need to buy a home to save money but can't

[Anonymous]

We need to figure out a way to buy a home here. Between the rent and the bills we pay we will never be able to save money until we move into out own home.

I know it sounds crazy but we pay $2000/month in rent and $400-$500 in utilities.

I have crap credit (591 FICO) and we have about $12,000 saved.

I want to see if I can swing buying a modest townhome that we can live in for 5 or so years and build some equity and not have so much money flying out the door to our landlord.

HELP!

[Anonymous]

Anonymous wrote:We need to figure out a way to buy a home here. Between the rent and the bills we pay we will never be able to save money until we move into out own home.

I know it sounds crazy but we pay $2000/month in rent and $400-$500 in utilities.

I have crap credit (591 FICO) and we have about $12,000 saved.

I want to see if I can swing buying a modest townhome that we can live in for 5 or so years and build some equity and not have so much money flying out the door to our landlord.

HELP!

No you can't afford it. Just keep renting and save money. Cut credit cards, get rid of smartphones, limit going out to eat,drink at home and don't get pregnant.

[Anonymous]

A home is more expensive. Really.

[Anonymous]

Anonymous wrote:A home is more expensive. Really.

How so? Nowhere I've looked shows we will spend more than $2500/month for mortgage, utilities, upkeep.

We can't save a dime because of the money we are dumping into a rental.

[Anonymous]

A home is more expensive due to all the maintenance costs. Our place is small, but new, and we have spent tons of money in 2 years.

Our mortgage is 400K, and I saved a whopping maybe $4K on my taxes. Yet I spent probably over $1000/mo extra. So netting that, I spent an extra $600/month to be a homeowner.

You need a Fico score more in the 630+ range. My advice to you is get a good rec for a credit repair person. But get a recommendation from somebody you know. Then, do a VHDA loan (in VA) with no money down and get the seller to pay the closing costs. Or, try one of Wells Fargo's programs in MD/DC for no money down. You will need your 12K for your new place and a cushion because you will be paying more.

[Anonymous]

Anonymous wrote:A home is more expensive due to all the maintenance costs. Our place is small, but new, and we have spent tons of money in 2 years.

Our mortgage is 400K, and I saved a whopping maybe $4K on my taxes. Yet I spent probably over $1000/mo extra. So netting that, I spent an extra $600/month to be a homeowner.

You need a Fico score more in the 630+ range. My advice to you is get a good rec for a credit repair person. But get a recommendation from somebody you know. Then, do a VHDA loan (in VA) with no money down and get the seller to pay the closing costs. Or, try one of Wells Fargo's programs in MD/DC for no money down. You will need your 12K for your new place and a cushion because you will be paying more.

If it's new. What did you spend so much money on?

[Anonymous]

I would simply continue to rent and not worry about it. Wait till prices drop.

[Anonymous]

Why are you dumping money into a rental? What does that mean? Maintenance costs aren't your responsibility so if you are updating things for fun than stop that and save that money.

[Anonymous]

Keep renting.

[Anonymous]

Yep, you need to rent. You can't afford a house.

[Anonymous]

If your credit score is that low, you can't afford a house. No one is going to loan you any money unless it's at a RIDICULOUS rate. You cannot afford to buy a home.

You aren't "throwing away money," you are paying for a roof over your head. If you can't save money for a down payment, what the hell are you going to do when the roof leaks, the refigerator breaks, and the boiler goes, all in the same winter? (been there, done that) You'll go into debt, AGAIN, with more crazy interest rates, and you'll go bankrupt. It's people like you that lost their shirts when the bottom dropped out of the real estate market.

TL, DR: You cannot afford to buy a house.

[Anonymous]

I say buy. Better to spend all that money and have something to show for it.

[Anonymous]

Anonymous wrote:If your credit score is that low, you can't afford a house. No one is going to loan you any money unless it's at a RIDICULOUS rate. You cannot afford to buy a home.

You aren't "throwing away money," you are paying for a roof over your head. If you can't save money for a down payment, what the hell are you going to do when the roof leaks, the refigerator breaks, and the boiler goes, all in the same winter? (been there, done that) You'll go into debt, AGAIN, with more crazy interest rates, and you'll go bankrupt. It's people like you that lost their shirts when the bottom dropped out of the real estate market.

TL, DR: You cannot afford to buy a house.

Exactly my point, OP here. If we buy, our mortgage monthly will be nearly $1,000/month LESS than we are paying in rent.

Then we can actually SAVE and OWN.

And refinance whatever wackadoo mortgage we get in a year or so.

[Anonymous]

I'm assuming your stellar financial reasoning has gotten you to the point where you have a 591 FICO. Perhaps you should start listening to people who manage their finances more successfully?

The clear consensus is that you cannot afford to buy.

[FruminousBandersnatch]

If you're paying $2K a month in rent but can't save, why are you paying so much in rent? Have you cut unnecessary expenses to the bone, or are you living a comfortable urban life?

In a rental you're not paying for maintenance, and you usually don't have to provide all of your own appliances. You're also not usually paying for all of the utilities or insurance. There are a lot of costs associated with home ownership that add up. It isn't necessarily true that you save money by owning your home - in the short or long run.

You should be talking with a financial advisor about (a) how to manage your current budget, (b) how to get your credit score up, and (c) whether it makes sense to save for a house or if you should be putting that money into other things. You say that you want to OWN and SAVE, but the saving you do is simply electing to put your money into a house rather than investing it other ways.