House buying conondrum
![[Post New]](/jforum/templates/default/images/icon_minipost_new.gif){kind=icon}
Anonymous
Op have you calculated how much your new house payment will be all in. How does it compare to your rent payment? What are you able to save now and what will you be able to save after you buy? Also, what the potential for your salary increasing? |
Anonymous
| i think given your situation, it wouldn't be wise to buy a higher priced home....So either save up some more to pay your debts or aim for a lower priced home. It's tough but we are on the same boat. |
Anonymous
|
I agree with the rest. Your finances are stretched pretty tight right now. In the next few years you should try to:
1) Pay off the car loan completely 2) Pay down as much law school debt as you can 3) Hopefully your salary will increase. From the bank's perspective they are looking at your debt as: law school loan + car loan + credit card debt + potential new mortgage debt + property taxes + home owners insurance. They then compare this to your income. Even if you pay off your CCs each month, that will still show up as debt when they check your credit. You could consider writing checks, or using a debit card only for the few months before you re-apply for a loan in the future. |
Anonymous
Wow, real intelligent. OP, pay off the car to change your debt amount. Save that money and pay down the school loan. As a lawyer, your income should increase over time and you will find another house you love. Now just isn't the best time to make the purchase. |
Anonymous
Okay, I'll jump on the bandwagon, but hopefully in a more polite way. OP, the key here is that you cannot take on that much debt. Something, somewhere has to give. In general, banks and lending companies will not grant you new loans that will require payments to exceed approximately 33% of your income (credit cards will lend with a higher DTI ratio, but mortgages will be lower, the actual target numbers vary). So, in order to buy a house under the conditions you want, you will need to either decrease your existing loans or increase your income. Some options: - pay down the car loan, but note that if you do so, you decrease the amount that you will have to borrow (since you'll have less cash in hand) which will increase the lending interest rate, which will increase the payment, and will decrease the total amount that the lender will be willing to lend you. - save a lot more - you can change your living habits so that you cut back your food (eating out, get generic brands instead of name brands, cut back on more expensive items like meats, Starbucks) and luxuries (cell phone, cable, gym membership, wine) so that you can either save more or pay down more debt. Live bare bones, student style for a year and make your income work on the savings and debt - decrease monthly expenses (move to a cheaper rental, adjust your thermostat to colder in the winter and warmer in the summer, make more use of energy efficiency, CFL or LED light bulbs, cut back on big appliance use, trade in the expensive car for a car with lower monthly payments and lower loan amount). Apply the savings to debt - make more use of cost saving tools. If you have a CC that has a cash back program, but things on the card and pay off completely monthly. You will not accrue interest, but you'll get the cash back savings. By doing this, I earn about $600 a year on my Discover. Coupon for groceries - spend the time collecting and using grocery coupons on items you need to buy. My office mate does this and saves about $50-60 per month. Shop sales - if an item you use regularly goes on sale, but multiples at the sale price and store so that you aren't buying these items at the full price. Get gas at the gas station that has a discount on Thursdays. |
Anonymous
| Op here, thanks to everyone who answered my question so graciously and without snark. I do need to save more. I was simply putting the cart before the horse. I spoke to the lender, the student loans are killing me. So I'm going to place my focus there for a little while. The American Dream will have to wait. |
Anonymous
| I don't know if you can even qualify for the type of loan you are seeking, but I would caution you against taking out such a large mortgage. There are a lot of unforeseen expenses that go along with homeownership. Unless you anticipate a substantial hike in your income in the next 2 to 3 years, it may be less stressful on you to wait until you have more cash in the bank. I am speaking from personal experience. Best of luck. |
Anonymous
| I would agree to keep saving for a home and don't rush. Even though you don't have any credit card debt, you have a lot of other other (student loan and car). I would try to pay off the car and student loan in full and then save for 20% down on a home. no need to rush. |
Anonymous
| Where is the location of the house you are interested? I believe this posted article would be beneficial in your end to determine which is better to you. https://www.eddiemortgage.com/conventional-vs-fha-loans-arizona/. After youve already read this article and still wanted to pursue but at the same still have confusing in your decision, you can call them if you the house are in Arizona state. |
Anonymous
| I wouldn't get the house, student loans are not cc cards, but it's still debt. I'd get rid of the car debt and law school debt, then start saving for a down payment on a house. What's the rush? |
Anonymous
You will no doubt be slammed for dismissing the doctrine that renting is wasting money and that it is always smarter to own property. |
Anonymous
| Not to hijack the thread but I have about the same income as OP (95k) and although there are homes I like at 375k - I feel like it that price is too much. I have no student loans or car loan. So is that price home actually feasible for me? I am getting the sense from this thread - that it is. And that is surprising to me. |
Anonymous
Forgot to mention - can put down 20% |
Anonymous
| ^^^ What is your monthly take home? |
Anonymous
| I don't understand. Is your lender taking into account the monthly payment on your student loans or your overall amount of loans? I thought it was monthly -- at least it was for me. You are very close to doing this. Maybe just have to wait a bit. |