Am I over my head? -Buying a home?

Discussion in 'Teacher Time Out' started by VANewbie, Feb 28, 2011.

  1. VANewbie

    VANewbie Devotee

    Joined:
    Apr 13, 2010
    Messages:
    1,141
    Likes Received:
    0

    Feb 28, 2011

    I am a 2nd year teacher and still have tons of loans to pay off. I am single with no kids but I am considering buying my first townhouse.
    I am in my upper 20s and just think its something I need to start thinking about.

    Here is the negative side-
    I do not have a lot of money saved up(so no down payment)
    and I do have a lot left to pay in student loans.

    Is this a bad idea? Do people do this in my situation or can they do this in my situation?

    Any advice for me?
    I know the obvious answer is I need to save up money and wait but can it be done without doing that? I do have family members who maybe able to help me with a downpayment if I needed it.
     
  2.  
  3. donziejo

    donziejo Devotee

    Joined:
    Dec 30, 2009
    Messages:
    1,091
    Likes Received:
    1

    Feb 28, 2011

    Google Suze Orman, she has a formula and some excellent ideas on this subject. Good Luck.
     
  4. Ms. I

    Ms. I Maven

    Joined:
    May 13, 2004
    Messages:
    5,882
    Likes Received:
    159

    Feb 28, 2011

    First of all congrats on making this big decision. Now from watching Suze Orman's show a lot, she'd probably say, "DENIED" if you asked if you could afford it, but I personally wish you all the best. I wish I was a homeowner! Maybe with a bit more saving up, not now, but very soon, you WILL! :)
     
  5. czacza

    czacza Multitudinous

    Joined:
    Sep 30, 2001
    Messages:
    24,959
    Likes Received:
    2,116

    Feb 28, 2011

    There's a lot of good bargains on the market. Not sure if the first time home buyer tax credit is still available, but look into that. Dh and I bought our first home when we were in our 20s YEARS ago and the interest rates were MUCH higher than they are now...it's worth having your numbers run to see what kind of mortgage you could qualify for...
     
  6. INteacher

    INteacher Aficionado

    Joined:
    Aug 3, 2007
    Messages:
    3,765
    Likes Received:
    1

    Feb 28, 2011

    And you should think about more than just a mortgage payment when considering if you are ready for home ownership. Home repairs, maintance, general up keep, buying things for general upkeep like lawn mowers, homeowner association fees, and the list goes on. I think these were the things that surprised my husband and I when we bought our first home.
     
  7. Caesar753

    Caesar753 Multitudinous

    Joined:
    Jun 10, 2007
    Messages:
    14,606
    Likes Received:
    2,713

    Feb 28, 2011

    I don't believe the first-time homebuyer tax credit is still available, but there might be other incentives for first-timers. I know that my school district offers an assistance program which is basically that they'll give you a loan for a portion of your down payment and a couple hundred dollars off your mortgage payment for the first year or two. You have to start paying it back after a couple of years, but the rates are good and it's a good option if you don't have money saved for a down payment.

    I don't think your student loans should be an issue. Most people have them nowadays. As long as you can afford to pay on your student loans and your mortgage, I think it shouldn't be a problem.

    You're going to need to have a lot of cash available to purchase a home. This was something that my husband and I were very confused about. Every person along the way (Realtor, mortgage guy, etc.) gave us different amounts that we'd need at closing. We eventually figured out that we'd need ALL those amounts, added together. These are the things you'll need to pay for before or when you close on the house--you can't add them to the mortgage or anything like that.

    You will need an earnest deposit, which I think is good faith money that says that you intend to follow through on your offer. Usually this money is deducted from the down payment later on. I think your earnest deposit will be around 1-2% of the purchase price.

    You need money to pay the closing costs on the house, although that is something you can ask the sellers to do. The sellers paid our closing costs. This will be at least 3% of the price of the house.

    You might need money for the loan itself, like a month or two of mortgage payments. Honestly this part still confuses me, but from what I remember, our mortgage guy said something about how mortgage payments are actually a month behind, so you need to pay a little up front to give yourself a cushion. Or something like that. In any case, this was a bit of money that wasn't officially part of our "closing costs" and therefore not covered by the seller, nor was it part of our down payment. It was extra, on top of both those things.

    And finally, you'll need a down payment. Most loans these days require a down payment of some sort. Even an FHA loan requires 3 or 3.5%, I think. You'll need several thousand dollars just for that.

    I think it's probably a good idea to have at least 7-10% of the purchase price of the house available in cash, ideally more for a larger down payment.

    And finally you're going to want to think carefully about how much money you want to spend on a house payment each month. It shouldn't be more than 30% of your monthly income. That will leave room for things like repairs, larger utility bills, association dues, etc.

    I hope this helps and wasn't too confusing!
     
  8. Blue

    Blue Aficionado

    Joined:
    Nov 16, 2005
    Messages:
    3,591
    Likes Received:
    3

    Feb 28, 2011

    I think anyone who buys a house goes through some of the same thought processes. I would suggest talking with a loan officer to see if you are in a position to borrow money.
     
  9. YoungTeacherGuy

    YoungTeacherGuy Phenom

    Joined:
    Oct 21, 2007
    Messages:
    4,463
    Likes Received:
    1,491

    Feb 28, 2011

    Do you qualify for an FHA loan?

    I was 27 when I bought my first home. I qualified for an FHA loan and only put down 3% of the purchase price. Also, I was able to get the seller to pay all closing costs.

    My home was brand new; thus, it didn't need any repairs or upgrades.

    Best wishes and keep us posted!!!
     
  10. mmswm

    mmswm Moderator

    Joined:
    Nov 5, 2007
    Messages:
    5,621
    Likes Received:
    6

    Feb 28, 2011

    Caesar's response was great!

    I second the idea to sit down with a mortgage rep. I'm not a home buying newbie, but I learned an awful lot this time around because my mortgage rep is really a teacher at heart :).
     
  11. Ima Teacher

    Ima Teacher Maven

    Joined:
    Oct 25, 2005
    Messages:
    5,955
    Likes Received:
    1,449

    Feb 28, 2011

    Look around and see what you can find. It never hurts to ask questions and look.

    Personally, I would not have considered it when I was in my second year of teaching. I was 23/24 at the time, and I didn't have much in terms of savings. I also wasn't making all that much money--I qualified as low-income on my taxes--and I was on a yearly contract. At the time all non-tenured teachers were pink-slipped every year.

    I did buy my house when I was single, though. I was 29. I had a job I liked and had tenure. I was finished with my masters, so I was making more money. I also didn't have a car payment or any other debt. I paid a little over 30% down. I also wanted to make sure that I could get a good fixed interest rate.
     
  12. mrachelle87

    mrachelle87 Fanatic

    Joined:
    Aug 30, 2006
    Messages:
    2,815
    Likes Received:
    53

    Feb 28, 2011

    In our state, second and third year teachers can be let go without cause. My husband and I made a bid on a house. It was accepted. We put earnest money down. Then I found out I was being let go. Luckily for us the loan officer was a friend and she denied the loan so we could get our earnest money back. So, while I know you are excited...if you were one of my teachers in my district, I would suggest waiting another year or so.

    But only you know what is best for you! We all just wish you best of luck.
     
  13. VANewbie

    VANewbie Devotee

    Joined:
    Apr 13, 2010
    Messages:
    1,141
    Likes Received:
    0

    Mar 1, 2011

    Thanks everyone. You all bring up good points. Its not something I am ready for but it seems like something I need to really think about.

    I will take all of your advice.
     
  14. deedee

    deedee Connoisseur

    Joined:
    Jan 18, 2005
    Messages:
    1,634
    Likes Received:
    0

    Mar 1, 2011

    Look at forclousers! I got my house for a STEAL!!

    I am 24 and own my a home and LOVE it!! I didnt have to put anything down on the house and my monthy payments are less than what I was paying in rent!! It comes with many more hidden costs but overall I am so happy I made the plunge and bought instead of renting!
     
  15. Danny'sNanny

    Danny'sNanny Connoisseur

    Joined:
    May 13, 2005
    Messages:
    1,912
    Likes Received:
    14

    Mar 1, 2011

    We're looking to buy this summer.

    There are so many foreclosures, or people just trying to get out from their homes, that prices are CHEAP!

    DH has worked construction, so we can get something ugly and fix it up as we can.

    Our mortgage on a house will be less than rent on our tiny, icky apartment.

    BUT- the mortgage broker gave us a number that is much, much, much higher than we're comfortable with. Be sure you crunch the numbers for yourself, and don't push yourself so far on payments that you're trapped each month. I want to be able to stop and get a coffee in the morning, or go out to dinner once in a while, without panicking about the house payment!
     
  16. Youngteacher226

    Youngteacher226 Enthusiast

    Joined:
    Jan 16, 2006
    Messages:
    2,048
    Likes Received:
    0

    Mar 1, 2011

    Don't be afraid to jump out there and look into it! I bought my own home when I was 23 and I wasn't making much money (probably around $27,000 a year working for Head Start). I qualified for a home loan and I agree that at times your mortgage can end up being less than what you pay for rent! That is exactly what happened to me. Also, I got a fixed interest rate, which was low, and I got my home owners insurance and taxes rolled into my monthly mortgage payment, so I don't have to come up with lump sums every year. That was in 2001, now I'm ready to buy my 2nd home soon. I'm so excited!
    Hope it works out, good luck!
     

Share This Page

Members Online Now

  1. Jill Bond
Total: 256 (members: 1, guests: 236, robots: 19)
test