Advice For First Time Buyer, Loans, FHA and Condos

[joec]

Not sure your age, how long you’ve worked, longer term career plans, etc, but I’d get rid of any on going credit card debt first to have 1 less thing to worry about.

At this point, you have about 4k liquid. Not sure what you have in retirement, but I’m a big fan of the cheapest rental you can afford and save save save. This maybe harder if you care where you live (I never did when I rented since it’s a rental as long as it’s close to work.).

Housing prices probably aren’t going to move up much anytime soon and interest rates “should” remain low for a while (at least according to the fed).

Based on all that, I’d just work to improve my credit (read the fico forums) and save for a larger down payment.

[UCGal]

The fact that you are looking ot hold it for only 5 years is what leans me towards suggesting you rent.

The market isn’t likely to spike up significantly in the near term, and when you sell you have some serious transaction costs… You might end up with negative equity and have to bring cash to the table at closing in 5 years…. or at least see your initial down payment turn into selling commission 5 years down the road.

I’ll say it again – consider renting, and save, build that downpayment up to closer to the 20% level, pay down any debt you have and improve the credit scores.

This is what I would do if I were in your shoes. Heck, this is what I did do years ago… waited till I had the resources to put 20% down before purchasing… 2 weeks after my 30th birthday.

[UCGal]

The fact that you are looking ot hold it for only 5 years is what leans me towards suggesting you rent.

The market isn’t likely to spike up significantly in the near term, and when you sell you have some serious transaction costs… You might end up with negative equity and have to bring cash to the table at closing in 5 years…. or at least see your initial down payment turn into selling commission 5 years down the road.

I’ll say it again – consider renting, and save, build that downpayment up to closer to the 20% level, pay down any debt you have and improve the credit scores.

This is what I would do if I were in your shoes. Heck, this is what I did do years ago… waited till I had the resources to put 20% down before purchasing… 2 weeks after my 30th birthday.

[UCGal]

The fact that you are looking ot hold it for only 5 years is what leans me towards suggesting you rent.

The market isn’t likely to spike up significantly in the near term, and when you sell you have some serious transaction costs… You might end up with negative equity and have to bring cash to the table at closing in 5 years…. or at least see your initial down payment turn into selling commission 5 years down the road.

I’ll say it again – consider renting, and save, build that downpayment up to closer to the 20% level, pay down any debt you have and improve the credit scores.

This is what I would do if I were in your shoes. Heck, this is what I did do years ago… waited till I had the resources to put 20% down before purchasing… 2 weeks after my 30th birthday.

[UCGal]

The fact that you are looking ot hold it for only 5 years is what leans me towards suggesting you rent.

The market isn’t likely to spike up significantly in the near term, and when you sell you have some serious transaction costs… You might end up with negative equity and have to bring cash to the table at closing in 5 years…. or at least see your initial down payment turn into selling commission 5 years down the road.

I’ll say it again – consider renting, and save, build that downpayment up to closer to the 20% level, pay down any debt you have and improve the credit scores.

This is what I would do if I were in your shoes. Heck, this is what I did do years ago… waited till I had the resources to put 20% down before purchasing… 2 weeks after my 30th birthday.

[UCGal]

The fact that you are looking ot hold it for only 5 years is what leans me towards suggesting you rent.

The market isn’t likely to spike up significantly in the near term, and when you sell you have some serious transaction costs… You might end up with negative equity and have to bring cash to the table at closing in 5 years…. or at least see your initial down payment turn into selling commission 5 years down the road.

I’ll say it again – consider renting, and save, build that downpayment up to closer to the 20% level, pay down any debt you have and improve the credit scores.

This is what I would do if I were in your shoes. Heck, this is what I did do years ago… waited till I had the resources to put 20% down before purchasing… 2 weeks after my 30th birthday.

[DWCAP]

I think you should find a less costly place to rent for 5 years and save more money, work on the credit score, and get rid of that credit card bill NOW. Housing isnt going up any time soon, infact most news seems to argue for a slight decrease if anything.

Just a few thoughts:

1) You can find much cheaper housing that is very nice. I rent a 2/2 HOUSE on a big lot for 1550/month in MM. I dont care about the schools cause I am still in my 20’s as well and dont have kids.

2) Alot of those condo’s you are looking at are bunk. They are short sales that will never go through, the HOA has serious problems (and you wont get a loan), the place is trashed and needs more money than you have in just repairs, etc etc etc.

3) Buying a condo is just a bad idea, because you dont want to stay there. After 5 years you will have paid down VERY little of your mortagage, and will be one assment away from loosing any/all equity you have paid off. Plus you will have transaction costs and general home repair costs that are on you. Just due to the transaction, mortagage and repair costs you will need to make ATLEAST 10% appreciation over the next 5 years, just to break even let alone make anything.

I am in a similar boat to you, 20’s, in a stable relationship, first good job (ok I am 2 years ahead of you, but I was there in 2009). Hell, the GF even had similar credit card debt as you. We moved into this little house, killed her CC debt, and saved $. We took hikes and walks on the beach, rented movies from Netflix instead of going out, went camping in Palomar instead of traveling…. Inshort, we gave up the luxeries we loved.

Since we moved into our little house in 09 the GF has saved ~15k, and paid off the CC. I have done alittle better. Plus our credit scores are now ~800 each.

If you pulled off the similar, in 3 years you could have 50k no prob, no debt, great credit, and be able to jump directly into your starter home which is obviously your real target.

Or you could follow the route a co-worker took in early 2003, bought a condo, fixed it up, did like you want to. He is still atleast 10% underwater BEFORE the transaction costs, cant refi, cant rent it for par, cant move without loosing thousands, and cant go out and buy the house he wants cause his ‘investment’ is really just an anchor keeping him from the things he really wants.

Your choice, 3 years hard work to get what you want; or 5 years of speculation.

[DWCAP]

I think you should find a less costly place to rent for 5 years and save more money, work on the credit score, and get rid of that credit card bill NOW. Housing isnt going up any time soon, infact most news seems to argue for a slight decrease if anything.

Just a few thoughts:

1) You can find much cheaper housing that is very nice. I rent a 2/2 HOUSE on a big lot for 1550/month in MM. I dont care about the schools cause I am still in my 20’s as well and dont have kids.

2) Alot of those condo’s you are looking at are bunk. They are short sales that will never go through, the HOA has serious problems (and you wont get a loan), the place is trashed and needs more money than you have in just repairs, etc etc etc.

3) Buying a condo is just a bad idea, because you dont want to stay there. After 5 years you will have paid down VERY little of your mortagage, and will be one assment away from loosing any/all equity you have paid off. Plus you will have transaction costs and general home repair costs that are on you. Just due to the transaction, mortagage and repair costs you will need to make ATLEAST 10% appreciation over the next 5 years, just to break even let alone make anything.

I am in a similar boat to you, 20’s, in a stable relationship, first good job (ok I am 2 years ahead of you, but I was there in 2009). Hell, the GF even had similar credit card debt as you. We moved into this little house, killed her CC debt, and saved $. We took hikes and walks on the beach, rented movies from Netflix instead of going out, went camping in Palomar instead of traveling…. Inshort, we gave up the luxeries we loved.

Since we moved into our little house in 09 the GF has saved ~15k, and paid off the CC. I have done alittle better. Plus our credit scores are now ~800 each.

If you pulled off the similar, in 3 years you could have 50k no prob, no debt, great credit, and be able to jump directly into your starter home which is obviously your real target.

Or you could follow the route a co-worker took in early 2003, bought a condo, fixed it up, did like you want to. He is still atleast 10% underwater BEFORE the transaction costs, cant refi, cant rent it for par, cant move without loosing thousands, and cant go out and buy the house he wants cause his ‘investment’ is really just an anchor keeping him from the things he really wants.

Your choice, 3 years hard work to get what you want; or 5 years of speculation.

[DWCAP]

I think you should find a less costly place to rent for 5 years and save more money, work on the credit score, and get rid of that credit card bill NOW. Housing isnt going up any time soon, infact most news seems to argue for a slight decrease if anything.

Just a few thoughts:

1) You can find much cheaper housing that is very nice. I rent a 2/2 HOUSE on a big lot for 1550/month in MM. I dont care about the schools cause I am still in my 20’s as well and dont have kids.

2) Alot of those condo’s you are looking at are bunk. They are short sales that will never go through, the HOA has serious problems (and you wont get a loan), the place is trashed and needs more money than you have in just repairs, etc etc etc.

3) Buying a condo is just a bad idea, because you dont want to stay there. After 5 years you will have paid down VERY little of your mortagage, and will be one assment away from loosing any/all equity you have paid off. Plus you will have transaction costs and general home repair costs that are on you. Just due to the transaction, mortagage and repair costs you will need to make ATLEAST 10% appreciation over the next 5 years, just to break even let alone make anything.

I am in a similar boat to you, 20’s, in a stable relationship, first good job (ok I am 2 years ahead of you, but I was there in 2009). Hell, the GF even had similar credit card debt as you. We moved into this little house, killed her CC debt, and saved $. We took hikes and walks on the beach, rented movies from Netflix instead of going out, went camping in Palomar instead of traveling…. Inshort, we gave up the luxeries we loved.

Since we moved into our little house in 09 the GF has saved ~15k, and paid off the CC. I have done alittle better. Plus our credit scores are now ~800 each.

If you pulled off the similar, in 3 years you could have 50k no prob, no debt, great credit, and be able to jump directly into your starter home which is obviously your real target.

Or you could follow the route a co-worker took in early 2003, bought a condo, fixed it up, did like you want to. He is still atleast 10% underwater BEFORE the transaction costs, cant refi, cant rent it for par, cant move without loosing thousands, and cant go out and buy the house he wants cause his ‘investment’ is really just an anchor keeping him from the things he really wants.

Your choice, 3 years hard work to get what you want; or 5 years of speculation.

[DWCAP]

I think you should find a less costly place to rent for 5 years and save more money, work on the credit score, and get rid of that credit card bill NOW. Housing isnt going up any time soon, infact most news seems to argue for a slight decrease if anything.

Just a few thoughts:

1) You can find much cheaper housing that is very nice. I rent a 2/2 HOUSE on a big lot for 1550/month in MM. I dont care about the schools cause I am still in my 20’s as well and dont have kids.

2) Alot of those condo’s you are looking at are bunk. They are short sales that will never go through, the HOA has serious problems (and you wont get a loan), the place is trashed and needs more money than you have in just repairs, etc etc etc.

3) Buying a condo is just a bad idea, because you dont want to stay there. After 5 years you will have paid down VERY little of your mortagage, and will be one assment away from loosing any/all equity you have paid off. Plus you will have transaction costs and general home repair costs that are on you. Just due to the transaction, mortagage and repair costs you will need to make ATLEAST 10% appreciation over the next 5 years, just to break even let alone make anything.

I am in a similar boat to you, 20’s, in a stable relationship, first good job (ok I am 2 years ahead of you, but I was there in 2009). Hell, the GF even had similar credit card debt as you. We moved into this little house, killed her CC debt, and saved $. We took hikes and walks on the beach, rented movies from Netflix instead of going out, went camping in Palomar instead of traveling…. Inshort, we gave up the luxeries we loved.

Since we moved into our little house in 09 the GF has saved ~15k, and paid off the CC. I have done alittle better. Plus our credit scores are now ~800 each.

If you pulled off the similar, in 3 years you could have 50k no prob, no debt, great credit, and be able to jump directly into your starter home which is obviously your real target.

Or you could follow the route a co-worker took in early 2003, bought a condo, fixed it up, did like you want to. He is still atleast 10% underwater BEFORE the transaction costs, cant refi, cant rent it for par, cant move without loosing thousands, and cant go out and buy the house he wants cause his ‘investment’ is really just an anchor keeping him from the things he really wants.

Your choice, 3 years hard work to get what you want; or 5 years of speculation.

[DWCAP]

I think you should find a less costly place to rent for 5 years and save more money, work on the credit score, and get rid of that credit card bill NOW. Housing isnt going up any time soon, infact most news seems to argue for a slight decrease if anything.

Just a few thoughts:

1) You can find much cheaper housing that is very nice. I rent a 2/2 HOUSE on a big lot for 1550/month in MM. I dont care about the schools cause I am still in my 20’s as well and dont have kids.

2) Alot of those condo’s you are looking at are bunk. They are short sales that will never go through, the HOA has serious problems (and you wont get a loan), the place is trashed and needs more money than you have in just repairs, etc etc etc.

3) Buying a condo is just a bad idea, because you dont want to stay there. After 5 years you will have paid down VERY little of your mortagage, and will be one assment away from loosing any/all equity you have paid off. Plus you will have transaction costs and general home repair costs that are on you. Just due to the transaction, mortagage and repair costs you will need to make ATLEAST 10% appreciation over the next 5 years, just to break even let alone make anything.

I am in a similar boat to you, 20’s, in a stable relationship, first good job (ok I am 2 years ahead of you, but I was there in 2009). Hell, the GF even had similar credit card debt as you. We moved into this little house, killed her CC debt, and saved $. We took hikes and walks on the beach, rented movies from Netflix instead of going out, went camping in Palomar instead of traveling…. Inshort, we gave up the luxeries we loved.

Since we moved into our little house in 09 the GF has saved ~15k, and paid off the CC. I have done alittle better. Plus our credit scores are now ~800 each.

If you pulled off the similar, in 3 years you could have 50k no prob, no debt, great credit, and be able to jump directly into your starter home which is obviously your real target.

Or you could follow the route a co-worker took in early 2003, bought a condo, fixed it up, did like you want to. He is still atleast 10% underwater BEFORE the transaction costs, cant refi, cant rent it for par, cant move without loosing thousands, and cant go out and buy the house he wants cause his ‘investment’ is really just an anchor keeping him from the things he really wants.

Your choice, 3 years hard work to get what you want; or 5 years of speculation.

[briansd1]

DWCAP, congratulations. I’m impressed. Great advice.

I’m embarrassed to say that I was not that financially responsible in my 20s. I was lucky more than hardworking.

If everyone was as financially responsible as you, housing prices would be cheaper and the industry would be hurting.

A friend of mine just bought a house for $250,000 just because he could do a no-down VA loan; and where he lives, buying is cheaper than rent.

The broker kept on telling him that he can afford much more. You’d be surprised how people buy the very maximum they qualify for, resorting to exotic loans, piggy back 2nd mortgages and the like. Even people who didn’t have down payments would rig up gift letters and borrow money from relatives to pad their bank accounts.

That was all fine during the bubble years, but no more.

[briansd1]

DWCAP, congratulations. I’m impressed. Great advice.

I’m embarrassed to say that I was not that financially responsible in my 20s. I was lucky more than hardworking.

If everyone was as financially responsible as you, housing prices would be cheaper and the industry would be hurting.

A friend of mine just bought a house for $250,000 just because he could do a no-down VA loan; and where he lives, buying is cheaper than rent.

The broker kept on telling him that he can afford much more. You’d be surprised how people buy the very maximum they qualify for, resorting to exotic loans, piggy back 2nd mortgages and the like. Even people who didn’t have down payments would rig up gift letters and borrow money from relatives to pad their bank accounts.

That was all fine during the bubble years, but no more.

[briansd1]

DWCAP, congratulations. I’m impressed. Great advice.

I’m embarrassed to say that I was not that financially responsible in my 20s. I was lucky more than hardworking.

If everyone was as financially responsible as you, housing prices would be cheaper and the industry would be hurting.

A friend of mine just bought a house for $250,000 just because he could do a no-down VA loan; and where he lives, buying is cheaper than rent.

The broker kept on telling him that he can afford much more. You’d be surprised how people buy the very maximum they qualify for, resorting to exotic loans, piggy back 2nd mortgages and the like. Even people who didn’t have down payments would rig up gift letters and borrow money from relatives to pad their bank accounts.

That was all fine during the bubble years, but no more.

[briansd1]

DWCAP, congratulations. I’m impressed. Great advice.

I’m embarrassed to say that I was not that financially responsible in my 20s. I was lucky more than hardworking.

If everyone was as financially responsible as you, housing prices would be cheaper and the industry would be hurting.

A friend of mine just bought a house for $250,000 just because he could do a no-down VA loan; and where he lives, buying is cheaper than rent.

The broker kept on telling him that he can afford much more. You’d be surprised how people buy the very maximum they qualify for, resorting to exotic loans, piggy back 2nd mortgages and the like. Even people who didn’t have down payments would rig up gift letters and borrow money from relatives to pad their bank accounts.

That was all fine during the bubble years, but no more.

[Author]

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