If you can get a conventional loan at a low interest rate than that's good. But you should check what the rate is for you to get an FHA loan which has a lower interest rate typically. Yes, you do have to pay PMI but if the value of your house goes up / your principal payments get you to 20% equity there's no more PMI. It might not be right for you but worth looking into. Also, you should look at what the impact on your taxes will be - you should get a but more back.
It sounds like you have a cheap apartment now. Just try and save up towards the 20% and wait for the housing market to take a dive. Patience can be a virtue with housing. You also want to focus on houses that will be insulated from a decline in the housing market. Its not just about what you can afford today but also about whether you can sell it down the road and for how much. Does the neighborhood you're moving into have good fundamentals? Good schools, low crime, good proximity and access to major areas of employment and entertainment, etc.. Even if you can afford that house, make sure it will grow in value. Housing can be a great investment if you pick wisely.
Its good location right next a park and schools my gfs kids go too. The only house on the street with quite a bit of space between neighbors. I love the house but then again i love being able to be flexible. Something can always happen, i dont want an emergency pop up then im low on funds because of the house. This house will make the whole family very happy. Idk if ill find another house that i love like this one is perfect for us. I also dont want to ruin a great realtionship because of stress from trying to afford a home. They want to know today...if i want it, its mine. If not, then renovation begins and it will be listed at 230k
Your rent is low enough that I'd recommend staying in your apartment until you can save up a bigger down payment. With your income, I wouldn't consider a house until your rent approaches your monthly PITI (mortgage + property taxes and insurance) or you can afford it with the conventional metrics (monthly PITI is 25-30% of your gross income).
Don't make decisions under stress or being rushed. Look, you might pass on this and then 5 years later everything goes well job wise and you look back and think - why didn't I buy it? But what you don't know if that things will go well. How much risk are you willing to stomach? How secure is your income and job? Do you have life insurance in case something happens to you such that your family can continue to make mortgage payments? (I say this without knowing your age). As yourself this - is this really the only home? What do you think the inventory of homes will be in the next few years? Are they building a lot or is it pretty high demand compared to construction?
Man, I stressed myself out about buying a home where my monthly costs would be about 20% of after tax income. Your situation would give me a heart attack.
If you do not plan on living in the house for five years, you might want to pass. BTW the interest rate seems high. Google says the going rates are
My realtor thinks the house would go for 238k-240k. She believes this house woulf be a steal on the market. Houses here last about 2 days on the market. Every house i looked at sold the very next day.
but thats how the market is right now. Even here in DFW its like that. As several others have pointed out the market is high right now so yeah they want you to move fast. My rule is dont buy a home that either you or your spouse can not afford to pay with 1 income. And that 1 income should include a buffer for increase in taxes, hoa, being able to buy a car if yours break down, and play money. Dont go to a risk in a high market
My advice is not what you want to hear. Over the next 12 months, fix your credit, pay down your debt, be on time with your payments AND save money to increase your house down payment. I suggest saving the difference between your current rent and the projected house payment. If you miss one or more months with your saving goal, be glad you did not sign the mortgage documents. When you move into your new house, you will need a bunch of stuff you do not currently own. Fridge, washer, dryer, lawn mower, weed whacker, drapes (which you are not going to believe how they cost), furniture to fill the house, etc. For a $200K house, i would have $20K banked for the down payment, $3K for closing costs and $5K for fridge etc.
The important thing to look at with rates is understanding the amortization table and the long-term cost of ownership. If you are willing to be in this home for 20-30 years and will continue to pay the mortgage it is worth it. But if you are looking at this as a starter home and will sell it in 7-10 years you fall into a trap in which the effective interest rate triples as you're paying mainly interest the first decade. Net of buying and sales costs you will lose money. Better to rent and take the $400-$500 differential and invest in a savings account with a Vanguard Total Market/S&P 500 component for growth. That $500 over the next 7 years could compound to $70-$80K+ thousand in savings while you rent. I would only buy a home if its a home I planned on staying in for 20+ years. Otherwise the scam of home ownership is that you're just paying excess interest and costs and fees to bankers and title companies and real estate agents and local municipals as taxes (hopefully you've included that) are very high for property in Texas.
Yeah, im leaning on not buying it. I had 31k saved up and dont have to much debt. Just when i was younger i missed a lot of payments. Havent been late in years, my credit was like a 520 awhile back. My family is ready for a home and so am i, so idk if i should continue the search or stay longer in the apartment.
Look at it this way: passing up on this house and regretting it down the road would be a small mistake while buying this house now and then finding out that you can't afford it would be a HUGE mistake. I worked in property management for a few years and the management companies I worked for typically required you to bring in 3 to 3.5 times your monthly rent in income. Looking at your net figures, it looks like your gross income is probably around 3 times the size of your mortgage payments but given all the extra maintenance costs associated with home ownership (as well as other unforeseen costs like say property tax increases) as opposed to renting an apartment, waiting and saving up more money for a down payment or finding a cheaper house would be the better route to go IMO.
I know this is difficult because we are so conditioned to wanting to live in a house, but an apartment can be a home. They are money pits and you can lose so much financial freedom by tying yourself down to one when you can't really afford it. As in most things in life, I think a very important piece of advice is "If you aren't sure you should, don't." I think you know it would be a mistake but you are probably facing pressure from your family and your own desire to "be a man." Just shut that **** down. Don't let those things lead you to making a huge mistake that handicaps you and your family. They'll forgive you for not getting the house right now, but the financial strains of a house you CAN'T afford can destroy a marriage.
1. Interest rates are going up. If Trump goes through with this trade war, they can go up a lot. So, waiting to fix your credit might be a bad play. Locking in 5% for 30 years may look like genius 12 months from now. 2. There will always be another perfect house. The worst thing you can do is fall in love with a house. People in love don't make rational decisions. Fall in love with whatever house you end up with in the end. 3. You mention a girlfriend and her kids, presumably one in the same with what you're calling your family. Since you're not married (and really even if you were) you want to consider how definite is this relationship. The house has a lot of utility for you when you have a family, and you have more means for paying for it too. But, if you break up, will the house have been a mistake? Is she going to be on the deed? If she is, things will get messy if the relationship breaks. If she isn't, why should she contribute her own treasure to your ownership? 4. The economic pressure of paying your mortgage is a good omnipresent pressure to make you do what you have to do to get raises, to get promotions, to find better jobs. Unless you think your career has already plateaued, the rules about what a safe investment is might constitute a long-term solution to a short-term problem. 5. What's your safety net? I've been able to take some pretty beneficial financial gambles in my life (buying a house, going back to school, starting a company) because I knew if I failed my parents would have my back. If you don't have a back-stop like I did, then you should be more risk averse. If you know you have people to run to when things go sour, you can be more aggressive. Don't abuse their support, but if something looks like a smart bet and you won't be literally in the street if you're wrong, you should probably go for it. 6. Related to #2, the choice is not between this $200k house and nothing. It's between this $200k house and potentially some other house that's cheaper. Don't fall in love with any house. And don't be impatient. Make the smart play considering the needs of your family, your resources, and your prospects. You can buy the $150k house, spend the next 3-5 years fixing your credit, increasing your income, and building your equity. Then, sell that house and buy a better house on firmer footing.
I want to recommend this advice to the OP. Also, I strongly suspect the housing market will slip a little over 12 months. The only negative to waiting 12 months and fixing your credit is that interest rates might be a bit higher. But if the next downturn is more substantial, they could even be a little lower. Depends on exactly when Yoda says, "begun this trade war has."
Your realtor is not there to look out for your interest. They are there to sell you a house so they can get commission. They don't care what house you buy, as long as you buy one. I really really doubt you're going to have 40k right off the bat. It sounds like your realtor is trying to get you to buy. If the house only stays on the market for 2 days, its good as gone. Additionally, no house is ever sold in two days unless its a cash in hand offer. If the market is that hot, the sellers are going to take a good week to take the best offers before making a decision. Honestly it sounds like you're way in over your head.
