(Closed) Want to buy a house but not much saved. Advice please!

posted 3 years ago in Home
Post # 16
Member
63 posts
Worker bee
  • Wedding: April 2018

If you can save enough to make a 20% downpayment, I highly recommend it. Otherwise you’ll have to pay for mortgage insurance. Also, keep in mind when budgeting  that utilities for a house are quite a bit more than for an apartment.

Post # 17
Member
7906 posts
Bumble Beekeeper

mrsdrake :  track all of your spending for the next month or two (ALL of it – even that 75 cents at a vending machine) and then see where you stand. You might be right that you can only save a few thousand a year, but if you don’t budget now I’d guess you’ll find lots of small money leaks you can plug. This will be something to always check in on because old habits are hard to break and it’s easy to slip back into overspending. Also if you can eliminate any debt (student or car loans) that will help you qualify for a larger mortgage which can be key in hot HCOL markets. If possible move into a cheaper rental while you save for a year. When Darling Husband and I got our first apartment together it was a major dump, but it was cheap by Boston standards and now we own an awesome house in a highly desirable suburb. That crap hole apartment with the slumlord made our lovely home possible lol. 

Post # 19
Member
256 posts
Helper bee
  • Wedding: June 2014

I don’t know…I think I disagree with most saying that you shouldn’t do it. My husband and I bought a condo with less than 20% down. I was able to save several hundred per month compared to what my rent was in comparison. Now the property has appreciated about 20% on top of what we purchased for and are planning on sellng to buy a house. You should come up with a plan to build an emergency fund. If you can purchase something (and figure in condo fee) below your current rent and are able to save money each month it may be a good investment. There are a lot of factors to consider. 

Post # 21
Member
652 posts
Busy bee

mrsdrake :  Unless you live in a magical place in CA with really cheap housing, principal and interest on a $200k loan would about $1000/mo, that doesn’t include taxes, homeowners insurance, and HOA or condo dues. You would also owe PMI if you don’t have a 20% down payment. 

Your title insurance/fees and what you’re required to put in escrow for taxes and insurance exceeds the few thousand you have saved.  

Unless your family is prepared to give you a pretty substantial gift for a downpayment, realistically you’ve got a lot of work saving left to do.  Moving costs for us were around $2000 and you will also need an emergency fund so factor things like that into your savings goal.  You will be amazed how quickly you can save up funds to purchase a home with little changes to your budget.  Good luck bee! 

Post # 22
Member
2041 posts
Buzzing bee
  • Wedding: August 2015

mrsdrake :  Just to put things in perspective for you, we bought our home in January 2015. Since then we have had to replace the furnace, water heater, roof on the house and detached garage, the fence, and washer/dryer. Not to mention all the other little things that arise when you own. The furnace and roof went at the same time. The roof cost $15,000 and the furnace/water heater/AC unit cost $12,000. That was a $27,000 month. Those emergencies can and do happen, and if you’re not financially ready to handle them, you’re going to be digging yourself into a very deep hole quickly.

I highly recommend saving up 20% down payment otherwise you’re going to be much worse off in the long-run.

Post # 23
Member
63 posts
Worker bee
  • Wedding: April 2018

If you think condos don’t come with extensive repairs like houses do, think again on that as well. Our HOA recently decided to reface pur building. It will take two years of construction and each unit owner was assessed between $7-12K

Post # 24
Member
9130 posts
Buzzing Beekeeper
  • Wedding: August 2013 - Rocky Mountains USA

When you’re making these mortgage calculations, are you using the ones that factor in taxes and insurance, or only the contribution to the principal/interest? The other things add about a third. So if the mortgage cost is 1000, it’s more like 1500 with taxes and insurance. Also if you don’t have 20%+ down, you need to pay Private Mortgage Insurance (PMI) on top of your regular interest rate, which adds up  

I recommend you google around about the home buying process. I didn’t know anything when I started wanting to buy my first home and became an expert in a couple weeks. That will be far more effective than posting on a wedding website 🙂

Post # 25
Member
6169 posts
Bee Keeper
  • Wedding: September 2016

I was in the same position as you. I live in CA. Our rent kept going up and it felt like our savings weren’t going up as quickly as home prices! We stayed in an apartment that was too small and increasingly more uncomfortable to be able to afford to set money aside each month. I made a really strict budget and cut out any and everything possible to be able to put more in savings each month. I also expanded our search beyond where I was originally looking to an area that was a bit more affordable (that helped a lot).

Also, what an HOA covers varies from place to place so look at what might be covered if you buy a condo. A PP mentioned having to replace their roof- my HOA covers my roof and all other external areas so while you do need to be prepared for sudden emergencies, you should be clear on what those might entail.

It took 2 years from when I seriously started saving and searching to when I put in an offer and bought a place.

Post # 26
Member
2680 posts
Sugar bee
  • Wedding: September 2014

You should talk to a mortgage broker to get a more realistic perspective. I’m not saying it’s impossible, but I can’t think of many places in CA where you could put almost nothing down and end up with housing cost of $1k/month. 

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