Minnesota-Minneapolis and St. Paul

To all you homeowners out there...

All you ladies getting homes lately, got me thinking!

Michael & I would love to have a house right now.  He's currently applying, all over trying to get a cop job.  We've had a few close chances, but he hasn't been picked up yet.  He is trying really hard & still working while he's searching, but his current job doesn't bring in all that much income.  Trust me, I know it's better then nothing, but we really need him to make more.  My job is pretty stable & I bring in a decent amount of income, but I don't feel it's enough where we could afford a house payment, along with the other bills we have.  (A big chunk comes out for our insurance & of course uncle Sam)!

Our thoughts were that we should wait on buying a house, until we know what city or county he ends up working for, so we can then decide where to buy. 

Our parents keep suggesting we should at least go get pre-approved & see what we could afford, so we could start looking soon after he gets a job.  But, I don't know if that makes much sense, since he will be making more money when he becomes a cop.  We have great credit ratings - both in the high 700's, so I'm not worried about that, but I guess I just don't know where to start!

Any tips on when/how/where we should start this process?

And for those of you who bought a house before the wedding, what was your reasoning?  And what about those that waited until afterwards?

I know the reasoning varies by situation, but I'm just curious! 

TIA ladies!  = )

Re: To all you homeowners out there...

  • edited December 2011
    I would say wait until he gets a job to even get pre-approved. They have to do a credit pull to get you an estimate and that goes on your credit... If you want to know what you could afford there are calculators out on the net that can get you in the ball-park. I would say since it is a buyers market you don't need to go through all the work right now since it will all change when he gets a better job. It really didn't take us much time to get our good-faith estimate from the back when we were ready to start looking so don't let that push you into it. Once you have the numbers it is so hard to be patient and wait. You would hate to rush it and then end up with a house on the wrong side of the city from where your FI finds a job.

    Good luck!
    image
    Anniversary
  • edited December 2011
    I agree with PP in waiting.  I know it gets exciting and all...but since things will be changing and you are not super serious right now, I would wait until he has the job that you guys are searching for and know more information.
    image
    BabyFruit Ticker
  • jmkaiserjmkaiser member
    100 Comments
    edited December 2011
    Wait until he gets the job he wants. We waited until I was stable in my job to start looking because it looks better to the loan people to be stable. Honestly, I'm glad we got a house before we got married because we were able to really register for what we needed but if we waited we would have had about $1300 extra a month to spend towards the wedding.

    Having a house is great but there is alot of responsibility with it--not just the mortgage. I never would have thought about needing a lawn mower/snow blower or any of those things which we are currently relying on our parents for.

    You have plenty of time. It's exciting to own a home but take the time to get the best deal you can. There are enough houses out there that you'll be able to find something in your price range. GL!
  • edited December 2011
    Definitely wait.  I know it's super exciting (trust me, I KNOW. haha)

    But, if you're not certain you'll be living here for at least a few years, I wouldn't even consider buying.  I'll try and find it, but I know there was a study out there by MSNBC (or something else 'legit') that said it takes about 6-7 years to 'break even' on owning a home.  So, if you're planning to resell within 5-6 years, you'll lose money.  And that's just talking about the cost of closing, etc.

    Anyway. I do have a ton of info bookmarked at home, so I'd be happy to post more info when I get home if you really are considering it.  

    The pre-approval is going to pull a credit report on you. Typically, those scores will only be honored by the bank for 6 months (some only 90 days.)  Don't do the preapproval until you're sure; pulling your scores multiple times will hurt your score.  
    One thing that the Loan Officer mentioned, that I found interesting- it's better to save cash than pay off debt.  (Assuming you don't have too much, of course.)  Although, to be totally honest, H and I have a lot.  Our total student loan debt is almost equal to our annual combined salaries.  We also have about $10k in credit card debt (most of that is on a really low interest card, and actually covered education expenses.)  We were still approved, and we were approved at far above what we wanted to spend. We thought we should pay off a CC or loan first, but he said to wait and keep that cash in the bank instead.

    IF you decide to buy, make sure you sit down together and determine how much you're comfortable spending, before the bank tells you what you can afford.  The bank told us we could go up to $235k, but we knew we wanted to stay around $1200/mo.  That put us at about $150k.  Make sure you have enough cash to use for the buying process, too.  Of course you need the down payment; you might need the cash for closing costs (we negotiated these to be seller-paid.)  But, in the last week, we had to give $1000 for escrow, $350 for inspection, and $550 for the bank.  The $1550 will be put towards the down payment, but it was still taken earlier than I expected ;)
  • edited December 2011
    I would agree to wait, with big changes that are going to happen for you.

    I agree that you should just see what level you would be comfortable with spending each money, based roughly on what you know FIs starting salary would be. If I were you I would still look around online and see what is really important to you in a house (and what isn't). If you have it narrowed down, that will make the home buying process that much more smooth once you are ready to buy.

    PS I am jealous of everyone that has bought a house in this market. The market was already headed down when I bought, but the value of my house has dropped 20% in the past few years. I'm waiting it out anyways, won't sell for a long time, but you sure can get a lot more for your money now!! :)
  • FutureMrsS13FutureMrsS13 member
    Third Anniversary 100 Comments
    edited December 2011
    I would wait.... also.. i know how exciting it can be.. My BF also going to be looking for cop jobs.... i been apart of it all.. i know of a few places going to be hirring..  does he volunteer anywhere?
  • edited December 2011

    The first thing that I would tell you to do is figure out if you were to buy right now how much would you actually have to put towards your bills if you did buy. When FI and I bought our house (little over 2 years ago, prior to even being engaged) we say down and figured out exactly what we had to pay for everything. Once we figured that out we started taking out the money we would have to spend on bills and came up a ballpark number for what we could afford for our total mortgage payment (we escrow, so it's house insurance, payment, property tax and mortgage insurance). Once we had that number we figured out what our range of prices could be and I started perusing the internet to see what our money could buy us.

    Personally, if your FI is still looking for a full-time job I agree with PP that it would be better to wait to get the pre-approval. However, it probably wouldn't hurt for you to figure out what you can afford so you have an idea. It never hurts to start looking at houses to see what you are looking for in a house as well as get an idea of what your money could buy you.

    As for why we bought the house prior to being married...because I personally value real estate much more then marriage. I believe that the legal documents that we signed when we bought our house are leaps and bounds harder to get out of then a marriage certificate. (Feel free to to flame me, it didn't go over well with my mom either.) That and I never had any intention of getting married. (FI kinda blew that plan out of the water when he proposed though. ;-)) So, I didn't see anything wrong with getting a house/living together when we did. I think it's a personal decision and you depends a lot on the couple. We were in a place where we both had stable, well enough paying jobs and I was sick of renting and giving my money to someone else.

    (Kudos if you made it through that whole thing. DIdn't realize it was going to be so long!!)

    Anniversary
  • edited December 2011
    We just did our "official" preapproval yesterday.

    I say "official" because, you can contact a mortgage broker with both of your SSN's and they can let you know what you are approved for in a matter of minutes.  Do a calculator like the ones here:  http://www.usbank.com/mortgage/home-mortgage-calculators.html

    You can calculate how much you can be approved to borrow, and then how much you can afford.  Keep in mind you don't want to be house poor so make sure it's a monthly payment amount you can comfortably handle.  We are spending 1/4 of our combined monthly income or less if possible.

    Then once you have numbers, wait until he has a job.  He'll need to be employed for about 6 months to a year before you might be able to get approved (maybe less if you have good credit).  They did all kinds of income verification with us - they needed W2's from 2009 and 2010, our last two pay stubs each, complete bank statements of all accounts each, and full disclosures of debts (with documentation of any paid in fulls that were different from the credit report). 

    I would recommend doing your calculators, then eliminating any bad items on your credit report.  They'll want you to do it for the preapproval anyway.  I would also pay off anything you can in the meantime (cc's, student loans, wedding stuff, etc).  You will want to have 20% as a down payment or 3.5% if you are preapproved to qualify for FHA.  You'll need earnest money if you put an offer in on a house (value is a percentage of the value of the home), $$ for closing costs + down payment + inspections (you may need multiple inspections if you buy a short sale or foreclosure), + minor repairs needed/appliances/paint/fixtures/etc needed right away before you can move in, etc etc.

    You need a big chunk of money basically.  If you're both working you can cash flow it.  I wouldn't try to buy a house on one income though. 
  • edited December 2011
    Oh - and don't let a job dictate where you live.  Decide where you want to live, and then let that dictate how far you are willing to drive to go to work.  Jobs change, but a house you'll have for many years.

    FI and I decided we are not willing to drive more than an hour to work each way, so that is what will limit future job changes/transitions.
  • edited December 2011
    I forgot - the preapproval only lasts 60 days, so don't get preapproved until you are ready to buy.

    If you let the preapproval period expire, then you have to get preapproved all over again which means they pull your credit reports again and that knocks your score down a couple points.
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:a486fe5a-0b70-471c-9745-848511048cb6">Re: To all you homeowners out there...</a>:
    [QUOTE]I forgot - the preapproval only lasts 60 days, so don't get preapproved until you are ready to buy. If you let the preapproval period expire, then you have to get preapproved all over again which means they pull your credit reports again and that knocks your score down a couple points.
    Posted by kgettingmarried[/QUOTE]

    <div>Yeah. That's what I said before.</div><div>
    </div><div>But, for us, it wasn't just 'a couple points'.  It was 20-25 points.  That makes a difference in your credit score.  Just an FYI.</div>
  • edited December 2011
    OP, we really would like to get a home as well and are in a similar situation.  We did take a first time home buyers certificate program called Home Stretch Workshop  as a way to educate ourselves a bit more. It was through First Home Network and the Minnesota Home Ownership Center. It will give you lots of information regarding low interest loan programs that are available to first time home buyers in the state of MN. And there are lots out there specific to city/neighborhood or the county you want to live in. Almost all of the loan programs require that you do take the course and you get a certificate at the end. I was amazed that many of the people in the workshop were mere days from closing and they were under the wire with fitting in the class in order to finalize their qualification for the loan!  I say once you think you are ready, do it right away, it’s $40 per household and the certificate last for a year. In the end it gave us a clearer understanding of the process and the realistic commitment that you will have to face and lays out your options. Even though our certificate expires this summer and we will have to take the course again come the time,  I am glad we took it when we did for future planning.       www.hocmn.org/en/index.cfm">http://www.hocmn.org/en/index.cfm www.1sthomenetwork.org/Home_Page.html">http://www.1sthomenetwork.org/Home_Page.html
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local Wedding BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:db03defe-5221-42ec-a9fb-cf727713faf3">Re: To all you homeowners out there...</a>:
    [QUOTE]OP, we really would like to get a home as well and are in a similar situation.   We did take a first time home buyers certificate program called Home Stretch Workshop   as a way to educate ourselves a bit more. It was through First Home Network and the Minnesota Home Ownership Center. It will give you lots of information regarding low interest loan programs that are available to first time home buyers in the state of MN. And there are lots out there specific to city/neighborhood or the county you want to live in. Almost all of the loan programs require that you do take the course and you get a certificate at the end. I was amazed that many of the people in the workshop were mere days from closing and they were under the wire with fitting in the class in order to finalize their qualification for the loan!  I say once you think you are ready, do it right away, it’s $40 per household and the certificate last for a year. In the end it gave us a clearer understanding of the process and the realistic commitment that you will have to face and lays out your options. Even though our certificate expires this summer and we will have to take the course again come the time,   I am glad we took it when we did for future planning.             <a href="http://www.hocmn.org/en/index.cfm" rel='nofollow'>www.hocmn.org/en/index.cfm</a> " /> <a href="http://www.hocmn.org/en/index.cfm" rel='nofollow'>http://www.hocmn.org/en/index.cfm</a> <a href="http://www.1sthomenetwork.org/Home_Page.html" rel='nofollow'>www.1sthomenetwork.org/Home_Page.html</a> "> <a href="http://www.1sthomenetwork.org/Home_Page.html" rel='nofollow'>http://www.1sthomenetwork.org/Home_Page.html</a>
    Posted by TaffetaDarlingTaffeta[/QUOTE]


    Not all of the loans require you to take a class, we aren't required to take any type of training for the one we are approved for.
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local Wedding BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:ec661562-4f31-40da-8db9-9447a0cdc5d9">Re: To all you homeowners out there...</a>:
    [QUOTE]In Response to Re: To all you homeowners out there... : Not all of the loans require you to take a class, we aren't required to take any type of training for the one we are approved for.
    Posted by kgettingmarried[/QUOTE]

    Yes, you are right, seemed as though many required the certificate that we were looking at though.  Never-the-less the information that the class provided was pretty informative in terms of laying out the process for a first time home buyer/looker.
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:8d387f99-55ca-47da-9043-5dddbecdd32d">To all you homeowners out there...</a>:
    [QUOTE]All you ladies getting homes lately, got me thinking! Michael & I would love to have a house right now.  He's currently applying, all over trying to get a cop job.  We've had a few close chances, but he hasn't been picked up yet.  He is trying really hard & still working while he's searching, but his current job doesn't bring in all that much income.  Trust me, I know it's better then nothing, but we really need him to make more.  My job is pretty stable & I bring in a decent amount of income, but I don't feel it's enough where we could afford a house payment, along with the other bills we have.  (A big chunk comes out for our insurance & of course uncle Sam)! Our thoughts were that we should wait on buying a house, until we know what city or county he ends up working for, so we can then decide where to buy.  Our parents keep suggesting we should at least<strong> go get pre-approved & see what we could afford</strong>, so we could start looking soon after he gets a job.  But, I don't know if that makes much sense, since he will be making more money when he becomes a cop.  We have great credit ratings - both in the high 700's, so I'm not worried about that, but I guess I just don't know where to start! Any tips on when/how/where we should start this process? And for those of you who bought a house before the wedding, what was your reasoning?  And what about those that waited until afterwards? I know the reasoning varies by situation, but I'm just curious!  TIA ladies!  = )
    Posted by MikeNAndi[/QUOTE]

    My one piece of advice: do not let the bank/pre-approval/mortgage tell you what you can afford.  That is why the market is where it is today, and people are foreclosing on their homes left and right.  Put together a budget, and decide for yourself what you can afford.  I have a great budget spreadsheet template that my financial advisor gave me if you want to see it. 

    Homes are going to stay low for a while - foreclosures especially, because they are taking up to 2 years to get on the market.  Interest rates are starting to slowly rise, but the money you'd save by locking in now at a point less than it would be 6-12 months from now is not worth overextending yourself while waiting for FI to get a law enforcement job.

    That all being said, we just bought a house (5 months out from wedding) simply because we found what we were looking for, we can afford it, and we have the down payment money.  Don't let "before or after the wedding" make your decision for you either - buy a house when you are ready and financially stable.  I wouldn't start casually looking before you are pre-approved... if you find something you love, it will just make you sad that you can't have it, or make you rush into something you aren't ready for.  When you ARE ready, find a mortgage broker you like (interview them.. seriously.  I love mine, happy to recommend), THEN a real estate agent (interview them too!), and then start looking at houses that are in your price range.  Make sure your whole team is on the same page about what you can afford.

    Good luck to your FI on the job situation!!

    image

    My Planning Bio Updated 9.2.11
    My New House Bio! Updated 5.8.11
    image 356 Invited image 144 will be there! image 212 missing out image 0 holding up the show

    Wedding Countdown Ticker
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:46573b1d-e167-4e09-8615-e51a9ae482df">Re: To all you homeowners out there...</a>:
    [QUOTE]In Response to To all you homeowners out there... : My one piece of advice: do not let the bank/pre-approval/mortgage tell you what you can afford.  That is why the market is where it is today, and people are foreclosing on their homes left and right.  Put together a budget, and decide for yourself what you can afford.  I have a great budget spreadsheet template that my financial advisor gave me if you want to see it.  
    Posted by jenn920[/QUOTE]
    <div>
    </div><div>Completely agree. Like I said, the bank approved us for almost double what we actually wanted to spend.  Thankfully, we had that figured out ahead of time.  I can see where the temptation could exist to go "OH! I want to spend ALL of that."</div><div>
    </div><div>Also. If you decide to spend no more than $150k, for example, do not look at houses that cost $200k.  DON'T DO IT.</div><div>
    </div><div>ETA: We also never had to take a class. I think they could be valuable, if you're not comfortable with your REA or LO explaining the process to you.  But, I don't think it's often required (we had an FHA loan, too.)</div>
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:8d387f99-55ca-47da-9043-5dddbecdd32d">To all you homeowners out there...</a>:
    [QUOTE]AAny tips on when/how/where we should start this process? And for those of you who bought a house before the wedding, what was your reasoning?
    Posted by MikeNAndi[/QUOTE]

    <div>Waiting is wise. I know it's difficult once you get house fever, but it's worth it. For so many reasons that PPs have mentioned - reducing your income-to-debt ratio, figuring out where you'll both be working (obviously not a guarantee that your FI will stay with _____ Police Dept forever, but govt jobs are different than private sector) and most of all, saving for a down payment and closing costs along with the myriad of other homeowner expenses. Point being: If you aren't losing money by renting, don't rush to buy just yet.</div><div>
    </div><div>We bought our house in May 2008, a year before we were engaged and 2.5 years before our wedding. The time was right for us - debt had been paid down, a nice fat nest egg had been amassed and some tax burden relief in the form of homeownership (also not guaranteed forever - the mortgage interest deduction could disappear someday) was needed. (ETA: I was way more into buying a house than getting married.) Our home purchase was worth it, but it's not like interest rates have risen exponentially since - we could refi now and get a lower rate (so don't let that be a factor).</div><div>
    </div><div>My advice is for you to wait until your FI is done with school and lands a job. In the meantime, save your pennies and dimes! Then make a realistic budget that accounts not only for a mortgage payment but for incidentals (off the cuff guideline - 40% of gross income). Once you establish a budget, seek pre-approval. Don't let a lender or agent talk you into spending more than you're comfortable and look within that price range. Make a wish list (just like on "House Hunters") and then find an agent. Then have fun house hunting! (Again, don't look higher than you can spend - it leads to heartache.)</div>
    Warning No formatter is installed for the format bbhtml
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local Wedding BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:fdda316d-20f8-4857-8687-fe7893f3493d">Re: To all you homeowners out there...</a>:
    [QUOTE]In Response to Re: To all you homeowners out there... : Completely agree. Like I said, the bank approved us for almost double what we actually wanted to spend.  Thankfully, we had that figured out ahead of time.  I can see where the temptation could exist to go "OH! I want to spend ALL of that." Also. If you decide to spend no more than $150k, for example, do not look at houses that cost $200k.  DON'T DO IT. Posted by Steph0871[/QUOTE]

    Agree.  Definitely agree.  I am not allowing us to see anything priced over $200k because that is our hard maximum number.  We've had to pass up putting offers in on houses because we were sure the other interested parties would push the price up past $200k and we just aren't willing to go there.  It sucks to see those houses go away but there are always more out there.

    To me it doesn't matter when the wedding happens, as long as it happens.  Same thing for the house, doesn't matter to me whether or not it's before or after the wedding (except that I would feel awkward renting my parent's house and getting married while living there).  I know we're going to be married eventually and buy a house eventually, so the order of the two wouldn't matter if we weren't renting from my parents.  Since we are though I want the house first.

    Another thing to know - the market is very very hot right now.  I can see a house one Saturday, and it has an offer on it, and the offer has been accepted by the sellers/bank,  by Monday morning.  Especially if it's a turnkey home at a good price.  Doesn't matter if it's a short sale or not.  The houses are selling really fast, and I don't see the market slowing down til late August/Sept (says our realtor, idk how reliable that is).  There is no use looking at houses unless you are ready to buy because they will so be gone by the time you actually go out hunting and you'll have to see different listings anyway.
  • edited December 2011
    Thanks ladies, I appreciate all the info!

    Now when the parents look at us like we're crazy, when we tell them there's no point in looking right now, (which they've done many times!!)  I'll bring up some of your awesome points!  I will be saving this post for sure!

    Thanks again!  = )

  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local Wedding BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:1d63887c-d1be-48de-a2db-6442a1f6add2">Re: To all you homeowners out there...</a>:
    [QUOTE]In Response to Re: To all you homeowners out there... : Yeah. That's what I said before. But, for us, it wasn't just 'a couple points'.  It was 20-25 points.  That makes a difference in your credit score.  Just an FYI.
    Posted by Steph0871[/QUOTE]

    Oh wow I didn't realize it was that many points!  Ouch!
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local Wedding BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:113e60e9-f640-4514-9418-3f1c78d098c5">Re: To all you homeowners out there...</a>:
    [QUOTE]Thanks ladies, I appreciate all the info! Now when the parents look at us like we're crazy, when we tell them there's no point in looking right now, (which they've done many times!!)  I'll bring up some of your awesome points!  I will be saving this post for sure! Thanks again!  = )
    Posted by MikeNAndi[/QUOTE]

    Neither FI nor my parents understand the way home buying is right now because when they were buying houses years ago the market was predictable and steady and there were no foreclosures/short sales/etc.  FI's dad thought we were nuts for not putting an offer in on a short sale, but that's because he assumed it was the same as a regular sale.

    GL with the parental talks, we are struggling with them too!
  • edited December 2011
    I also agree with most pp, the banks are going to say you can afford way more than you want to spend. Let me tell you one word of advice...when you start seriously looking at houses and get preapproved, DO NOT let your realtor know what the bank approved you at. Our bank approved us at $350k but we wanted to spend $250k at the max. We told our realtor the more expensive amount so she kept showing us houses in that range. I wish I would have told her we were approved at $250k. Plus it's really tempting to look at houses out of your comfort price range and you will WANT them.


    Also, I would have to disagree that saving cash is better than paying off debt. How does that make any sense? I mean you obviously have to have a chunk of change for your down payment, earnest money, escrow, etc. but all of your debt is accumulating interest so why not try to pay that off. I have a friend that said she has $15k saved up for a down payment but wants to keep waiting to have more so she can pay a bigger chunk down on closing day. Well that makes no sense to me because she is wasting money on rent right now that is basically being thrown away and interest rates aren't that great on savings accounts right now.

    One last thing, has your FI tried applying at Three Rivers Park District? My neighbor said they are looking to hire a few cops. Good luck in the job search, I hope he can find a great job soon! :)
    Trying to Conceive Ticker "All that I'm after is a life full of laughter, As long as I'm laughing with you" Planning Bio image
    image
  • edited December 2011
    Veijes- I should have explained that better. The LO reasoned it as just the few months leading up to closing.  If we hadn't planned on buying for another year or so, of course we would have paid off more debt.  But, like I said, most of our debt is really low interest (nothing above 6%), and it's all school-related.  We were approved with our current 'load' of debt, so it made more sense to make minimum payments for a few months to save up even more cash. (H and I typically double or even triple the minimum payments on our loans and CC.)

    Oh, and paying down more up front is always a good idea.  You'll usually end up paying almost as much in interest as you do in principle.  If you buy a house that's worth $300k, and put $50k down, you pay about $230k in interest (at 5%).  If you can put down an extra $20k (borrowing $230k), you'll pay about $214k in interest.  So, it kind of 'doubles' your money to put down more. Similar situation if you're using the extra cash on closing day to buy down points on your interest rate.  As long as your rent isn't insanely high, it does usually make sense to wait until you can afford more of a downpayment. 

    BTW- I got my numbers from the website I used about 20 times/day while we were looking at houses. haha . http://www.mortgagecalculator.org/
    We did realize, though, that you need to up the tax rate (damn MN) to make it more realistic. 
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local Wedding BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:1c7dc695-b1cc-4012-8cc3-4cef115aa679">Re: To all you homeowners out there...</a>:
    [QUOTE]I also agree with most pp, the banks are going to say you can afford way more than you want to spend. Let me tell you one word of advice...when you start seriously looking at houses and get preapproved, DO NOT let your realtor know what the bank approved you at. Our bank approved us at $350k but we wanted to spend $250k at the max. We told our realtor the more expensive amount so she kept showing us houses in that range. I wish I would have told her we were approved at $250k. Plus it's really tempting to look at houses out of your comfort price range and you will WANT them. <strong>Also, I would have to disagree that saving cash is better than paying off debt. How does that make any sense? I mean you obviously have to have a chunk of change for your down payment, earnest money, escrow, etc. but all of your debt is accumulating interest so why not try to pay that off. I have a friend that said she has $15k saved up for a down payment but wants to keep waiting to have more so she can pay a bigger chunk down on closing day. Well that makes no sense to me because she is wasting money on rent right now that is basically being thrown away and interest rates aren't that great on savings accounts right now.</strong> One last thing, has your FI tried applying at Three Rivers Park District? My neighbor said they are looking to hire a few cops. Good luck in the job search, I hope he can find a great job soon! :)
    Posted by veijes[/QUOTE]

    Ditto on the this!!!!!  AGREE 100%!!!!
    image
    BabyFruit Ticker
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local Wedding BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:ee176e04-29ef-4889-85a4-ed589f939910">Re: To all you homeowners out there...</a>:
    [QUOTE]Veijes- I should have explained that better. The LO reasoned it as just the few months leading up to closing.  If we hadn't planned on buying for another year or so, of course we would have paid off more debt.  But, like I said, most of our debt is really low interest (nothing above 6%), and it's all school-related.  We were approved with our current 'load' of debt, so it made more sense to make minimum payments for a few months to save up even more cash. (H and I typically double or even triple the minimum payments on our loans and CC.) Oh, and paying down more up front is always a good idea.  You'll usually end up paying almost as much in interest as you do in principle. <strong> If you buy a house that's worth $300k, and put $50k down, you pay about $230k in interest (at 5%).  If you can put down an extra $20k (borrowing $230k), you'll pay about $214k in interest.  So, it kind of 'doubles' your money to put down more. Similar situation if you're using the extra cash on closing day to buy down points on your interest rate.  As long as your rent isn't insanely high, it does usually make sense to wait until you can afford more of a downpayment.</strong>  BTW- I got my numbers from the website I used about 20 times/day while we were looking at houses. haha .  <a href="http://www.mortgagecalculator.org/" rel='nofollow'>http://www.mortgagecalculator.org/</a> We did realize, though, that you need to up the tax rate (damn MN) to make it more realistic. 
    Posted by Steph0871[/QUOTE]

    I understand what you are saying about having more down but you can do what we are planning on doing by making an extra payment once a year, which can decrease our interest by $20k or more. Another way I look at it is if my friend was planning on saving for another year and paying rent, it wouldn't make as much sense as buying now when you can get such a great interest rate and there are a lot of foreclosures and houses at amazing prices. What if in a year the interest rate goes up 1% or the home values increase? That's all I'm saying.
    Trying to Conceive Ticker "All that I'm after is a life full of laughter, As long as I'm laughing with you" Planning Bio image
    image
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:83a85947-7ddb-45e8-93fd-9f338bcdf1b6">Re: To all you homeowners out there...</a>:
    [QUOTE]In Response to Re: To all you homeowners out there... : I understand what you are saying about having more down but you can do what we are planning on doing by making an extra payment once a year, which can decrease our interest by $20k or more. Another way I look at it is if my friend was planning on saving for another year and paying rent, it wouldn't make as much sense as buying now when you can get such a great interest rate and there are a lot of foreclosures and houses at amazing prices. What if in a year the interest rate goes up 1% or the home values increase? That's all I'm saying.
    Posted by veijes[/QUOTE]

    <div>What if housing prices continue to drop (which is what they're predicting) or if interest rates go further down? I mean, really... homebuying is a gamble right now anyway.</div><div>
    </div><div>I think the point I was trying to make is that everyone is different in their opinions. Everyone needs to decide for themselves what makes them most comfortable when it comes to buying a home. If, for one person, that means paying rent for another year while you save up more money, so be it.  If H and I had decided to stay at our tiny apartment for another year, we could have saved a ton more cash.  We're just sick of our neighbors ;)</div>
  • edited December 2011
    In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_minnesota-minneapolis-st-paul_homeowners-out-there?plckFindPostKey=Cat:Local Wedding BoardsForum:81Discussion:218e7061-68f9-48d9-aebc-6a0d3935a16cPost:41d42cf0-84dd-439f-b14f-30193434fecb">Re: To all you homeowners out there...</a>:
    [QUOTE]In Response to Re: To all you homeowners out there... : What if housing prices continue to drop (which is what they're predicting) or if interest rates go further down? I mean, really... homebuying is a gamble right now anyway. I think the point I was trying to make is that everyone is different in their opinions. Everyone needs to decide for themselves what makes them most comfortable when it comes to buying a home. If, for one person, that means paying rent for another year while you save up more money, so be it.  If H and I had decided to stay at our tiny apartment for another year, we could have saved a ton more cash.  We're just sick of our neighbors ;)
    Posted by Steph0871[/QUOTE]

    Yes, I agree 100%! Everyone's situation is different and I was just stating my opinion on that matter. I'm scared to gamble and that's why we bought now :) And we found a perfect fit for us.
    Trying to Conceive Ticker "All that I'm after is a life full of laughter, As long as I'm laughing with you" Planning Bio image
    image
  • edited December 2011
    For us, what made us buy when we did was that we were sick of worrying if our lease on our old place would ge renewed or not.  We lived in a duplex with the owners upstairs, and one of them wanted to move into our unit with his girlfriend at the time.  We were tired of having our housing be contingent on his relationship and whims.  We'd already been saving up and I got a small inheritance when my uncle died that gave us enough for a 10% down payment.

    What I've heard about saving cash vs. paying off debt is that as long as you stay current with your bills and your balance/limit ratio is under 35% on any credit lines, it wouldn't matter if you worked your debt down further to get the same approval for a mortgage, so you could start saving up cash at that point.  I had no debt besides my car payment, and H had finally paid off all debt from his previous marriage, so we were in a really good place to buy.

    Like everyone said, you don't want to be house poor, so don't write off the lower-priced houses even if you get approved for way more.  You might be really surprised by what you can get for less - we sure were, and we still have money to spend going out every once in a while and don't have to worry about how we'll pay for much of anything.
  • edited December 2011
    Hi!
    I'm a realtor and you guys all have fantastic information! I'd definitley wait to see where he gets a job first. One because of location wise (so you don't have to travel too far!) and b), you'll be qualified for more. I definitely agree though NOT to purchase for what you are approved up to. I think a lot of people are getting smarter and smarter doing this so they aren't living paycheck to paycheck and still have enough money to do "fun" things.

    There are still a lot of good programs out there for down payment assistance and stuff too so definitely let your loan officer know what you had in mind and let them dig into the programs for you. Good thing is that banks are becoming more flexible! 

    Good luck!!!!


This discussion has been closed.
Choose Another Board
Search Boards