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I am a 26 year old full time student, full time worker, and full time mother of three. I am currently renting a home for about $700, I know this may not seem alot to most but to me this is a morgage. I am tried of paying for someone elses morgage and want to start paying one of my own. I have a low credit score due to being young and reckless with my credit but I am currently paying everything or making payments on everything I owe. I have no credit cards of any type and no loans of any type(except student loans but no paymentis due until I am finished with school). MY lease it up in 8 months and I really would like to own a home. I am working on my debt and my credit what next? I have researched programs for first time buyers but now I am lost. Please advise on my options and not on what service you can offers. Remember no Spam! Thank you
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Good luck. WIth the tighter lending standards that is going to be a task.
Do you have adown payment of 20% saved? That is needed even if you have decent credit.
There is too much to go over here. Lean on friends and family members to refer you to a good lender and good realtor. They will be able to walk you through the entire process. 100% financing is still available in most areas if you do not have alot of cash on hand. The lender will know. It may take some time to clean up your credit, so keep working at it.
Whatever you do, do not let anybody tell you how much you can afford. You still want to be able to enjoy a movie, dinner, christmas, etc.
Visit a lender first to see if you can comfortably do it and if not, what steps to take. If you're already there, go to a realtor.
Sign nothing until you have found the home you want and can afford.
If you don't have 20% to put down, then you can't afford the house. Period. Just because lenders told people that wasn't true for the past 5 years doesn't change the basic fact. 20% down or you can't afford it.
From the information you have posted, you seem like you are not in a good position to buy. Keep working on you're credit and paying down your bills. Banks are in no mood to lend to people with poor credit and minimal down payments these days. Finish your schooling, fix your credit and pay off student loans if you have them. Just because you don't like renting (who does?) doesn't mean that you should buy right now. The market will probably be better once you resolve these issues anyways..
Finish school, if it will help with a career and your income will improve then why not wait, start banking funds to a house fund. Home ownership requires a lot of attention, being single, working, school, and 3 kids I wouldn't recommend it, esp for repairs and upkeep......I am married and I swear that house was like a full time job! Good riddance, this feels like a vacation. Your not throwing your money away, cause chances are if you really do the math a house payment will end up costing you more than $700 a month. Don't let someone feed you crap about paying someone else's mortgage, renting comes with certain freedoms too.
My mother was single with 3 kids, she bought her first home when she was 37, so don't feel rushed.
this post is exemplary of exactly the type of mental laziness that causes people to make bad decisions...
"i am tired of paying someone else's mortgage"... Ok, if you bought the exact place you live in, would your payment go up or down? $700 won't cover much of a mortgage payment.
Since you're in school, try to use some math and thinking to analyze your particular situation, instead of quoting something so ridiculous as your motivation for buying.
Now that I'm sufficiently over my envy to think clearly (three children)! Some questions: Are you a single Mom? (I'm not sure since you didn't mention a job and how you pay rent). What was your last FICO score? Without a credit card or loans, how are you building your credit record?
Sorry, you did mention a job. I missed it.
I don't really blame her for buying the "i am tired of paying someone else's mortgage" line - the NAR is working overtime to get propaganda like this out as the RE market is deteriorating. We can't be all so lucky as to escape its grasp.
Finish school & get a job where you can afford to pay for a mortgage plus your student loans. You need to use a credit card responsibly to build up your credit. If you can't use one responsibly, I wouldn't attempt the responsibility of a mortgage yet either.
I've been there, done that. I survived bad credit. It can be done. Have patience and save money for a down payment in a few years. Good Luck!
I don't really blame her for buying the "i am tired of paying someone else's mortgage" line
That reminds me, what is the rent/ own ratio where you live?
You have a full plate now and buying a home will add to your stress. I would wait, save for the DP, and look into a free credit counseling service in your community to review your credit. When my daughter was in law school, the law students volunteered at a state run credit counseling agency. The students recorded the client's information, but the regular employees did the analysis.
As a single Mom there are programs for first time homebuyers when you are ready financially.
DFAQueen,There is no rush to buy. Find an agent who will work with you for the next year (or so)helping you put a plan into action. Work on your credit; get your down payment together and some reserves in the bank while looking into first time homebuyer programs in your area.Here is a formula (that has lost me some clients;)…Your rent is $700 your new mortgage PITI fixed for 30 yrs will be $1100, add another $100 per mo (any repairs that need to made on your house will be paid for by you)Based on that you should easily be able to put $500 per month in the bank…no problem
If you have a plan that you can patiently and consistently follow through, you will be more likely end up as a homeowner and not in foreclosure (which is devastating on many levels)
Its obvious you don't have the werewithall currently to purchase a house. Although I disagree with the line "if you don't put 20% down you cannot afford the house" I do believe that without a significant down payment closer to 10% you really cannot afford the house. Also, I firmly believe that going out beyond 2.5 x loan to income is far more crippling than the 20% downpayment rule. Given that 2.5 x a 700 payment turns into less than 100K mortgage you aren't able to afford much more than a very nice trailer home.
Start saving money and get a good job after school. This will end up paying far greater dividends in the end. Remeber all comes to he who waits
Rent/Own ratio in my area is about 1/1.5. Prices have come down some but rents have dropped even more because of so many condo conversions being dumped on the market.
The ONLY time you can afford a house is:
1. When you can save 20% (whether or not you plan on using it - and you should use it)
2. 3-6 months expenses
3. You have NO debt (including car payments)
4. Your new mortgage (PITI) is 25% of you NET income
Don't believe me? Just put on the 11:00 news we are in crisis lock-down mode because of people buying what they can't afford.
Forget the 100% financing, that's how so many got in trouble. Pay off your debt immediately. Save for downpayment, that way you don't pay PMI (Mortgage insurance... which doesn't help YOU, only the bank if YOU miss a payment... you still get foreclosed, but the bank gets paid... this is beyond me, why pay insurance for someone else to gain?)
I had kids in college, too. It's tough. If you become a teacher, and jump through their hoops, and pull the right student loans, once you work as a teacher for 2 years the govt will pay off your loans. Just FYI.
I seriously doubt you are paying someone else's mortgage at the current prices you would pay if you buy right now. That should make you smile. Most here are pretty sure your mortgage payment will be more than the rent you are paying.
Buy when you get a tax break. Right now if I buy, my fed tax break is $100/mo LESS than my property taxes. That's crazy, I pay $100/mo MORE on taxes if I buy? Use your tax program to project the numbers. You have 3 beautiful tax write offs at home! Enjoy!
Just say your from mexico and you;ll get a loan with no problem!
When you are ready as stated above, I would try www.naca.com (really low rates, but they take a long time) because they do a full analysis of your finances and will tell you when you are ready to buy or "Naca approved". There is also the www.acornhousing.org also funded a bit by BOA.
I f your mind is set on a home "Makesure you can afford and add $200.00-$300.00 ontop of the +morgage for Taxes /Insurance! And make sure you have the home Inspected by a Licence home Inspector..
You are still young and carrying a HUGE mountain of responsiblitys not just One but 3 children as you know must come first! I do feel for you" the road your on only goes oneway and hope the father of your children has taken that road next to you.
The load you carring is enough try not to add any more weight <unexpected bills go with owning a home! There are many inexpenvive homes out there now, but remember you get what you pay for
15k -20k if the septic tank doesn't pass the new regulation laws?
Think slowly! make the best of it!
I am 24 and my mortgage payment is less than $700! But we did put 20% down for sure. We live in a very nice 3 bed 2 bath home which is plenty big for my bf and son and I. Drapes: Did you say where you lived and I just missed it?
"Given that 2.5 x a 700 payment turns into less than 100K mortgage you aren't able to afford much more than a very nice trailer home."
LOL you're kidding right? It depends on where you live, you know that right? So everyone who has a less than $100k mortgage lives in a trailer home???
Blissful ingnorance... ;)
I agree you may want to finish school and get established in a job before buying. Also, no credit cards/no loans will not help improve your credit score. You need to show you can manage and use credit wisely.
"If you don't have 20% to put down, then you can't afford the house. Period. Just because lenders told people that wasn't true for the past 5 years doesn't change the basic fact. 20% down or you can't afford it."
I have bought 3 houses each with only 10% down. I still own all 3. Why would you say if you don't have 20% down you can't afford it??? I decided each time how much I could spend a month and it was always less than what the bank was willing to lend me even with only 10%. My first house was even a 15 year mortgage, which I paid off 4 years early (already in my second 10% down house). The more you have to put down the better, but to say if you don't have 20% to put down means you can't afford a house...I don't get it.
The ONLY time you can afford a house is: 1. When you can save 20% (whether or not you plan on using it - and you should use it) 2. 3-6 months expenses 3. You have NO debt (including car payments) 4. Your new mortgage (PITI) is 25% of you NET income Don't believe me? Just put on the 11:00 news we are in crisis lock-down mode because of people buying what they can't afford.
Totally untrue. I watch the news all the time - its bad but what you are saying is that 40% of all homeowners will default on their mortages. That's wildly wrong, when in reality somewhere between 4 and 5% in the wortst housing crisis since the depression (in 2005 the default rate was just under 1%) will actually default on their home loans. Granted as many as 16% of all subprime/alt A mortgages may go belly up [some are saying it might go to 19%] but lets face it they were making 100% ltv deals on inflated prices with neg am or interest only mortgages. If you look at the default history of traditionally amortizing 30 year fixed home mortgages with even 5% down payments with LTV ratios below 3x - you will notice an incredibly stable default rate over the past 20 years and its very low (low sign digits). What the foreclosures today are telling us is that giving 100% financing with option arm negative am terms results in (a) overpriced homes that become (b) bank owned and relatively cheap within 2 years.
Thank you for all the response. Answer a few questions yes I have a good job, I am going to school so I can have the chance to moveup in the ladder when I choice to. I am not married but have been in a relationship with my childrens father for almost 8 years. I have talked to a lender, he told me there are programs in my area that will help me purchase a home and help with my down payment. He suggested I get a small or store credit card to show a can make payments since I have no activity on my credit for over a year.I have paid every debt I owe (they were small debts) and disputted the one I don;t agree with. I am not looking for a new model home I wouldn't mind a older home, it depends on the home itself. Where I am living now there are a lot of newer homes selling for less anyway.
Sorry I messed one I live in North Alabama. We have alot of building going on but alot of the newer houses are staying empty.
I paid my car off last year and I did have a credit card because my thought was if i didnt have the money then I don't need it.
Since I only pay $700 rent many of you seem to think that will not cover a morgage. I have went over what I can afford to pay what other bills I will have with owning a home. The leander I spoke with didn't think my morgage would be more $700 if I stay within a certain price range. There are so many beautiful homes available that I can afford. I have been going over this idea many times in my head and something tells me I need to try to move forward. I trust the lender he is not trying to rush me into anything neither is the realtor. I have my future mother n law watching over me and my mother watching also.
You can also try Orchardbank... they offer credit cards to dusty credit people, and the best thing is that they report to the major bureaus every month thereby building your credit that much faster. Quick note, their interest rates are a little dicy... dicer based on your credit though you get 1 year @ 0 interest thus after 6-12 months your credit should be decent enough to close that card and get another at a better rate.
* ever consider leasing with an option to buy?*
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