help me make my dream a reality - Buying a house

amother

Sat, Oct 17 2009, 5:19 pm

I currently rent an apartment for 1500 a month plus utilities. I have 5 children and am really growing out of my apt. not to mention it's on the second floor etc.. etc.. every month when we pay our rent I feel like we are throwing out money. I dream about owning our own home almost every night!!! the problem is while we can afford the rent and basically make ends meet in our other expenses, we don't have a large amount of money saved for a down payment. whenever we try saving money something arises and the poof the money is spent... Also in the area where we would like to live, the houses are expensive $500,000 and up!!!!
so does anyone have any good advice how I can come up with a down payment??????? please enlighten how you did it

amother

Sat, Oct 17 2009, 5:24 pm

I'll tell you, and it isn't so "proper" on this site.

Went on BC to cut our childcare expenses due to rising tuition expenses as the kids were entering school, and FIL helped with the rest.

It was a hard choice. But there aren't many apartments over 3 bedrooms here, and the few that are are way to expensive. Also, many landlords here won't rent 3 bedrooms to over 4 people--doesn't matter if they are young kids. (This isn't Brooklyn).

nicole81

Sat, Oct 17 2009, 8:37 pm

what state are you in? there are some grant programs available.

however... if you can't save for a downpayment, and are just making ends meet with $1500/month rent, do you really think you'll be able to afford a mortgage? just to give you some perspective, I bought a house this year. it was less than $500,000. like you, I had little money saved to put down. with a 5% downpayment my mortgage is still double what you pay in rent.

as far as saving for the downpayment, dh worked around the clock, around 80 hours a week. I took on extra jobs at work and tutored at nights. I transfered everything I could into savings and basically lived off of nothing. then we had to borrow from a family member on top of this, who we are still paying back on a monthly basis.

don't forget that you'll have to pay closing costs, too, usually around 3% of the loan value.

Grandmama

Sat, Oct 17 2009, 8:45 pm

amother wrote:

Unfortunately, today owning a home for most young couples is and should remain a dream, unless there are parents who are willing and able to help. It is impossible to have the kind of money for a down payment and for the monthly expenses. Paying rent of 1500 is cheap! And saving up is all you can do, for now.
A mortgage and other expenses will cost more than double that, and the bank still owns most of what you think is yours for the next 30 years. With 5 children there are all kinds of expenses....and you are better off saving money than investing it in a house.
Things are different today than they were years ago, when houses were more affordable and more in line with earnings. So, dreaming is good, but we also have to be happy with what we have.

Grandmama

Sun, Oct 18 2009, 6:18 am

amother wrote:

moving to a different place is out of the question, due to my dh's job. I'm just curious if anyone opened up a few credit cards and borrowed that way, can such a thing be done?

Absolutely not. Credit cards carry a very high payback rate. And it will lead to bankruptcy. Even borrowing from friends without concrete plans to repay is very risky. Borrowing from A to pay back B and then C is the worst way to buy a house. If you cannot afford it, you should not go into it. It will be more of a headache than an enjoyment, you will not have peace of mind.
Of course, I know some people that borrowed, just never paid back, and lives with the harassment, calls all day and night....and some that went into bankruptcy as a result, some that lost their homes and went back to live in apartments, and all kinds of disaster stories.
If you have say 95% of the money, and need just 5 % to close the deal, then I would say ok, as a last desperate measure, to borrow from a credit card. But you need to have some money left over for unforeseen things, that always happen.
So, I think you should just be happy with the way things are.

amother

Sun, Oct 18 2009, 6:23 am

amother wrote:

moving to a different place is out of the question, due to my dh's job. I'm just curious if anyone opened up a few credit cards and borrowed that way, can such a thing be done?

this is really NOT a good idea as it will negatively affect your credit and thus affect your ability to get a mortgage and your interest rate if you do get one.

It doenst sound like you can afford a house so while this may be your dream it may not be a realistic one at this point in your life. I would strongly recommend that if you want to buy a house you start by saving every month. That money should be untouchable - not available for emergencies. you need to figure out how much you can actually put away each month and start working on it. Slowly your dream might become a reality.

I understand that this might seem harsh but I have just been there, done that and we are finally ready to make a downpayment and buy a house after many years of disciplined saving. It was not easy but well worth it now that our dream is becoming a reality.

good luck!

NotInNJMommy

Sun, Oct 18 2009, 6:39 am

BTW here where I live mortgage+taxes isthe same or less than renting a similar property.

And in a matter of years, if one is paying a mortgage, then it eventually ends bc it's paid off, and then it's only taxes. (which here is 300-500/mo, but still, less than if one stays renting)

that said, do NOT take out credit cards.

Daven, save the best you can, see if a relative, etc. can help, etc.

There is a limit to how much debt is appropriate to take out for a house, and in what ways. (ie. a mortgage rate is generally lower than credit cards, and depending on income/other expenses, etc. there's a limit to what is appropriate to spend for an individual circumstance)

cute mommy

Tue, Jul 20 2010, 9:54 pm

when we got married we had no money. our dream was to buy an apartment or house. we first lived in israel, but then moved to new jersey where hubby is doing much better. even though we both come from frum families, and my husband first learned in kollel. that doesn't mean we got support from our parents. we didnt expect help, and know they dont have to help us with. I was 20 when we got married, I hoped to buy a home before 30, and we bought it just when I turned 27. hubby worked and still works very hard, meaning extra hours plus sundays, and other jobs, I worked part time and was able to help out alittle. somehow somehow we were able to get the downpayment together. we bought a small 3 bedroom home, atleast its ours, and ofcourse we still owe alot to the bank. we bought a cute home for about 260,00, had to put down 20% plus had to pay lawyer feesand other fees prior to the downpayment itself, but we are baruch hashem very happy, ourr mortgage plus taxes equals the same amount as the rent we were paying in our previous apartment. but you have to remember buying a home especialy an old home thers alot of work to do, fix up, my husband is very handy bh so he didalot of work himself, but still there are utilities to paytaxes, etc etc.. but good luck! hopefully ur dream will come mtrue very soon! If it did for us, it could happen to anyone, we both come from simple families with not much money, and we dont make much either.

amother

Tue, Jul 20 2010, 10:07 pm

Whatever you do, make sure you're keeping in mind the TOTAL cost of ownership - including taxes, insurance, maintenance and repairs (things WILL break, and you won't have a landlord to fix them). Utilities will also go up drastically if you've only been in an apartment until now.

amother

Tue, Jul 20 2010, 10:17 pm

amother wrote:

Yup- I agree. I have friends who bought houses and said that suddenly they had all these bills that they never used to have when they rented, like water bills, gas bills, and any other maintenance bills that you need to pay for when you own a house b/c you don't have a landlord to complain to. This is why I kind of prefer to rent for now because every time something breaks or there's a leak or whatever, we just call the landlord and its his problem. I also don't look as renting an apt as throwing away money especially if you can't afford a house which it does not seem like you are in a position to do right now. Not to rain on ur parade, but if you buy a house, you gotta have a lot of extra put aside for repairs and what not, not just living paycheck to paycheck.

chocolate moose

Wed, Jul 21 2010, 8:52 am

If you only pay $1500 and have 7 people living there, you got a bargain. Rent isn't "throwing money out of the window"; you have a plae to live with water and amenities !

Also, in NYC, tenants have more rights than a homeowner does - if you can't meet your rent the court works something out for you; if you can't meet your mortgage, the bank takes your house.

The harsh reality is that not everyone can own.

sky

Wed, Jul 21 2010, 9:05 am

amother wrote:

moving to a different place is out of the question, due to my dh's job. I'm just curious if anyone opened up a few credit cards and borrowed that way, can such a thing be done?

Don't do that. When you get a morgage they look at the entire picture, including your credit, changes in credit, your bank account, and any new changes in your bank account, such as recent large deposits they will want proof that the money is not just loans from elsewere.

$1500 is a lot less then you would spend a month to own a home, especially if it is $500,000. Home ownership includes maintenance, taxes (in many places $500 a month or more), water, heat, electric, snow removal, grass cutting, etc. And don't forget that utilities on a house are a lot more then an apartment. And when stuff like a boiler, air conditioner, or roof go then you are stuck with the big expense, there is no landlord to fix it.

You can look into getting 100% loans, but they are almost impossible to get today. Or see if you can get on HUD with help to buy a house. Or you can get insurance if you are not putting down the full 20%, but that is an additional expense.

Make sure that you can afford to own a home before you buy it.

Barbara

Wed, Jul 21 2010, 9:06 am

amother wrote:

Your bigger problem is that you can't afford the mortgage payment. Even if you come up with a $50,000 downpayment on a $500,000 house, the mortgage alone is gong to cost you nearly twice what you now pay in rent. Add to that insurance and taxes. Sure, you get some back on taxes, but AFAIK not nearly enough for you to make it.

How to save? Cut corner where you can. Be frugal. Shop sales and second hand stores. Don't go out to eat. Don't vacation -- save the money. If you're a SAHM, try to find a job, at least part time. Or home school.

Liba

Wed, Jul 21 2010, 9:17 am

Mortgage plus taxes and insurance on our home, when we had a $110k mortgage, was $1,200 per month. Our house was worth $260k, so the taxes were a lot less than the taxes on a $500k house as well.

Look at the annual property taxes amounts for the homes you would like to buy and calculate that, plus home owners insurance and the mortgage (there are plenty of on line calculators) and see if it is even worth dreaming about buying in that area.

redt85

Tue, Jul 27 2010, 9:04 am

First of all you need to speak to a mortgage broker or lender and provide him with your financial information pay stubs and bank account statements and they will then tell you what price range you can afford a house. Also if you never bought a house you can qualify for FHA loan through HUD. Then you only have to give a small down payment.
Don't give up your dream, it is a just question of how to make it happen. I just bought a house through FHA which was a short sale without giving really giving a down payment, but that is a real rarity.
Also even before you buy a house, you need an engineer or home inspector which is 325-500 right there. You also need a survey and title search-about $550 and you need to pay for a home appraisal which also another 500-550 . that is before anything lawyer feeds and closing and title fees which can really add up also.
There are a lot of foreclosures and short sales right now so just keep looking and hopefully you can find a house.

Peanut2

Tue, Jul 27 2010, 9:30 am

Monthly payments on a mortgage - for me where I live - are cheaper than the cost of rent on a similar place. Utilities not included in each case.
The monthly mortgage payment is higher the less money you have for your down payment, no?

Anyways, good luck OP! I'm also trying to figure out how to save money for a down payment. You just have to spend less than you earn, sort of like the opposite of losing weight.