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WWYD in our situation?
Hi everyone! First post on this board, H and I came across a home that we might actually be able to make work, but I'm looking for some outside opinions before I get to excited.
We can get an FHA loan, mortgage will be about 1300 month more than we are paying in rent. Total mortgage is exactly 30% of DH income. I do not have income until July, but seller is extremely motivated to sell before the end of the calendar year. We have been traveling/buying at a pretty good clip, not thinking we were going to be buying a home until next fall. H has been paying about 3 - 4k on credit card spending (about a 2k balance is on there now from this month).
With our current tax situation, buying a home wouldn't necessarily be that big of a tax break (can't deduct PMI which is about $400 a month)
So I guess my question is would you pay less (I suppose that equals BUY less) on the CC every month to buy a home that was $1300 more than your rent and 30% of one income?
If you need more information I'm happy to give it, I just don't know what is relevant to answering this question.
Thanks!!
ETA: Also, the mortgage quote is about $300 over what we had *hoped* to pay each month if that makes any difference whatsoever.
Re: WWYD in our situation?
Honestly its something you both need to sit down together and really, i mean really talk about and see if it will be comfortable financially.Think about all the extra costs of home repairs, taxes to pay on property..etc. PLUS the extra costs needed just to buy and move. You definitely dont want to eliminate your savings just to buy a house.
Its hard to say if you should or shouldnt buy because I do not know your exact financial situation. What youve listed seems iffy...and would personally make me feel uncomfortable. I would personally try to eliminate as much cc debt as possible and get that second income coming in before looking into any further (but thats just me
)
Have you been house hunting or is this just somethng that fell on your lap? It sounds to me your post is already leaning toward not buying...
Thanks for the response! We have been casually looking around, setting a goal of buying next year spring/summer-ish. We went and saw this house and the seller's realtor said the sellers were VERY motivated to sell. I know one of their neighbor's, who said they are going through a divorce. So very motivated = more doable for us. If that makes sense.
I should have been a little more clear in the figures too... the mortgage is $300 over my target mortgage. It is $1300 over our rent, and that amount includes taxes, insurance, and PMI.
Buying a house freaks me out a little as it is, so if I sound hesitant that may be why.... :-)
Pull your Credit Scores and make sure they are accurate and if anything needs to be fixed --- and that you qualify for the best interest rates. Pay off the credit cards each month in full. Do not use more than 15% of the allowable limit as it will ding your FICO score. Establish a 6 month expenses emergency fund.
Keep your housing costs to no more than 25-28% of your TAKEHOME pay (includes mortgage+PMI+ insurance+taxes+utilities+HOA dues/fees).
Remember you will also need $ for downpayment, closing costs, moving costs, utility deposits, repair/renovation costs, decorating & furniture along with a ton of purchases you need with a house such as lawn mower, ladders, tools, etc.
Make sure you are funding your retirement.
I highly recommend reading Smart Couples Finish Rich by David Bach for a good plan on setting up your finances so they work with your values and goals as a couple.
Thanks! Yep we have all of this. The credit has been run, the approval is set, the only thing I am wondering about is the payment itself. I understand 30% of takehome, that's what I was referring to above, it's 30% of H's takehome pay only (b/c it's the only income until July).
Not to be a downer, but the economy isn't great. I don't see why you should immeidately jump into buying a house when you don't even have a job yet. What happens if your husband gets laid off or get a pay cut?
So, you don't get a job until July. Will you be able to get a job in the area? Perhaps you'd find that you would want to move to a different town.
You already planned on not getting a house until NEXT YEAR in the Fall? It definitely sounds like you guys are possibly getting too excited too soon. Honestly, last year when my H and I were looking we were tempted to buy a house before we were completely ready. Now that we're ready to buy a house, we're looking at a house that is 100% better than the house we loved last year. The market isn't improving anytime soon. I'd be surprised if the market improves drastically next year. You do not want to immediately put a huge burden on yourself. Be 100% sure that you guys can do this comfortably.
TTC since Feb 2012
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