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Well first of all I think you have to have a 680 credit score and 3.5% down to qualify for an FHA loan these days. Maybe you can make 3.5% your goal?
Those calculators are good, but you really need to know what you are even remotely going to be qualified for. Its hard because the standards are changing ALL the time.
Also, it would be best if you guys figured out how much in your budget you can afford to spend on housing. Remember there are repairs, insurance, larger electric bills, etc. You may actually qualify for more than this, but if you are already trying to pay off debt, you don't want to go into more house than you can afford.
My husband and I started looking at houses in February (and were not ready) and my lease ended in July. We ended up moving in with his parents for a bit (6 months) and bought our house in August.
Its safe to look at houses before you are ready but you want to make sure you know what you can/can't afford. Kind of like dress buying, no sense in trying on a dress you can't afford. You will probably fall in love with it and then have to give it up.
I agree with the others and say only look for a house that you can afford. And if you can't afford it, don't be afraid to wait. There will always be a house out there. This past spring my DH and I found a house we LOVED and were so close to making an offer, but decided the timing wasn't right for us. We still wanted to have more money on hand for closing costs, more of a emergency fund set up, etc. And you know what, we've found a house that we love even more...now...hopefully it doesn't sell in the next few months. lol
Also keep in mind that as you clean up your credit and get a better credit score (and your FI builds his) that you will get a better interest rate and therefore might be able to afford more house.
I think the bottom line is, even though you are ready to be a home owner, you might not necessarily be financially ready. And there's no sense in buying a house when you can't afford it. Unlike a lease, as a homeowner, you are on the hook for all the repairs, maintence costs, etc. And it would be horrible to get into a house only to lose it because you got in over your head too fast.
My advice is to keep on looking....only if you can have the self control to not buy until you are financially ready.
I don't mean to dash your hopes, but if it is difficult for your to save $1,000, then home-ownership may be out of your reach right now. Many common home repairs and maintenance cost $1,000 or more (like replacing a broken refrigerator, repairing a damaged roof, etc). If one of these things went wrong you would need to have enough money to pay for it right away (you can't live with a leaking roof or no refrigerator for very long). It's ok to rent, and you can move to a different apartment that suits your needs better. We've been renting for 5 years so that we can live well below our means.
@snmcdowell - We've just been hit with some VERY unexpected expenses over the past few months. My big problem is I can't say "no" to family. Plus, DH has been having some stomach problems, and his insurance sucks, so we've been paying quite a bit out of pocket for doctors visits, lab tests, etc. Not that ANYTHING they've done or suggested has helped AT ALL. But that's another vent for another post, lol.
I'm just feeling like in order for us to save "enough" for a house would take us 10 years or more. We are pretty good about saving money (I mean we paid for our entire wedding ourselves, and we only had about 10 months to save) but it's just been frustrating lately. DH is not going to build his credit - he hates borrowing money, credit cards, banks, etc. I don't blame him. You can get a mortgage without credit, it's just a matter of finding someone who will do manual underwriting.
Add that to the fact that we feel like it would be irresponsible of us to have kids before we buy a house, and I feel like an emotional wreck. Somedays I think it's a bigger deal to buy a house than have a baby! Sheesh!
I agree with snmcdowell. The amount you spend in house repairs can be HUGE. A new HVAC for us will be $5,000 (and it could go anyday in our townhouse)!!! Appliances, roof, etc...all of these are super expensive!
I don't quite get what you mean about your husband not wanting to develop credit? Did somebody advise him about this? I'm sorry, just never heard of this. I think it's wise (if you are both going to buy a house and want to be on the mortgage and have a good interest rate) that you both need to have good credit scores. A good way to start for him would be to use a credit card and pay it off monthly. I don't know too much about mortgages and credit, but I don't think not having any credit or having poor credit will help obtain a decent or good mortgage. But I could be wrong...I don't know too much. :)
Could you get a part-time job to help save? I'm thinking of doing that..working 2 nights a week waitressing to save up some extra cash. (We plan to sell our townhouse and buy a single family home next year and need to save an additional $15000). Would you be open to something like that?
Lastly, having a baby without a house is not irresponsible. Just know that once you do have the baby, it could be harder to save for a house. But I definately wouldn't call it irresponsible. Many people I know got married and had a baby before buying a house! :)
I know it's been a couple of rough months, but those happen once you own a house too. I would work on saving as much as you can now, but put off looking for a house for a bit. I've read several articles that point to medical expenses as a large reason people end up loosing their home.
It's far more responsible to bite off something you can chew--like a baby in a two bedroom apartment--than a house that you can't afford to repair if anything goes wrong.
Have you guys looked into the Dave Ramsey money/budget tool? Its a great program to help get out of debt but still takes into account all the "what ifs" life can bring.
"But then I think about those people who bought homes with $0 down and make less than DH and I do. How the heck did they do it???"
That's part of the reason for the housing crises we've been weathering in the US. The day's of NINJA loans (No income, No Job/assets) are pretty much over because of it.
The best for now would be to save save save. Work on your credit (I can sympathize, my credit took a hit this year due to a medical bill they didn't notify me of) and FI's perfect credit saved us. Get your FI to establish credit, and save save save. It may take a while, but keep you eye on the prize! Who knows, maybe in the next year or two you'll find higher paying jobs/get promotions/etc...
@caszos - I've been using Dame Ramsey's techniques, but I can't be as "gazelle-like" as he preaches. Unfortunately for me, NONE of my debt is really "mine" - it's all things I signed for when I was young and dumb for family members. Before I even really understood what credit was. Yeah, Mom never taught me that one. :(
@KLP2010 - Our problem is we can do one or the other. We can either save for a house OR pay off debt, but there just isn't enough money to do both. And my debt will never be entirely paid off, thank you very much student loans.
I'm just feeling really defeated about the whole situation, and we haven't even started yet!!
I think you'll end up with more regrets rushing into home ownership than continuing to rent and save up money. So many things can come up unexpectedly with home ownership that might put a lot of unnecessary stress on you, especially in your first year of marriage. There is nothing wrong with waiting, if that is what makes most sense for your family. I know it's hard, but it will happen someday. And you want to feel 100% great about your choice, when you do make it.
@Miss Snowflake: FI and I are pretty much in the same shape as you. I wish I could offer some additional helpful advie but I can't. I just thought you'd take some comfort in the fact that other people out there are in your shoes as well for many of the same reasons (not being able to say no to family, health issues, etc) Just keep saving and someday you will get there. I know it's tough and it takes a long time, but don't give up!
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I want a house. Really, really, REALLY want a house.
But I'm scared. Scared to talk to a mortgage broker. Scared to talk to a bank. Scared to call a realtor. Scared to even start looking at houses. We have about $1k saved so far for a downpayment, and that was pretty tough to do. My credit is pretty tarnished (I should have never helped out certain family members financially) and DH doesn't even have credit. We both work steady, full time jobs, but combined we only make about $50k a year.
It's just so disheartening, when you know you are ready to be a homeowner mentally and emotionally, but you aren't sure if you will ever be able to. I feel like if I were to go into a bank or mortgage company right now and try to get a loan, they would just laugh in my face! "You have bad credit, you don't make enough money, and you think you can buy a home? HAHAHA!!"
But then I think about those people who bought homes with $0 down and make less than DH and I do. How the heck did they do it??? I mean, we want to have at least a little bit down, but I know we will never have anything close to 20%. Plus, we don't want to buy a home we can't comfortably afford.
Did any of you have fears like this? DH and I really want to start looking at homes this fall, because our lease is up next April and I just don't know if I can take another year of renting and living in our tiny little apartment. Is it okay to start looking at homes you think you can afford before you get pre-approved? I've played with a few calculators online, just to get an idea. But I don't want to be looking at types/styles of houses we will never be able to afford.
How did you bees do it? I think I just need a little advice and some house love. :(