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Where do we start? Just starting to look....
Hi everyone,
I am new to the board. My husband and I just married in July and we have started thinking about buying a house. To be honest... I don't know where to start. We currently rent a home in Baltimore and it is just too small. We would like to move to the suburbs into a roomier town home or single family home. Ideally- I would like to buy, but we aren't sure if it is in the cards for us.
Here is a little about us- maybe some of you more knowledgable home hunters will be able to give us direction.
Houses in our area tend to be 250,000 and up. We have seen things we liked right under 300,000 so let's just say that is our price range. We have very little for a down payment if we were to go try and buy today. (Maybe 6,000) Our annual income is about 130,000 before taxes. We both have great credit and the only debt is in student loans. I'd say roughly 45,000 between the two of us. We have both cars paid off as well. Based on this information.... is it worth even looking at houses? Would a bank even approve us for a loan with such a small down payment? What is out there for people like us? Where do we start?
Again- like I said I am new to this whole idea and before we do too much- I would really love some input. Let me know what you think!!
Thanks!
Re: Where do we start? Just starting to look....
I think the lowest you can have downpayment wise is 3.5% with an FHA loan, so I would look in to that. That is the way that we are going. I think the pricerange you are looking at is fine, but make sure that you add in things like HOA, taxes and PMI and make sure you feel comfortable with that. We have the same income and are actually looking at houses at a higher pricepoint than you (375ish) but you have to buy where you feel comfortable after crunching the numbers. Not sure if Baltimore is a HCOL area, but if it is you do not want total costs associated with housing to be more than 35% of your TAKE HOME pay. If it is M or LCOL then 28%.
You also have to factor in closing costs, which are around 3% of the sale price on average. You can ask the seller to pay closing costs as part of your offer, but you probably need to be prepared for that not to happen. Plus you will want to have some cushion in an emergency fund.
So maybe save up for a few more months to make sure your numbers work, then start looking
You'll need to save more money if you want to buy in the $300k range. Unless you qualify for a VA or USDA loan where you can still do 0% down, it's likely that you'll need a minimum or 3.5% of the purchase price as a down payment. FHA loans allow for 3.5% down, and most conventional mortgages require 5% or more in a down payment. 3.5% of $300k is $10,500.
Do you have savings beyond the $6,000? You'll also need to factor in closing costs, and should have an emergency fund of at least 3 month's expenses. Owning your home means you need to be prepared to pay for unexpected (and expected) maintenance issues that you currently don't need to worry about as a renter. I know home ownership sounds fun, but it can also get to be very expensive :-)
Also, you'll need money to set up your new house, pay for moving expenses, etc.
Mr. Sammy Dog
Life and Love at #16 | our married life blog