670 score, 16k, want to borrow 700k

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - Although you want to, I don't think you are ready to buy a home yet. There are a lot of issues that go with buying a home.

First, when you are buying with less than 20% down, you will be paying PMI (private mortgage insurance). Basically you are paying an extra fee to insure that should you fail to pay and the lender has to foreclose on your house that the lender is insured for monetary losses which can be substantial. It's not a lot, but it is a monthly payment added on to your payment, which decreases the amount of money that you pay each month towards principal. As another PP mentioned, the first 2-3 years of payments, you will be paying virtually nothing towards equity, but will primarily be paying heavily up front on the interest payments against the loan. Last, the closing costs can be significant and range between 5-15% of your home cost (the most expensive the house, the lower the percentage). You are probably looking at around $8K-20K worth of closing costs You can roll some or all of the closing costs into the loan, but that increases your loan.

The less you put in for a down payment, the higher your interest rate will be. So it will increase the amount of money that is taken up front in the first few years and extend the period when you are earning virtually no equity in the house. Also, your credit rating will likewise increase the interest rate you are paying. When you hear all of those great rates on commercials and ads, those are essentially for people who are putting 20% down and have a credit rating 750+. You will not get those rates in your situation.

Another big issue is that unless you are buying a very solid home, either one well-cared for by the previous owners, or a flip where most things are new, you can expect some costs in the first year of ownership. There are always things ranging from appliances (d/w, w/d, stove, oven, water heater, HVAC, fridge) to electrical to plumbing, vents, that need repairs or maintenance in the first year. And if you don't do maintenance on these things (like doing a spring-time inspection/cleaning of the AC or the fall inspection/cleaning of the furnace/heat pump) then you run the risk that something could happen and leave you without that appliance when you get into the season. A little money up front often prevents a lot of money later, especially at the wrong times (e.g. furnace going out during a cold snap or A/C going out during a heat wave). I general, it is conservatively recommended that you have 1% of the purchase price of the home to account for the unexpected during the first year or two of home ownership. There always seems to be something that comes up that you need to deal with. The older the appliances and components of the house, the more likely you'll have issues (although there often seems to be a cap at around 60 years, things were built to last much longer in pre-1960 homes.

Additionally, although might be included in the 1%, you might find the additional accessories for home ownership may run over that. For example, if you buy, you may be responsible for a yard, or landscaping or plants. When you rent and there is a problem with that, usually the landlord takes care of a lot of those costs, but when you own you have to pay for all of that. You have to be responsible for clearing your sidewalk or shoveling a driveway or parking space. I've had many friends who didn't realize all of the things that they'd need to buy to take care of a house. As renters, when many problems came up, they called the landlord or property management and had them take care of things. But when you are a homeowner, you have to deal with things yourself or you have to hire someone to do it for you.

Like others, I would recommend that you consider relocating to a less expensive home for a few years and get much more of a savings before you go into home ownership. I just don't want to see you spending everything to get into a home and then finding in the first two years that you just can't afford to live there. Home ownership is a lot of work beyond just the mortgage payment and it can be pretty expensive. In the long run, you'll get more out than you put in, but it does require a lot of time and money investment up front.

You are way too kind to write all this for OP, who isn't even trying to let us help him/her. They are giving us the absolute bare minimum of information and won't even answer why they need a 700k house nor why they haven't saved anything. Don't entertain the troll anymore.

I don’t NEED a 700k house. I just need a good school and two bedrooms. -op

For those requirements, there are 16 condos in Bethesda with 2 BR between $180K-400K that might work for you. The good thing about condos is that a lot of the external costs for home ownership (snow equipment, lawn equipment, outdoor maintenance, etc) are taken care of for you and you won't incur those expenses.

These might be a good option for you to consider. The important thing is whether you can get approved under your situation for a mortgage with your credit rating and low cash in hand.

I think that like others have pointed out that you might be better off actually renting someplace smaller and less expensive for a year or two to get yourself more financially stable. There are many options for 2 BR rentals in Bethesda that are zoned for good public schools and that you can get for $2000-2500. Start with those, start saving aggressively and get your cash in the bank, for both emergency fund and for future down payment, closing costs, and maintenance costs up and then plan to buy one of the less expensive condos in Bethesda. You can metro to work easily from Bethesda and also save costs on parking downtown.

I just want to point out that there are many places with good schools where rent can be less than $2000. Even in Arlington if OP would prefer to stay in the area they are in!

https://hotpads.com/arlington-va/2-bedroom-apartments-for-rent?beds=2&orderBy=experimentScore&price=0-2000

Where?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - Although you want to, I don't think you are ready to buy a home yet. There are a lot of issues that go with buying a home.

First, when you are buying with less than 20% down, you will be paying PMI (private mortgage insurance). Basically you are paying an extra fee to insure that should you fail to pay and the lender has to foreclose on your house that the lender is insured for monetary losses which can be substantial. It's not a lot, but it is a monthly payment added on to your payment, which decreases the amount of money that you pay each month towards principal. As another PP mentioned, the first 2-3 years of payments, you will be paying virtually nothing towards equity, but will primarily be paying heavily up front on the interest payments against the loan. Last, the closing costs can be significant and range between 5-15% of your home cost (the most expensive the house, the lower the percentage). You are probably looking at around $8K-20K worth of closing costs You can roll some or all of the closing costs into the loan, but that increases your loan.

The less you put in for a down payment, the higher your interest rate will be. So it will increase the amount of money that is taken up front in the first few years and extend the period when you are earning virtually no equity in the house. Also, your credit rating will likewise increase the interest rate you are paying. When you hear all of those great rates on commercials and ads, those are essentially for people who are putting 20% down and have a credit rating 750+. You will not get those rates in your situation.

Another big issue is that unless you are buying a very solid home, either one well-cared for by the previous owners, or a flip where most things are new, you can expect some costs in the first year of ownership. There are always things ranging from appliances (d/w, w/d, stove, oven, water heater, HVAC, fridge) to electrical to plumbing, vents, that need repairs or maintenance in the first year. And if you don't do maintenance on these things (like doing a spring-time inspection/cleaning of the AC or the fall inspection/cleaning of the furnace/heat pump) then you run the risk that something could happen and leave you without that appliance when you get into the season. A little money up front often prevents a lot of money later, especially at the wrong times (e.g. furnace going out during a cold snap or A/C going out during a heat wave). I general, it is conservatively recommended that you have 1% of the purchase price of the home to account for the unexpected during the first year or two of home ownership. There always seems to be something that comes up that you need to deal with. The older the appliances and components of the house, the more likely you'll have issues (although there often seems to be a cap at around 60 years, things were built to last much longer in pre-1960 homes.

Additionally, although might be included in the 1%, you might find the additional accessories for home ownership may run over that. For example, if you buy, you may be responsible for a yard, or landscaping or plants. When you rent and there is a problem with that, usually the landlord takes care of a lot of those costs, but when you own you have to pay for all of that. You have to be responsible for clearing your sidewalk or shoveling a driveway or parking space. I've had many friends who didn't realize all of the things that they'd need to buy to take care of a house. As renters, when many problems came up, they called the landlord or property management and had them take care of things. But when you are a homeowner, you have to deal with things yourself or you have to hire someone to do it for you.

Like others, I would recommend that you consider relocating to a less expensive home for a few years and get much more of a savings before you go into home ownership. I just don't want to see you spending everything to get into a home and then finding in the first two years that you just can't afford to live there. Home ownership is a lot of work beyond just the mortgage payment and it can be pretty expensive. In the long run, you'll get more out than you put in, but it does require a lot of time and money investment up front.

You are way too kind to write all this for OP, who isn't even trying to let us help him/her. They are giving us the absolute bare minimum of information and won't even answer why they need a 700k house nor why they haven't saved anything. Don't entertain the troll anymore.

I don’t NEED a 700k house. I just need a good school and two bedrooms. -op

For those requirements, there are 16 condos in Bethesda with 2 BR between $180K-400K that might work for you. The good thing about condos is that a lot of the external costs for home ownership (snow equipment, lawn equipment, outdoor maintenance, etc) are taken care of for you and you won't incur those expenses.

These might be a good option for you to consider. The important thing is whether you can get approved under your situation for a mortgage with your credit rating and low cash in hand.

I think that like others have pointed out that you might be better off actually renting someplace smaller and less expensive for a year or two to get yourself more financially stable. There are many options for 2 BR rentals in Bethesda that are zoned for good public schools and that you can get for $2000-2500. Start with those, start saving aggressively and get your cash in the bank, for both emergency fund and for future down payment, closing costs, and maintenance costs up and then plan to buy one of the less expensive condos in Bethesda. You can metro to work easily from Bethesda and also save costs on parking downtown.

I just want to point out that there are many places with good schools where rent can be less than $2000. Even in Arlington if OP would prefer to stay in the area they are in!

https://hotpads.com/arlington-va/2-bedroom-apartments-for-rent?beds=2&orderBy=experimentScore&price=0-2000

Where?

So go to this school https://www.greatschools.org/virginia/arlington/114-Drew-Model-Elementary-School/

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - Although you want to, I don't think you are ready to buy a home yet. There are a lot of issues that go with buying a home.

First, when you are buying with less than 20% down, you will be paying PMI (private mortgage insurance). Basically you are paying an extra fee to insure that should you fail to pay and the lender has to foreclose on your house that the lender is insured for monetary losses which can be substantial. It's not a lot, but it is a monthly payment added on to your payment, which decreases the amount of money that you pay each month towards principal. As another PP mentioned, the first 2-3 years of payments, you will be paying virtually nothing towards equity, but will primarily be paying heavily up front on the interest payments against the loan. Last, the closing costs can be significant and range between 5-15% of your home cost (the most expensive the house, the lower the percentage). You are probably looking at around $8K-20K worth of closing costs You can roll some or all of the closing costs into the loan, but that increases your loan.

The less you put in for a down payment, the higher your interest rate will be. So it will increase the amount of money that is taken up front in the first few years and extend the period when you are earning virtually no equity in the house. Also, your credit rating will likewise increase the interest rate you are paying. When you hear all of those great rates on commercials and ads, those are essentially for people who are putting 20% down and have a credit rating 750+. You will not get those rates in your situation.

Another big issue is that unless you are buying a very solid home, either one well-cared for by the previous owners, or a flip where most things are new, you can expect some costs in the first year of ownership. There are always things ranging from appliances (d/w, w/d, stove, oven, water heater, HVAC, fridge) to electrical to plumbing, vents, that need repairs or maintenance in the first year. And if you don't do maintenance on these things (like doing a spring-time inspection/cleaning of the AC or the fall inspection/cleaning of the furnace/heat pump) then you run the risk that something could happen and leave you without that appliance when you get into the season. A little money up front often prevents a lot of money later, especially at the wrong times (e.g. furnace going out during a cold snap or A/C going out during a heat wave). I general, it is conservatively recommended that you have 1% of the purchase price of the home to account for the unexpected during the first year or two of home ownership. There always seems to be something that comes up that you need to deal with. The older the appliances and components of the house, the more likely you'll have issues (although there often seems to be a cap at around 60 years, things were built to last much longer in pre-1960 homes.

Additionally, although might be included in the 1%, you might find the additional accessories for home ownership may run over that. For example, if you buy, you may be responsible for a yard, or landscaping or plants. When you rent and there is a problem with that, usually the landlord takes care of a lot of those costs, but when you own you have to pay for all of that. You have to be responsible for clearing your sidewalk or shoveling a driveway or parking space. I've had many friends who didn't realize all of the things that they'd need to buy to take care of a house. As renters, when many problems came up, they called the landlord or property management and had them take care of things. But when you are a homeowner, you have to deal with things yourself or you have to hire someone to do it for you.

Like others, I would recommend that you consider relocating to a less expensive home for a few years and get much more of a savings before you go into home ownership. I just don't want to see you spending everything to get into a home and then finding in the first two years that you just can't afford to live there. Home ownership is a lot of work beyond just the mortgage payment and it can be pretty expensive. In the long run, you'll get more out than you put in, but it does require a lot of time and money investment up front.

You are way too kind to write all this for OP, who isn't even trying to let us help him/her. They are giving us the absolute bare minimum of information and won't even answer why they need a 700k house nor why they haven't saved anything. Don't entertain the troll anymore.

I don’t NEED a 700k house. I just need a good school and two bedrooms. -op

For those requirements, there are 16 condos in Bethesda with 2 BR between $180K-400K that might work for you. The good thing about condos is that a lot of the external costs for home ownership (snow equipment, lawn equipment, outdoor maintenance, etc) are taken care of for you and you won't incur those expenses.

These might be a good option for you to consider. The important thing is whether you can get approved under your situation for a mortgage with your credit rating and low cash in hand.

I think that like others have pointed out that you might be better off actually renting someplace smaller and less expensive for a year or two to get yourself more financially stable. There are many options for 2 BR rentals in Bethesda that are zoned for good public schools and that you can get for $2000-2500. Start with those, start saving aggressively and get your cash in the bank, for both emergency fund and for future down payment, closing costs, and maintenance costs up and then plan to buy one of the less expensive condos in Bethesda. You can metro to work easily from Bethesda and also save costs on parking downtown.

I just want to point out that there are many places with good schools where rent can be less than $2000. Even in Arlington if OP would prefer to stay in the area they are in!

https://hotpads.com/arlington-va/2-bedroom-apartments-for-rent?beds=2&orderBy=experimentScore&price=0-2000

Where?

So go to this school https://www.greatschools.org/virginia/arlington/114-Drew-Model-Elementary-School/

Well, there are people who send their children to that school so I am sure it is fine, but the five pages of options on that link include apartments zoned for a few different schools. If you are the OP, you are being deliberately obtuse with this response.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Your credit should be good enough for an FHA loan with 3.5% down. You will need money for closing costs too so you would still need to save a bit more.

+1

This is how we got our first home for 700k

FHA mandatory insurance is like 1% of the loan amount annually, so 7k/12 = $583 per month just in FHA insurance premium, on top of what will almost certainly be a crappy loan rate. I was in a similar position 10 years ago - I bought a $680k house with 3.5% down and an FHA loan at a 4.25% rate. I had a kid in daycare, $2k per month but no student loans or other debts. It was rough, and I made $240k. A mortgage payment of $4k is a lot on an income of 240k when you have another 1.7k in monthly debts (or even if you don't). We had to tightly control all of our spending. I can't imagine doing it on 175k and I highly advise that you not do it

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Your credit should be good enough for an FHA loan with 3.5% down. You will need money for closing costs too so you would still need to save a bit more.

+1

This is how we got our first home for 700k

FHA mandatory insurance is like 1% of the loan amount annually, so 7k/12 = $583 per month just in FHA insurance premium, on top of what will almost certainly be a crappy loan rate. I was in a similar position 10 years ago - I bought a $680k house with 3.5% down and an FHA loan at a 4.25% rate. I had a kid in daycare, $2k per month but no student loans or other debts. It was rough, and I made $240k. A mortgage payment of $4k is a lot on an income of 240k when you have another 1.7k in monthly debts (or even if you don't). We had to tightly control all of our spending. I can't imagine doing it on 175k and I highly advise that you not do it

Even if her credit score is good enough for an FHA loan, she only has $16K. If she put that entirely towards the 3.5%, that means she could afford up to $450K for a home, with that as her down payment, bu then she doesn't have enough for any closing costs. If you roll in the closing costs into the loan (which only some lenders will do and may increase her interest rate to do so), then she can max out at about $425K or $430K on purchase price. And I've only seen people roll in closing costs on traditional loans. Not sure if FHA loans will allow rolling in the closing costs into the loan amount (I remember there were a lot of unusual restrictions for both FHA and VA loans).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP will the $16k wipe you out? How will you pay for emergencies, house maintenance, life happens?-

Keep renting (somewhere much cheaper) and build your credit and emergency fund

I will continue to live paycheck to paycheck.

You make A LOT but you need more than 16k to buy a house. Sorry. Closing costs alone for a 700k will be AT LEAST that, not even including a down payment.

+1

And don't forget moving costs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am so confused here. How do you make that much income and have such a crappy credit score??
And why on earth are you looking to buy a house in the $700,000 range with so little savings?? Why aren’t you looking at least in the $500,000 range? There are plenty of nice houses for that much.

Where? Any place in that range I’ve found either is a tear down, a school that would require private school, or a crazy high (hoa ) condo.
I would like to keep my entire mortgage, taxes, and etc to under 4000 preferably in the 3300 range.

DP but honestly I think you should buy a condo. The condo market is not going insane like SFHs and you can’t afford down payment/closing costs on a SFH anyway. The HOA fees are annoying but you’re 2 years from being able to buy a SFH. Might as well build some equity.

Buying a condo to live in for just a couple of years is a terrible idea. The closing costs will more than eat up the small amount of equity OP is likely to accrue over that time period.

Double check your math. OP is currently setting $54k/yr on fire for rent. Merely not making money would be a huge win.

OP doesn’t have to spend that much on rent. They could move to a substantially cheaper apartment.

Even if OP downgraded to $30k/yr, or $60k/2 years, they aren’t going to lose $60k on condo transaction costs.

Go do the math on how much of those payments will go to equity in the first two years (especially given OP’s numbers), and then get back to us.

If OP buys a condo, incurs $20k in transaction costs to buy and sell, and sells at exactly purchase price in 2 years, that’s better than any rental deal. My math is all done.

How much equity are you assuming OP will accumulate during those two years? Have you factored in property taxes? Maintenance expenses? If the hot water heater dies during those two years, that’s OP’s cost to bear too. Condo fees?

You seriously--seriously--think it's going to cost more than $60k in taxes/maintenance/transaction costs to live in a condo for 2 years?

My hypo is based on 0 equity, simply not lighting rent money on fire anymore. And let's be real, a person who had been paying $4500 for rent isn't going to move into a $1500/mo place.

Op here. I would if I could find one with a good elementary school in a safe neighborhood ( no stray billets)

I suggest you get more perspective from financially responsible friends. I think your expectations and priorities are way off the mark. But perhaps you want what you want and we’re just different. Consult w other ppl