Is it completely hopeless? Want to buy home, no down payment.

[Anonymous]

Please don't laugh.

We just moved to NOVA for a job for DH. He is starting at 70k - this is less than he was making before, moved from private sector to USG so he now has no bonus and we now have health insurance premiums. He was tired of 12 hour days and really wanted this job, so I'm not complaining.

If I got a job now, our childcare expenses would be about 2000 per month or more until DC2 hits kindergarten, after that it will be a bit less. I've never made more than 45K, and childcare would not be the only work-related expense, so there is not going to be a fast way for us out of this. Right now I'm SAHM, but am looking. We are 35, still a ways from retirement but I think we'd be in a pretty bad situation if we get close to retirement age without much home equity. After watching my parents' disaster, I would really, really like to avoid that.

We only have about 10k in liquid savings. About 10K in college savings for 2 kids (please don't laugh!) and about 160K in retirement and about 30k of company stock that will be paid out over a few years. DH and I started out with nothing and/or student loans, after my loans were paid and before kids we saved our down payment really quickly and we were quick to buy a teeny tiny new construction real estate in 2006 - we thought it would be our "starter home" and move up, like it's supposed to work, right? Which turned out to be a bad idea, obviously. After a deed-in-lieu filed in 2011, the property sold for half of what we'd bought it for. So we lost our down payment and our credit scores went from 800 to 650 (now creeping up to 700), so we know getting a mortgage isn't going to be easy even with a good down payment.

None of our parents can help us (DH is already sending support to his parents.) We have few other assets... is there any hope at all for us? Yes, I know, maybe it would have been good to just save more instead of putting things in retirement.

[Anonymous]

Oh, and I'm not sure about a 401k loan. I would really want to make sure DH is going to stick with this job before we embark on that.

[Anonymous]

Do not take a 401k loan. Do not touch that money.
You cannot buy a house right now. You need to get used to DC, figure out your long term earning potential here, and figure out how to earn some money until your kids are in school.

You lost a lot of money in real estate once and you want to gamble your retirement money on trying that again?

Get your emergency fund funded, get your lives together in DC, and scrimp and save your pennies. By the time you have a small 5% down payment saved along with moving and closing costs, your credit will hopefully be a bit better too.

[Anonymous]

1) go back to work. I know that you think expenses will exceed income, but that won't do that forever. Plus, two 401k, more cushion, more stability, more confidence.
2) don't buy. Concentrate on savings. Your debt is gone, credit rebuilding, and I would say aggressively save. This will be easier with a second job. Try to live like students and squirrel away every dollar.
3) look at jobs that make more money, have a career path, etc. 10 years ago, I was in jobs making a third of what I do now. I have a much better earning trajectory because I focused on taking upward career tracks. I'm now in a position to hopefully raise my income by 50% n the next 5 years due to the path that I'm on. This has been a focus for me, and my partners job is relatively stable.
4) extra money in this case really does open up opportunities. Go back to work.

[Anonymous]

Live as meagerly as possible and sock away money. Stop saving for college. Rich people save for college after they've maxed out saving for retirement. Regular folks end up with student loans. Smart parents steer their kids towards state schools. Seriously, if I were you I would find a small apt to rent in a decent school district and try to sock away money for a down payment. You need a five year plan.

[Anonymous]

You should not be buying, any time soon... Let's be honest, 70k income won't get you much in this area. You also need to work. Find an in home childcare provider or a sahm to watch your child. You need more income. Agree with another poster, forget college. Also, if you have another child, you won't be getting a house.

[Anonymous]

OP here. HA! a third child is not on the radar, so don't worry. I was working before the move but don't have connections here and I'm not sure if or when it will happen for me. I did SAHM for 5 years, then went to work a year ago, before the move. I can't go back to what we had before with DH out of the house for 13 hours, me for 10, peeling the kids out of bed at 6 to get them to daycare, and eating crap or takeout all the time, no vacations ever. It has to be worth it. My salary did not make up for what was lost, it's that simple.
Our rental, although small, is actually pretty good and I can see us being happy here for a while. Our school area is good. So no emergency.

BTW, DH has a job that involves travel... a lot. I honestly am not sure a FT job is the best thing for me. At least I'd need more flexibility than what most jobs offer, or at least more money for backup care, etc.

[Anonymous]

You cannot buy a home now.

[Anonymous]

OP I don't know what makes you think you are ready to buy a home now.

We are making 120k a year and have 50k in savings and I STILL don't think we are anywhere near buying home anywhere near DC.

[Anonymous]

So in the best case scenario, if you were working now, you might have a . A condo or townhome could be doable in the next five years if you save diligently. You might also look in the less desirable areas of NOVA - I haven't lived there for a while, but I think it's fairly obvious that you will be completely priced out of Arlington/McLean/etc. There are cheaper condos (300-400k) that I've heard about, but they typically aren't in great shape physically and are probably smallish and definitely not in the most desirable area.

This is just the reality of living in cities in with high COL. In a smaller/cheaper city, buying on $100k can be totally doable. Out of curiosity, why are you thinking about looking now? It seems like you are on the fence about going back to work, and even at $115k (w/ small down payment), buying in this area is not easy.

[Anonymous]

OP I feel your pain. It kills me to wait another year while we save a down payment. As interest rates go from the 4ish range to the predicted 6 at the end of the year that is the equivalent of an additional 240k in internet on a 30 yr mortage. For many of us we feel likes it's buy now are we will never get I to this market.

Most real estate industry observers say mortgage rates will rise significantly in 2014, to roughly 5% for 30-year fixed-rate mortgages. But others say rates will go higher, with analysts at the real estate website KeepCurrentMatters.com seeing rates climbing to 6% by year-end. If that happens and fence-sitting buyers remain out of the market, they could regret it. Here's one way to look at a $200,000 mortgage stretched over 30 years: At 4.2%, the monthly payment is $978 and total interest is $152,094. At 6%, the monthly payment is $1,199.10 and total interest is $231,677.
That's about $80,000 in extra interest loan payments over the course of the loan, and it's 80,000 reasons why buying a house now, rather than waiting a year, may be a great idea.

[Anonymous]

Who said anything about needing to be close in or in Arlington/McLean or in any sort of "most desirable" area? DH works sorta near Tysons with an easy exit to 495.

If 1000 square feet is working well for us now, I believe we will need no more than 1200 square feet. We would prefer a TH or a neat condo to a run-down SFH. Not new, but maybe 15 years old or so. The idea of old, moldy houses stresses me out.
I'm not trying to buy now, I know that's out and makes no sense anyway. I'm thinking/worried about being able to buy EVER. Or at least within the next five years. DH job is stable and we're pretty sure we will be here.
It just sucks SO MUCH because DH and I lived live poor students early in our marriage to save up a DP, all for naught.

Part of the problem is that there isn't a lot of what we're looking for - smaller, newer, maybe in Fairfax/Burke. Most of the newer stuff being built is big and expensive.

[Anonymous]

http://www.daveramsey.com/new/baby-steps/

The Baby Steps



Begin your journey to financial peace

Get out of debt the same way you learned to walk—one step at a time.
Baby Step 1 $1,000 to start an Emergency Fund
Baby Step 2 Pay off all debt using the Debt Snowball
Baby Step 3 3 to 6 months of expenses in savings
Baby Step 4 Invest 15% of household income in Roth IRAs and pre-tax retirement
Baby Step 5 College funding for children
Baby Step 6 Pay off house early
Baby Step 7 Build wealth and give!

[Anonymous]

Go away, spam PP. We don't have any debt.

[Anonymous]

"Is it completely hopeless? Want to buy home, no down payment."

The answer to your question is YES.