PanteraGSTK

I'm thinking about asking my GF to marry me and I want us to buy a house cause renting in this town is buring money. I could get a house for $800-$900 a month or buy the same type of house and pay about $600 for a mortgage, tax, and insurance. My current landlord is useless so I won't miss that. Plus I can do anything I want to it because it's MY house. My idea is to buy a house for about $50k or so and upgrade it over the next two years until I graduate and sell for a profit.

My question is, how hard would it be for me and her to get a house without a co-signer? I'd like to do it on my own, but if we need one I don't know who I'd ask. This would be a good way to build our credit for when we move and get our "real" house. For background I'm 22 (soon 23) and she is 21. We both have had credit cards and phone accounts and such in our names, and I also have a truck loan. My credit is fine, but my debt to income is all screwed up because of my student loans. She's in the same boat. Not bad credit, but not good cause we both owe a lot (college is too expensive).

Is there any hope or am I just wishing? This will be happening within the next 6 to 8 months. I guess I should ask her first huh?

JD Dearden

Well It is hard to say because there are alot of factors such debt to income, cc, and so on like you said. But my advice would be try to as hard as you can because it one of very few smart purchases you can make, and like you said renting is just throwing away money.

nirion

I would say you have a good change. You are in a situation similar to me a year ago. I was recently engaged, I had a truck loan and she had a 2 month old car loan. Our debt to income was pretty high also. We ended up getting a house for $111,900 in town that is in pretty good shape but older. 50k houses around here are basically something that needs a ton of work or torn down. I am always online, so it made sense for me to look at mortgages online. Quickenloans actually gave us 100% financing at a decent rate when our local bank, which I have had 2 truck loans with and had accounts with for over 5 years, wouldn't approve us at all. Give them a call, they are pretty easy to work with.

Good luck, (house and engagement)

Nick

Jezzhuntin

NO EXPERT, wifes job

1st.. depends on you debt vs income, can you feasibly make the payments month to month and pay your other bills.

2nd.. if possible, put money down to avoid loan insurance. save you quite a bit. (think that is what it is called)

3rd.. student loans are not looked at the same as ie, truck, credit, etc debt. so that is a plus

4th.. I think their are some grants you can apply for first time home owners, at least one of my friends was looking into it.

5th.. you could try a stated income, instead of providing pay stubs, etc.

there are a lot of factors, you are just going to have to do some research and talk to multiple, banks, just don't let each one run a credit check, puts marks against you, get one and keep it on file. Lastly, do not do an ARM loan, seen so many young people do these thinking they will have more money in th future and then get into trouble, plus interest rates are sketchy right now. your credit rating is going to play a role.

I am no expert and I am sure someone else will correct me or expound on what I am saying. GOOD LUCK

PanteraGSTK

Thanks guys, keep it coming.

That's a bit out of range for me. Market in this town is weird. An older house that is above $110k will have been built in the 90's. I'm looking at 80's or 70's depending on condition. I want a fix-er-upper so I can have something to build on. I can do most of the work myself unless it is foundation or brick laying, which would be reasond not to buy. I just want one that is in decent condition, but has linolium, old carpet, old bathrooms, old kitchen stuff. I can fix/replace all of that without a problem. I can even replace sheetrock if needed.

All in all, it sound like i need to pay off some stuff and start looking.

P.J

Rule # 1, the worst they can do is turn you down.

PanteraGSTK

With my luck, I'll be shocked if they don't.

P.J

If they do, you give it another 6 months (DON'T CREATE ANY NEW UNSECURED DEBT), go back and try again.
Rates are on the rise.
Housing in TX (most of it, that is) is kinda funny. It is so much more driven on new home construction.

Up here we use a method of substitution, it goes basically like this:

An average buyer wouldn't likely pay more for an existing home than one can be built for in a reasonable time frame.
Keeping in mind, this only applies to "ready, willing and able buyers under no undue duress".

I have read some about the Huston area where buyers consider a home "used", and that has an effect on the value??

No such thing up here, I see 40+ year old homes sell for just as much as 4 year old comparable ones.
That, and the fact that they pretty much stayed FLAT while we were going through historic market increases up in the MidAtlanic/New England region.

I owned my first house, (actually, the bank owned it, they just let me live there ) at 19 years old. I have sold two more since then and came out smelling like a rose on them all.

Good luck.

P.J

I have access to a rent/own calculator through our MLS (multi-list) system.

It shows a buyer what the actual differnece is (yearly) in regards to the tax advantage of renting v.s buying.

Your rent money is GONE, no income tax advantage, no equity built, no nothing.
My house is a cash cow come tax time. After a while you figure out how to write off that home office, part of the electric bill, heating/cooling, etc.


I know we are all getting smoked in the amount of interest we pay on a 30 yr. fixed, but at least comapared to a renter we can write off that big interest amount.

nelrod

Pantera, as someone else said, there are multiple considerations and factors. If you are going to buy another house in 2 years it may or may not be a good idea. If you are just doing it to remodel and "flip" the house, and you have the time, skill and money and in right market, then you can probably have a place to live while you improve property and hopefully make money doing so. It could be a good project for you and your newlywed to do together and be a good thing or...... As you see, there are a lot of ifs in that statement. If you are going to just live in it 2 years, then sell and get a better house, that is another matter. Then you will have to recoup your cost of loan, which is not cheap, ? around 2500 -3000 bucks. You will also probably be paying pmi which you usually have to pay, unless you put 20% down. (It's for the lender--mortgage insurance that you pay for in case you default on loan). You will also be paying taxes, and insurance. If heating or cooling, or any other large ticket items go out, you will of course, have that to pay for. So you can see that renting is, in the right circumstance, possibly better. I don't know what your major is, but all the time put into a house could be spent on studying or advancing your career. Pray about it, research it, discuss it with your fiance`, make your decision, then go with it and don't look back or second guess yourself. Good Luck with your decision.

Jezzhuntin

ALOT of good points here. PMI that is the term I was lookign FOR! . before you buy, look at what other houses are SELLING for in the same area, not their asking price. Fixer upper/ Flip is a good way to get ahead if researched properly, but you will have to live in it for 2 yrs to avoid capital gains. If this is what you want to do I am sure there is also a construction type loan that you could get rolled in (or line of credit) the mortgage to be able pay for the upgrades. I have heard, if done right flip/fixer uppers can within 7-10 yrs get empower you to pay cash for a house down the road from your earnings, again it is going to depend on your time/skills/will to acheive this. great way to start and you are already using your head and not getting in over your head. get it all on paper and look at the pros and cons and feasibility.

~Cheers

P.J

These sneaky mortagage brokers have devised away around PMI (Private Mortgage Insurance).
It's called an 80/20 (or) 80/10/10. It is two loans, one of which is usually a higher %. It gets you out of PMI, which can in some cases be over $150.00 a month additional on a mortgage.

nelrod

PJ is right if, like most of us you don't have cash to buy a house. However,I don't subscribe to the "count interest off income taxes" thinking. Here's why. If I pay 10,000 in interest, I get to count that off my gross income. Just for this discussion, say I pay 1/3 in taxes. So I don't pay tax on 10K, I save 3333 bucks. I am still out of pocket, 6666 bucks for interest to the bank, it doesn't matter to me who it goes to, it is still my money out of my pocket. Of course most all of us can't just pay cash for a house. This thinking is mainly for argument of not paying off house any sooner than you can. There are always other factors, such as if you were right on threshold of going into a lower tax bracket, then you would have to put the pencil to the paper and see how it come out. This is just food for thought & my opinion.

PanteraGSTK

Thanks. Well, we live apart now, and I've yet to ask her to marry me. (she knows it's coming I just need to surprise her some way). Her rent is $530. Mine is 405. My utilities are 200+ for my half(that will decrease because my house is as sealed as a K&N and the insulation is older than me). I just REALLY don't want to rent, plus her mom may give us $10k to put down and cover expenses like appliences. Plus I make enough on my own to do it and then you add her income and we're golden, but right now money is tight and I'd like to be able to save a portion for the BIG house. I will only tackle what I can do as far as projects go. She only has a year left so she'll be working full time while I'm in school for the next 2(minimum) years. The only reason I want a "project house" is because I know in this town there is money to be made because of the insane turnover here. Houses go up for sale in my neighborhood once a year. I thought it was odd when I moved in, but people just buy houses for their kids to live in while their in college then they sell them. My friends' parents that have bought houses for them have paid around the price I'm looking for and they are worth the price to me. Especially if they were fixed up a bit, then you'd get a return on your investment. I need a place to live for the next few years and don't want to pay $200-300 more than a mortgage is per month. No matter what we'll save money when we move in together, I just want a foundation to start off of when I move out of this town and get a career instead of this BS job to pay bills.

P.J

Okay, if future MIL is giving you a 10K boost you are going to be a FOOL not to make an honest effort at becomming a homeowner.

Nelrod, agreed.
It's my little way of easing the sting of ending up paying about 450K for this house that I hold about 190K mortgage on.