Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Is our timeline too short?
Hello all! I've been lurking for a while and reading all of your great advice. Now I have a question of my own. DH and I are looking to buy a house early next year, like staring looking in January.
Is starting in January and closing on a house by April a bad timeline? We should know the status of DH's job contract by the end of the month, if they don't push it out again. And we don't want to start looking until we know if his job is secure or not. TIA
Re: Is our timeline too short?
That isn't too short as long as you are not planning on buying a short sale or some foreclosures as they can take an extremely long time. That is not to say all short sales and foreclosures take forever, but it is something to keep in mind. Foreclosures will usually be more toward the normal timeline vs a short sale.. For a normal closing it will take 30-45 days start to finish. You are giving yourself plenty of time. We did it in a much short time period and it was still no biggie.
You might want to talk with a mortgage lender as to their requirements for job history. Some want time in current job at a certain period - or at least time in current filed at a specific level or proof of employment letter if it was to be future employment.
Check both of your credit scores and fix any negatives. Save for downpayment, inspection, closing costs, moving costs, start up costs, repair/renovation costs, decorating costs, yard stuff etc. -- AND an emergency fund of 6 months expenses to have in place prior to buying.
Will you finance on DH's income alone or will you include your's as well? Allow for any future child care expenses should you plan to have a family and continue working. Allow for being a SAHM should that be your plan.
Rule of thumb: Housing costs (mortgage + PMI + insurance + taxes + utilities) = 25-28% of your TAKEHOME pay. 30-35% in a HCOL area. More makes most people house poor. Allow for less if you have alot of other debt (car payments, credit card debt, student loans). You want your debt to income ratio to be low.
We've both been at our jobs for over a year. We've both checked our credit scores and they're correct. We've gotten most of our down payment saved, we're just a few thousand short of what we want. But we already have more than 20% of the house values we're looking at. We plan on financing on both salaries. But we're keeping the mortage payment to where we can afford it on one salary.
We're trying to get a mortage payment to around what our rent payment is currently. I know this could be a trap, but we were paying rent and utilities on two apartments before we were married and know we can afford more houseing costs than we have planned. And that should cover the taxes and insurance. We have no other debt, so our debt-to-income ration is very low.
Our lender required 2 years of employment history. I saw your post above that said you've both worked for more than one year but I just wondered about previous to that. I had only been at my current job 1 yr when we bought and had to provide my previous employers info. If you were both in school, I'm not sure how that would work so you might want to ask a lender.
If you've been looking at homes online and have a good idea about location, price and what to expect in your price range the timeline sounds fine. Also be realistic about what you can and can not easily change about a house. DH is super super handy but on all those home shows people walk in and are like "we can take out that wall" well that is hard to do and gets expensive.
We did have jobs before the ones we had now. We just both got laid off but found new jobs quickly. And we both now we're not too handy. Just replacing wallpaper and looking at how hard it would be to replace flooring.
I've been looking at houses for months on-line. We've even taken walks to the neighborhood where the houses are. They are about 1.5 miles from where our apartment is now.
Your timeline *can* work, as long as you're not buying a foreclosure or short sale. If you are under contract by the middle of February, you should be able to close in April.
H and I started looking in Sept, went under contract in Sept and closed in December - we were supposed to close in November.
Be realistic, expect delays and have a backup plan in case you don't close until May or June.
Talk to a lender and start getting your financial ducks in a row so that when you find a house, you are ready to move (and by that I mean move forward with the loan, etc.). You have a "do-able" timeline, but if you are not prepared, then snags are more likely to happen.
I probably would avoid short sales (since their timelines are very unpredictable). We purhcased, and know several people who also purchased, foreclosures and our timelines were the same as a traditional sale (we closed in less than 30 days). That being said, I would have a backup plan if you don't find a house you love or things don't work out as you hoped (a low appraisal, delays from you lender, delays from the seller, etc.).
Good luck!
My Valentine Bookends (2~13~13, 2~15~09)
As long as your financial ducks are in a row and you are ready to go from that end ... if the home is new construction, empty, or the family is motivated to move quickly then there shouldn't be any reason why you can't have this done in 3 months.
A speedy close period can also be an advantage to you during negotiations. The quicker people can be out of their home = them not having to pay the mortgage etc on that home and the quicker they can move on to their next step.
Lighthouse State Beach, Santa Cruz.
Good luck!!!