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Buying a home right out of the gate?
Hi,
My fiance and I will be getting married in a year and a half and I really want to purchase a home. We will be 25 when we get married and I have been told that it might be hard for us to be approved for a mortgage because of our age. My fiance will get finishing his masters degree at the time we are getting married and is not planning on working FT, just PT, until he finishes his degree. I work FT and am going to school for my masters degree PT.
I don't have a lot of debt and I have a decent income. He has more debt than I do but its manageable. All of our debt is school loans, not credit card debt.
Would it be better for us to rent for a year and then purchase a home about the time we are looking to have kids or try to purchase a home now so we are settled when we are trying to have kids?
Thanks for your advice!
Re: Buying a home right out of the gate?
You should post this on Money Matters. The ladies there can give good advice too.
How much do you have saved in an emergency fund? How much do you have saved for a down payment? How much do you have saved for expenses that come with owning a home (lawn mower, extra supplies, etc.)?
It is illegal for a lender to give or deny you a loan based on the actual age of you or your spouse.
But they will look at things called your debt-to-income ratio. This the the comparison of how much you earn to how much debt you have. Also, lenders count student loans as viable debts EVEN IF they are in deffered status.
They will look at how long your credit history is - when was it first established? They will look at how much and what types of debts you have (credit cards, student loans, cars, etc.). They will look at your payment history - are you on time?
As a rule of thumb, it is advisable to have your housing payment each month be no more than 28-30% of your gross (pre-tax income).
Without knowing your actual numbers, it's tough to advise you either way. But, if you don't have any savings and your payment would be too high (beyond the 28-30%) then you are not ready to buy yet.
I bought a home with my now h when I was 22. Age isn't a issue. But credit score can be a challenge for most people at that age. Also a part time job needs to Be on the books for 2 or 3 years before that income counts.
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One additional thought -- are you sure you'll be living in this area after you both graduate from your master's programs, or might you move for a job opportunity?
Our buyer's agent advised us to only buy if we were committed to staying in the house for 7 years -- otherwise, we'd definitely lose money. H and I have actually moved around a couple of times for our jobs. Before we bought our house in this town, we rented a house for about two years -- until we were sure we were going to stay in this town for the long haul.
Finances aside, why do you want to buy a house now? Since you're just getting started in your careers, you may have great opportunities in other cities or even abroad.
Why tie yourself down to a house - that you are almost certain to lose money on if you have to sell within the first 5 years - when you both haven't even finished school? There's nothing wrong with renting - it allows for a lot more freedom.
This. I bought my own home when I was 23 and single, but I had been working in a great-paying job for 2 years.
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Thinking of doing cosmetic updates to a dated home? These were our costs.
And this.
You're very young - your whole life lies ahead of you. You want to be able to go where the opportunities lead you. We've moved 5 times in 9 years for work. ...And have accumulated homes we can't get rid of because the market's crap.
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Thinking of doing cosmetic updates to a dated home? These were our costs.
We bought a house in November and are getting married in May, I am a full time student with substantial student debt and FI makes decent money, we are both in our twenties.
It is doable....How we did it though, was that my name is not on the morgage for the first 5 years, after that we are allowed to add it, but we bought the house just under his name so that only his finances will be looked at, (also doing it this way we KNOW that he can carry the payments alone for the time I take to pay off my student loans) and it also saves me the first time buyer benefits if we decide to move within the next 5 years we can put the next place in my name. We don't plan on moving, since we love our house, the location and its close to FI's work which even when I finish school will pay better then anything I can get.
If you are in doubt rent. We were planning on renting but just started to check out the market last fall because people are more eager to sell in the fall and instrest rates are really low right now, and lo and behold we found a house we love AND can afford. So I wouldn't rule out looking around, but dont jump too early...(At this point I would suggest renting till at least a downtime in the market if possible...spring is when it picks up and theres more buyer competition, fall and winter theres usually better deals out there.)
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plus how much of a down payment you have, and financial reserves following closing.
My fiance and I just bought a house. We looked into renting and in our area it's actually cheaper or about the same cost to buy a house. In our specific situation, our monthly payment is going to be $300 less than renting. We took into account that owning a home brings a lot of other expenses that renting does not but we decided we'd rather make an investment in a house that we own and can resell if we want than to rent and never have an opportunity to get at least some of our money back out of it. We had plenty of other reasons why we decided to buy over rent and I could go on explaining our decision, but it's all a matter of opinion and every person has a different situation where other choices may make more sense.
As for it being difficult to be approved for a mortgage because of age, I don't see that being a problem. My FI and I are both 20 and we had no problems being pre-approved or getting a loan from the bank (and no, we didn't have co-signers or money gifted to us).
All they care about is 2 years employment in the same field - However, school counts towards the 2 years so if students are finance majors and get a finance job the day they graduate and want to buy right away that's fine.
PT maybe an issue. DH was part time and a student when we bought our current place and it was a pain even though he had an offer to become full time from the same job upon graduation (which would be a few months after closing) and we had the money to pay until then. It ended up working out but it was not an easy process because of the part time salary being reflected.