I'm in a rental situation that, for sanity reason, I need to get out of ASAP. I have no savings and a pretty crap poor credit score right now due to my recent divorce. I really don't want to rent again and am only looking for something small. All I need is two bedrooms a bathroom and a kitchen really. there are homes outthere that even with no down payment I would still be paying less than my current rent and are nice enough that i could justify moving there. But I just am curious if there are any programs or anything that I could look into as a first time home owner. thanks.
Posted by pH (Member # 1350) on :
I can relate to the frustration of the cost of renting.
I don't know anything about first time home buyer programs, though, because I didn't qualify for any when we bought this place. But good luck!
-pH
Posted by Bokonon (Member # 480) on :
Without savings, you really aren't in a position to be buying right now. You'll have high payments, due to the large amount of money you will need to borrow, and because you will likely get a more unfavorable rate (for borrowing all that money without a down payment).
You can look into FHA loans, or the 80/20 loans (which works around paying for PMI, private mortgage insurance). Also, look into tax breaks on rents. Here in MA we can actually deduct up to a certain amount of our rent from MA state income tax.
-Bok
Posted by Stephan (Member # 7549) on :
Check out Wachovia. I got a 100% financed loan through them, no PMI, at the time the fixed rate was 5.99%. I was shocked they could do this, and they said that they specialize in homes under $300,000 with 100% financing. A year into it, and its good to go.
DO NOT GET A VARIABLE RATE, and watch out for baloon payments.
I found Wachovia on lending tree, and even got about 45,000 frequent flyer miles for finding them that way.
Posted by SC Carver (Member # 8173) on :
There are a lot of first time buyer deals out there. You'll have to do some research. It is totally possible to borrow 100% and not add much to your payment. If you only can save up 3% to 5% as a down payment it is not going to change your rate much. A lot of what you can afford will depend on your market. Here in SC is just as cheap as or cheaper to own than renting. But in some places the housing market is way over inflated.
If you do buy something make sure you get something you can afford, and keep in mind there will always be unexpected cost. I just spent $200 buying lumber and paint to replace some rotten trim around the house, and I did all the labor.
Posted by Kwea (Member # 2199) on :
I worked for a mortgage broker fir a while, and there are plenty of ways to get financed. Not all of them will work for your situation as it currently is, though.
I would talk to a broker rather than a bank....brokers make money off of you, but they have literally HUNDREDS of possible lenders rather than one or two groups of underwriters, so they can be a lot more flexible about who they lend to.
Where are you living right now?
Kwea
Posted by beatnix19 (Member # 5836) on :
I live in a small town in Ohio. Housing here is actually pretty affordable. I currently rent for about 600.00 a month but I can buy a house of similar size in the same location for anywhere between 55,000 - 75,000. The owner of the house I live in now bought the place fro 55,000. That is part of my frustration, and add to that the factthat the owner is family and I am ready to ripp out what little hair I have left. I can be patient and find a good deal and work on getting my savings and credit back in line. In fact things are already starting to level out a little more now taht the divorce is final and I'm not dealing with all that crud anymore. Just trying to do my research and figure out what is the best way to get moving and how quickly I can actually do it.
Posted by Narnia (Member # 1071) on :
beatnix, this thread I started last year has some great advice and thoughts. I ended up renting and I'm really glad I did. Tom was right when he said that I wouldn't want to worry about all the stuff that comes with a house right now (lawn, outdoor stuff, big chief utilities, etc). However, if you're looking to buy for sure now, that thread has great advice. Posted by pH (Member # 1350) on :
quote:Originally posted by beatnix19: I live in a small town in Ohio. Housing here is actually pretty affordable. I currently rent for about 600.00 a month but I can buy a house of similar size in the same location for anywhere between 55,000 - 75,000.
I hate you. So much. So, so, so, so much.
-pH
Posted by beatnix19 (Member # 5836) on :
Oh, I'm ready to buy, at least in my head. I'm not sure if I am ready yet financially, but I don't think I'm too far away either. So looking for good advice and ideas to get my plans started.
Posted by Stan the man (Member # 6249) on :
quote:Originally posted by pH:
quote:Originally posted by beatnix19: I live in a small town in Ohio. Housing here is actually pretty affordable. I currently rent for about 600.00 a month but I can buy a house of similar size in the same location for anywhere between 55,000 - 75,000.
I hate you. So much. So, so, so, so much.
-pH
Don't ya know? I can rent where I am at pretty cheap, but buy...You got to be kidding me.
"oh look at the house for sale." "300,000...nevermind" ---the low end for most
It was worse when I was in CA. I can get places for a decent price around here, but they are all fixer uppers (that need a lot of fixin).
Good luck beatnix19!
Posted by pH (Member # 1350) on :
Stan, you don't even WANT to know about the real estate prices around here. The houses on my street (I live in a small condo) are all going for well over $300,000.
And the thing is, they probably would've gone for almost that much BEFORE the hurricane, too. Well, maybe not. I live in one of the non-flooding areas, pretty much the highest point in the city. But the houses would've been pricey either way. We were looking at a tiny one-bedroom house about a year ago...$250,000.
It's sort of a double-edged sword. On one hand, a lot of people just want to sell their houses quickly, and they don't even live in town anymore. On the OTHER hand, everyone wants to buy in areas that don't flood.
-pH
Posted by jeniwren (Member # 2002) on :
Clean up your credit first and put some money aside. It's amazing how many more options are open to you when you have some savings and very good credit. As I understand it, the fastest way to increase your credit rating is to be absolutely religious about paying on time or early. Being late takes big hits on your credit, moreso than having revolving debt.
For savings, determine what you can save per month then pay yourself first. If possible, have your determined savings amount either automatically withdrawn from your checking acount (we do this with Vangard) or automatically deposited from your paycheck (my employer allows us to split our automatically deposited paychecks into multiple accounts...I have a portion of each check deposited into a savings account that then gets automatically portioned out to my children's college funds. It makes it a total no-brainer and I never miss it because I never had it to spend.)
It's a lot easier to negotiate with your lender if you are clearly a good credit risk and have money to put down.
Posted by theresa51282 (Member # 8037) on :
I hear ya in hating paying rent. I just started renting a new place in Arlington VA. I love it so much. However, I can't believe I am shelling out 1200 a month on rent for a one bedroom. It is crazy to me. I moving there from a small town in Michigan where I was paying about 400 a month in rent for a three bedroom. I really thought about buying but when I looked into it the prices were just too steep especially when I wasn't 100% sure where in the DC area I wanted to settle long term. Hopefully you can find something that you like.
Posted by mr_porteiro_head (Member # 4644) on :
quote:I have no savings and a pretty crap poor credit score right now due to my recent divorce.
I recommend that you get some savings for a down payment before trying to buy.
Posted by El JT de Spang (Member # 7742) on :
If you have a steady income that would allow you to get a mortgage that's a third or less of your income, I'd buy a house as soon as possible. You don't need a downpayment in most places, and if you can handle being really broke for about a year after closing (if you're lucky) then I say go for it.
Posted by ClaudiaTherese (Member # 923) on :
Be sure to figure in property taxes and average home maintenance expenses in calculating how much this will cost you per year.
Posted by jeniwren (Member # 2002) on :
Unless you specifically ask to opt out, most mortgage agreements include an escrow account for taxes and insurance. Financially, it's better to opt out because you only pay property taxes twice a year, where you pay your mortgage every month. Opting out means you control your money and can be gaining interest on it for the months you're not paying taxes. Whereas in an escrow account, the money does not earn interest and is a conservative guess for how much your taxes and insurance will be. Often it's actually less, and you've been overpaying throuout the year. You get it back, but still. If you like getting a big tax refund at the end of the year, opting out is probably a bad idea. If you try to play it close and have to pay a little bit at the end of the year, you probably have the discipline to pay your taxes and insurance yourself.
You may not have the option if you have a poor credit rating. I don't know what all lenders do for this, but I imagine that they don't offer the option to poor credit risks on the reasonable philosphy that if the customer doesn't pay his taxes it could jeopardize their financial risk.
Posted by pH (Member # 1350) on :
Um, the only thing I learned from My First Real Estate Adventure, mortgage-wise, is that it might be good to make sure there isn't a penalty for paying off the mortgage early.
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Don't ya know? I can rent where I am at pretty cheap, but buy...You got to be kidding me.