At what point do you take on an expense

amother

Emerald

Thu, Jun 02 2016, 12:59 pm

So I've been reading all these finance topics, and it seems as though A lot of what determines how much people need is their big fixed expenses, such as housing, car, etc.

2 years ago was a really bad year for us. Last year was better but we were still on public assistance and barely making it. Towards the end of last year beginning of this year It got better and we were making our minimum plus paid off our debt and saved up some. Now, dh got a raise of $2000 a month and we are really outgrowing our apartment and we qualify for a very low interest mortgage and would like to buy a house.

At what point do you decide your income is going to be secure enough that you take on an expense like that? If we buy a house our total expenses (taxes mortgage insurance) would be about $2000/month. So right now we could afford it but if something happens again we will be in trouble. If we don't and interest rates go up Or they tighten up the mortgages again we may never be able to again.

thunderstorm

Thu, Jun 02 2016, 1:22 pm

A person is never secure. We made the decision after living in small apartments for 15 yrs . We needed a large apartment as my kids were getting older but the cost of renting was so high, it just made it more worth it to buy. My DH first made a budget, with all of our income and expenses and ultimately made the decision to buy once we saw that we are able to cover all the expenses monthly. Of course things fluctuate and I needed to put in work into the house unexpectedly. But we always felt a siman bracha since we bought the house and never felt like we were choking. We did our hishtadlus and left the rest up to Hashem.

tryinghard

Thu, Jun 02 2016, 1:38 pm

amother wrote:

Total? or above and beyond your current rent? If it's total, consider putting that monthly rental amount into saving just in case.

gp2.0

Thu, Jun 02 2016, 1:55 pm

If you can afford it, you do it. *

You don't live your life according to what can possibly go wrong. You live your life according to what you have now, and what you can reasonably expect for the foreseeable future.

*And by afford it I mean you have a 20% down payment, can easily afford the mortgage, and you can expect the house to go up in value. Dave Ramsey recommends that you should only do 15 year fixed rate mortgages (which are higher monthly than 30 year but you pay much less interest) and if you can't afford those then you can't afford the house. I don't necessarily agree but it's something to think about.

If you can afford a house, paying for a rental is money down the drain.

amother

Yellow

Thu, Jun 02 2016, 2:15 pm

amother wrote:

do u have money for down payment?

Amarante

Thu, Jun 02 2016, 2:27 pm

There are no guarantees in life. What makes you feel that your current situation is precarious more than another person. Do you have skills so that you can get a job if you lost iPhone current one?

In general you should have about six months actual expenses. That's a good amount in case you lost a job.

When you buy a house, you should also have some kind of cushion in case something needs to be replaced. Of course, you should have house inspects so that you have an idea of age of roof, condition of HVAC and other major systems. Of course stuff will still happen.

There are insurance policies that cover major systems and major appliances which can be a smart idea. I know of people who negotiate Th first year of premiums so the seller paid.

Miri7

Thu, Jun 02 2016, 2:34 pm

If you can afford it now and DH is reasonably secure in his current job, then I say go for it. Interest rates are very low right now. Look forward to your future, and don't be scared because of your bad year a couple of years ago. It sounds like you all were very disciplined financially to get out of that so fast! Good job!!! you should be proud.

Continue to make saving a priority so you don't get hit by unexpected expenses. We saved and saved and are now feeling so much more secure that we have "backup" savings in case of, cvs, an unexpected job loss or other emergency. We were accustomed to saving for a down payment, so we just kept up the saving ethic after the home purchase.

amother

Emerald

Thu, Jun 02 2016, 5:47 pm

Thank you for all the kind words.

It would be $2000/mo total. In my area a 2 bedroom apartment costs about $1600. We have a down payment and would have about $5000 left total. So if DH lost his job it would be a crisis. I had a profession, but I've taken a lot of time to stay with my kids and moved a few times for DHs work since I got married so I would need to start all over again and I would also not be able to earn more than child care would cost me. I could take in babysitting.

I would normally want to wait until next year and have more savings but I am afraid of not getting a mortgage. Also, the rents are going up so fast in my area.

tryinghard

Thu, Jun 02 2016, 6:03 pm

gp2.0 wrote:

just curious - what if you can't expect the home to go up in value? In my area, house prices have remained stable for decades

amother

Emerald

Fri, Jun 03 2016, 12:57 am

mo5 wrote:

The difference between rent and mortgage etc isn't so large according to what you said. Factor that in too

The difference between buying a 3-4 bedroom house versus renting a 2 bedroom apartment
But renting a 3 bedroom would be $2200-$3000.