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When I was making $35k a year, I bought a condo for $69k. It was a foreclosure in perfect condition. I had a student loan of about $12k and no other debt, but I also had very little in savings. I was lucky that no major expenses came up until I'd been there about 7 years and was making a lot more money. Unexpected repairs and unexpected life expenses come up all the time. I think buying a $155k house with a $40k salary and your other debt is cutting it way too close. You can rent for a while.
You really need to be careful with that credit card debt though. 7500 is a LOT for a couple that only makes 44k/year. You need to be paying that off asap.
Also, where in the world is a house still available for 155k?
It's all liquidated into a loan from my bank. It was at 27% from the CC company, now at 9.4%. Still not great, but better than where I was.
I agree, I would like to have the loan completely paid off. It's just we fell in love with this house, and I know there are PLENTY more out there and will be in the future.
In the very least though, I would like to have the motorcycle sold and that'll save $220 a month and have the smaller loan paid off which is $500 and that'll save another $150 a month.
And the house is actually on the Mississippi Gulf Coast. Little town called Gautier. Homes are pretty cheap here because we have nothing but fast food restaurants and gas stations. This particular hous is 3 BR 2.5 bath with 2400 Sq ft. However, it's about 20 minutes away from Biloxi, so you get the benefit of all the tourists attractions but don't have to deal with the crowd and traffic that it comes with on a daily.
$155k is the equivalent of £103k here - which is extraordinarily cheap and you'd be very, very hard-pressed to find any house that cheap unless it was either severely dilapidated or located in a bit of a dive. $40k is more or less the average income in the UK.
So I think most people would say yes. The real estate market here is detached from reality though.
My first thought is yes do it but Do you have a 401K or other source you could borrow from in a pinch ?
What do realtors say about the area you are buying in ? Is it rising or dropping or flat (not your realtor who will lie but others). This is really a key question because if the house value goes up you are looking good if it goes down you will be seriously stressed.
Also note that any existing construction house might have issues (you need a through inspection) and you should figure that at any time you might encounter a failed HVAC, leaking roof, plumbing, electrical problem, etc.
I'll will have to check to see if it's dropping or rising, however, I did research and found the selling price and value of the house for the past 12 years. The house averaged at about 175k I believe. I'll have to double check my notes when I get home.
I do have a 401k with about 6k in it as of now and $72 goes in it weekly. I have a family friend who just started in the real estate business who has been in construction his entire life.
I'm not sure if I'm going with him to be my agent or not yet, but he sure will take a look at the house for me.
No way would I advise anyone to buy a house with high interest credit card debt (rolled into the loan, I realize). Pay that off first with everything you've got (read up on Dave Ramsey's snowball method if you can) and then worry about the home ownership. I know that's tough to hear because you've likely already picked out the house and are excited to buy it but imagine if......WHEN....you have something come up that needs a few thousand dollars, where will you go for that? Likely your credit card, now you have a loan, a mortgage and a credit card to pay off. No way, be a responsible adult, pay off the loan asap.
155K on a 40K salary would make me very uncomfortable, personally. How long have you had the loan that consolidated your CC bills? Do you still have those CCs and have you changed your behavior that caused you to rack up that debt?
I'm somewhat familiar with the area that you're living in. Just one question-have you priced homeowners' insurance yet? Not to be a negative Nancy here, but those 3 coastal counties pay hefty insurance rates. And is the house in a flood zone? The Ms Gulf Coast is a great area, but it's not cheap to live there even after you've purchased the home.
So, be brutal if you must to alter my mind.
My fiance and I are looking to buy our first home and one pops out at us at 155k. Obviously will we try to talk them down, but for this purpose we shall say they are set on 155k.
Thoughts, comments, concerns about this?
ALL input is greatly appreciated.
Edit: At this point in time, we wouldn't be dropping 20% downpayment, but about 10%. We would be going through a program that provides a mortgage and matches our 2% of a down payment and covers closing. The rate they gave us is 3.4% on the mortgage.
Some say "That's not a good idea", if you can get approved and are willing to take the chance, go for it. Quick check shows a $600" monthly payment and you're bringing in $2,800 Yeah no problems.
Could you work a second job while your fiance is going to school?
I don't know the complete situation. I have no idea what you are comfortable with. I do know that things happen and when they do money is spent. I would want money in the bank waiting for those things to happen.
Can you cash out of the honeymoon? How about getting married at your fiance's parents home and having a small party. Take the money that the wedding was going to cost and put that into the house or a savings account. Your life together is forever, a one day party will not be remembered by too many people. My thought is that it is better to go modest on the cost and invest what you would have spent.
What happens when you start having kids? Is your future bride going to work outside the home? In many areas the cost of child care can wipe out a second income.
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