgages. There are some instances where you can get a 80% first, 10% second with a 10% downpayment but those are becoming much rarer. But in your case, it doesn't even sound like you can even come up with 10% down. You are most likely going to have to pay PMI anyway you look at it unless you come up with 20% down.
3. Question: Why is "we'd like to buy as soon as possible?" No one is pointing a gun to your head. There is nothing wrong with renting these days. It costs about $2-5K to move (assuming you hire movers). I know people hate moving multiple times, but the cost to move is very minimal. There is no urgency to "buy as soon as possible" Real estate prices are not going anywhere for the foreseeable future.
4. You can easily raise your credit scores. If you aren't getting approved for credit cards, you may try something that's known as a "secure credit card" This is a link to bankrate (a very well respected website) that explains it:
I got one of my co-workers one of these cards: Her credit score was in the high 500s (for some reason she had very little credit history and let her ex husband handle everything). But in 6 months, with the secure credit card, her credit rose to 640. Not bad for 6 months. The key is just to use the card 1-2 times a month (like a quick shopping trip or a quick gasoline fill up) and pay for it immediately. You don't want to use up that "prepaid" credit because it will look bad.
Honestly in your situation, your husband isn't even working at this point. Don't touch your retirement account to fund a home. I think you are dreaming. 1. Wait for your husband to get on his feet again with a job. 2. Save at least 6 months emergency cash and don't calculate this as your downpayment. It's your rainy day fund. 3. Rent for as long as you can. 4. Save at least 5% down. 5. When you are ready to buy, buy what you feel you can afford, not what you think you can afford on a stretched budget.
Thanks for the reply aneftp. A secure credit card Is our next step. Does itayter how much we put on the card? For instance, if we purchased a card for $200 or $300 and then used it for only 2 small
purchases and paid off right away, the percentage of available credit could still be high, which told is positive for credit. 640 is where my credit is at now, i'd like to get it to above 700 obviously.
The 30-40k we have saved is our rainy day fund, but it should be double. I guess we are looking at another 3-4 years or so before this can happen. It just worries me because I would lile to have children and don't know how it would be possible to save once that happens.
In any case Amy specifics on secured cars would be helpful- did she have fees etc?
You definitely need too get the score up. I didn't click on the above list of things to ask, but #1 on the list is find out what the fee is to close the account or if there is a penalty if the account is goes inactive. I had a customer get hit w/ an $80 inactive fee. The secured credit cards are a great way to go, but you really must be careful. If you have a public credit union, go in and ask them if you moved your banking over to them, would they give you a SMALL cc limit, say $500.
Another route (that was supposed to be shut down over a year ago, but hasn't been) is to have a trusted family member add both you and your husband to one of their credit cards as an authorized user. It still works, because I've just popped two scores over 50 points doing this. It takes about 30 days, but it still works.
The price range you are in, your score needs to be in the 660 to 680 and should not have any late payments within the past 12 months. Rental history should be stellar.
Not to be mean, but is a 450-520k home really necessary? I would love to have a home in that price range, but we can't afford it. Looking to the future at you having kids, are you positive that you're going to keep working? Does it make sense to keep working when you add in daycare costs? If you think you won't be able to save after having children how will you afford the kids and the mortgage? What will you do to replenish the rainy day account after you end up using it?
If I were you I'd be looking at something a lot less expensive. Just because your income qualifies you for a certain amount doesn't mean it's a good idea to spend that much.
Not to be mean, but is a 450-520k home really necessary? I would love to have a home in that price range, but we can't afford it. Looking to the future at you having kids, are you positive that you're going to keep working? Does it make sense to keep working when you add in daycare costs? If you think you won't be able to save after having children how will you afford the kids and the mortgage? What will you do to replenish the rainy day account after you end up using it?
If I were you I'd be looking at something a lot less expensive. Just because your income qualifies you for a certain amount doesn't mean it's a good idea to spend that much.
Maybe not, but what if this is the buying chance of a lifetime? The chance to buy the dream home at 50% what it sold for just 3 years ago? As you read through these pages, it's quite evident real estate is no longer the guaranteed money maker it once was, so why sink a whole lot of money into it if it could lose value?
Maybe not, but what if this is the buying chance of a lifetime? The chance to buy the dream home at 50% what it sold for just 3 years ago? As you read through these pages, it's quite evident real estate is no longer the guaranteed money maker it once was, so why sink a whole lot of money into it if it could lose value?
Someone with this mindset shouldn't be buying a house at all. Buying a house is a risk, period, just as any other financial investment. If you can't handle the ups and downs of the market stay out.
Statements like, "Buy now, you won't get another chance like this." are not reasons to jump into the market. You always have to be willing to walk away, even from the dream home...especially if the math doesn't add up long term. IMO, OP doesn't have the income to support a house of that price range long term...considering they want to have kids and think they won't be able to save much after that. They will be house poor. If they are in a HCOL area they may need to move to get more affordable housing AND be able to continue to save. They may be better off renting. Either way...getting a house 50% off the value from 3 years ago still isn't a bargain if you can't afford it in the first place. Someone who's moniker is SmartMoney should know that.
My husband recently lost his job. We are in are early 30's and have plans to have children and buy a home, but both seem a ways off. We have about about 90k in 401k and about 30k in savings, but don't want to touch any of this to buy a home. We would like our home to be in the 450-520k range. Our credit is in the lower 600s, but we have no debt. However, we can't seem to be approved for credit cards. When my husband is working, as he will hopefully will be soon, we make around 140k per year. As we'd like to buy as soon as possible, will 20k for a down payment be able to get a mortgage? what are the possibilities of taking second mortgage out to help wiht down payment and/ or fha loan? Am I in dream world that buying a home is in our future? Thanks in advance for any advice.
I would not attempt to buy a home with your husband out of work. Especially if you want to have children. Have him get a job. You can have children in rental housing. Nothing bad will happen to them if they live in a rental home. They won't care as long as they are with you and you love them.
In order to buy a house that costs $450K you will need a down payment of around $90K. You should be able to afford the payments on a salary of $140K per year as long as you don't have excessive debts. Perhaps the first order of business should be to save as much as you can once he starts working again.
In past years you have been able to buy homes with two loans, a first for 80% of the purchase price and a second for 10% of the purchase price. It is my understanding that these types of loans are not being done as frequently as they had been done in the past (we did one in 1995). You usually need to have a very good credit rating for these types of loans as they are risky for the lender. You need to speak to a mortgage broker in order to get answers about your specific situation.
Maybe not, but what if this is the buying chance of a lifetime? The chance to buy the dream home at 50% what it sold for just 3 years ago? As you read through these pages, it's quite evident real estate is no longer the guaranteed money maker it once was, so why sink a whole lot of money into it if it could lose value?
Look-the OP said that they have $30K in savings and her husband just lost his job. It doesn't matter what kind of bargain real estate is right now, the OP needs to have her family income stable, and some more savings to be able to buy a house.
IMO a couple buying their first home needs to have:
20% to put down PLUS 6 months of mortgage payments, In the bank.
For a $450K home that would equate to around $110K in the bank. Even if they chose to skimp on the 6 months mortgage payments they still need $90K plus closing costs. They have $30K now.
If they are making $140K per month they should be able to save $3K per month unless they are pissing away a lot of money. They should be able to do it in less than 2 years. It's not forever.
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