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

[Anonymous]

The other thing I just noticed is that you plan on living in the house for five years. Unless you're planning to rent it out afterwards you'll probably end up losing money with all of the transaction costs associated with buying/selling.

[Anonymous]

OP, I was in your situation several years ago and was able get a mortgage through FHA. We ended up buying an older home for about $300K with 3.5% down. Yes, we do have to pay PMI, but our interest rate is low and our mortgage doesn't increase every year as our rent did. Your credit score is above the FHA minimum of 580, though most lenders will want to see it a bit higher - I believe Wells Fargo requires 600.

I agree you will need money for repairs so choose the place carefully, get a home inspection, and continue saving aggressively. In our case, DH is handy so we've saved a lot on labor, but we still had some major expenses such as replacing the furnace, and we'll need a new roof in a year or two.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yep, that's what we are looking for. A townhome/condo under $350K in MD (Rockville, Gaithersburg, Silver Spring, North Bethesda, and Bethesda).

There's plenty of options out there.

I was looking for similar a couple years ago. First of all - condo fees run around $400 a month so you have to add that in. I never saw a condo or townhouse with utilities included. $350 may be possible in Gaithersburg or Silver Spring. The other areas you mention - I seriously doubt it and I say this having done the same search two years ago when prices were lower.

I agree. I don't think you can purchase a townhome in a decent neighborhood for 350.

I disagree. A peek at Redfin says differently. And many of them include some utilities.

Have you actually seen the areas and the homes that are under 350? get back to me after you look and let me know how you feel about them.

[Anonymous]

Anonymous wrote:OP, I was in your situation several years ago and was able get a mortgage through FHA. We ended up buying an older home for about $300K with 3.5% down. Yes, we do have to pay PMI, but our interest rate is low and our mortgage doesn't increase every year as our rent did. Your credit score is above the FHA minimum of 580, though most lenders will want to see it a bit higher - I believe Wells Fargo requires 600.

I agree you will need money for repairs so choose the place carefully, get a home inspection, and continue saving aggressively. In our case, DH is handy so we've saved a lot on labor, but we still had some major expenses such as replacing the furnace, and we'll need a new roof in a year or two.

OP here....I appreciate this.

I do think there's a way to make this happen and not have a dismal outcome.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, I was in your situation several years ago and was able get a mortgage through FHA. We ended up buying an older home for about $300K with 3.5% down. Yes, we do have to pay PMI, but our interest rate is low and our mortgage doesn't increase every year as our rent did. Your credit score is above the FHA minimum of 580, though most lenders will want to see it a bit higher - I believe Wells Fargo requires 600.

I agree you will need money for repairs so choose the place carefully, get a home inspection, and continue saving aggressively. In our case, DH is handy so we've saved a lot on labor, but we still had some major expenses such as replacing the furnace, and we'll need a new roof in a year or two.

OP here....I appreciate this.

I do think there's a way to make this happen and not have a dismal outcome.

Except that if you're only staying in the house for 5 years all of the money you saved will be eaten up by transaction costs. If you extend your horizon to 10 or 15 years I think you can make it work.

[Anonymous]

A land contract could solve your problems, but you have to find a seller willing to accept one. Keep in mind, if you miss one payment, the seller can take back the house and you've lost everything you put in.

http://en.m.wikipedia.org/wiki/Land_contract

[Anonymous]

Did you see the new FICO score announcement today?

It might help you!

[Anonymous]

When will that take effect?

[Anonymous]

I think you are asking the wrong question and not listening to what people are trying to tell you.

Your question should be "how can I save more money so I can someday afford to buy a home?"

Focus on where to cut expenses and start there.

[Anonymous]

Anonymous wrote:A land contract could solve your problems, but you have to find a seller willing to accept one. Keep in mind, if you miss one payment, the seller can take back the house and you've lost everything you put in.

http://en.m.wikipedia.org/wiki/Land_contract

This is a terrible idea, and good luck getting a mortgage for it.

[Anonymous]

I think you could buy something around $300. You'll have to get some seller assist for closing costs and you would probably need to save another $6-7k at least to make it happen. Even then, it will be close. Pay off the cc debt and save where you can. Good luck.

You do need to have at least 6-7k left over. Our first year of owning a condo, our heat pump crashed and we got a 4k special assessment from our HOA.

I also disagree that you can't find a good 2 bed property for less than $350 I own a 2 bed investment property in Shirlington that would sell btwn. $300 and 315k. This is an older town home, partially renovated, good condition. There are also 2 bed condos in Fairlington, a great neighborhood, that sell for less than $350.

[Anonymous]

Anonymous wrote:I think you could buy something around $300. You'll have to get some seller assist for closing costs and you would probably need to save another $6-7k at least to make it happen. Even then, it will be close. Pay off the cc debt and save where you can. Good luck.

You do need to have at least 6-7k left over. Our first year of owning a condo, our heat pump crashed and we got a 4k special assessment from our HOA.

I also disagree that you can't find a good 2 bed property for less than $350 I own a 2 bed investment property in Shirlington that would sell btwn. $300 and 315k. This is an older town home, partially renovated, good condition. There are also 2 bed condos in Fairlington, a great neighborhood, that sell for less than $350.

You didn't read the whole thread. OP said that she wanted to buy a new build in the Rockville area of Montgomery County for $350 or less. That just doesn't exist. She wants a new build because she doesn't want to have to worry about the maintenance costs that often arise when you buy an older home. However, to get new build at those prices, she's going to have to go further out, like the northern part of Gaithersburg or Germantown (or even further). She has said she wants Rockville, Silver Spring, Bethesda, North Bethesda or southern Gaithersburg. She is unlikely to find a new build in those areas for that price. Either an older home or a higher price for those areas.

And she wants one that has utilities and other expenses covered by the HOA/condo fees. What she wants doesn't exist. She's going to have to compromise on price, location, age of property or cost of living there.

[Anonymous]

Anonymous wrote:

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

I get that home ownership is something that you really want, but I dislike the attitude that renting is "throwing away money." I mean, you need a roof over your head, whether you buy or rent, right? If you put a tiny percent down with a really awful interest rate, I kind of feel like that's "throwing away money" in a sense...to the bank. It takes a long time to build equity that way. Also, if you're counting on refinancing, what if interest rates go up?

On top of that, home ownership is more expensive than it seems. There are repairs, local property taxes, maintenance, and it all adds up. Sure there's the mortgage interest deduction, but unless you have a healthy emergency fund, I don't really know you would be able to handle home repairs. It is kind of nice to just call up your landlord and get them to take care of it. I personally also appreciate the mobility that renting allows, and the ability to move someplace with a better commute if you or your husband have a job change.

I would keep renting and rebuild your credit. The daycare costs are going to ease up in a few years (yes, there's camp and afterschool and so on, but it probably won't be $2,000 a month) and you should have a little more room to save. In the meantime, try to look on the bright side of renting.

I totally agree With the above. Another PP also estimated tht you might save only $1000 in equity after the first year or so. It seems like there are other ways to save that $1000, that done come at the risk of living on the edge financially and spend that equity on repairs, or spend it all (and more ) on the transaction costs if you sell within a few years.

I wonder if you've come across Dave Ramsey's "Total Money Makeover" book and program. I used to listen to his free podcasts. His whole thing is about having people turn around their financial situation. The podcasts (and maybe his book) are full of stories of people who were In situations similar to (or worse than) yours and who took charge and totally turned their financial lives around. PPs have given good tips about cutting down on cell phone bills, etc, and it sounds like no fun but when you learn of other people doing the program it can get exciting because you see a great end goal of being debt free. And you see others doing it and it can provide you with momentum.

I'm a long-term renter and not inclined to buy anytime soon as I want the flexibility to move when my DH gets his next job. It does sometime seem like we are sinking $ into a rental but there are financial advantages to renting, as mentioned by several PPs.(I also think DC offers very little of interest in my price range that seems actually worth the price.)

[Anonymous]

Anonymous wrote:

You didn't read the whole thread. OP said that she wanted to buy a new build in the Rockville area of Montgomery County for $350 or less. That just doesn't exist. She wants a new build because she doesn't want to have to worry about the maintenance costs that often arise when you buy an older home. However, to get new build at those prices, she's going to have to go further out, like the northern part of Gaithersburg or Germantown (or even further). She has said she wants Rockville, Silver Spring, Bethesda, North Bethesda or southern Gaithersburg. She is unlikely to find a new build in those areas for that price. Either an older home or a higher price for those areas.

And she wants one that has utilities and other expenses covered by the HOA/condo fees. What she wants doesn't exist. She's going to have to compromise on price, location, age of property or cost of living there.

You pretty much summed up women in general. She wants what she wants, and come hell or high water, she thinks she's gonna get it.

[Anonymous]

Anonymous wrote:

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

LOL. You're funny. (OP, prices aren't going to drop...)

Hah, you don't have any clue either. Prices definitely could drop. Don't pretend to know more than you do. They could rise too. But OP should buy for long term and be liquid when purchasing, which is not the case and why she should wait.