Home Buying in 66502>Question Details

Mikey, Other/Just Looking in 66502

Am I ready to buy a house? I am 27, not married, no kids and a steady income. I work for the Federal Government and make $50,000 a year.

Asked by Mikey, 66502 Wed Mar 31, 2010

I also have a guaranteed raise coming in 11 months that will put me closer to $60,000. I have no credit card debt and no car loans. Really my only debt is about $20k in student loans, paying $300 a month. The thing that is holding me back from buying a home is my low savings. Everytime I save up any money I end up spending it on something I want. So basically I have almost no downpayment saved at this time. Is buying a home something I can consider at this time?

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Hi again Mikey..........it's me again!

Just because one "can" do something..... doesn't mean they should.
Sure - you might be able to find some program that can get you into a home with no money down, but I strongly advise against that.

As Dan and Michael have noted, home ownership is way more than just getting to the closing table.
You need to have the discipline to save (and that's what it appears you need to work on) for unforeseen home repairs and basic home maintenance.

In addition, any financial planner worth anything (think Suze Orman) will advise you to have a cushion of at least 3, with 6 being optimum, monthly expenses put away in savings.

You have none of the above.

You are young, and should start off on the right foot..................get into a habit of saving money........build up a reserve and cushion for that down payment and other expenses......and then you will be ready to move forward with a home purchase.

Don't jump in, and then find out you aren't prepared to stay afloat!

Just my advice ...........with my Realtor hat on, not my mommy hat!.

Best wishes...........

ps While you're busy saving up for that downpayment and financial cushion, do start to educate yourself on the home buying process......so....when the time comes, you will be ready, willing AND able!
0 votes Thank Flag Link Thu Apr 1, 2010
Mikey, this is really a question you need to ask yourself. As you can see, you will get a myriad of opinions and options. Ultimately, the only one you should listen to is yourself when asking "Am I ready to buy a house?". Home ownership is a commitment. Are you ready? Are you educated? Find out the processes, local practices in your area and learn about your local housing market.....history and forecast and be as informed as possible when making the 2nd largest decision of a lifetime. Best wishes!
0 votes Thank Flag Link Thu Apr 1, 2010
Hi Mikey,

Here in the Indianapolis area, I work with a bank that still offers $0
down payment loans to first time home buyers. Call a few banks in
your area today and find one that has this program. Ask for a Realtor
referral. If you do this immediately, you may also find a home quickly
(ask for a proactive, aggresive agent who works full time) and qualify for the 10% up to $8000 tax rebate
if you have an accepted offer by the end of April/close by the end of June.

I cannot stress strongly enough that you should make those calls today. FHA is currently at 3.5% down
payment and the lending industry is talking about raising their rates.

Good Luck,

0 votes Thank Flag Link Thu Apr 1, 2010
A few years back when I was your age I spent my savings also. My solution was to tie up some savings in short term c.d's at a bank. That way I got penalized if I withdrew out of schedule(not much penalty but enough to leave the $$ alone). In your shoes I would save up enough to put 10% down and negotiate a sweet deal since you have no overwhelming need to buy you just want to. You have more leverage that way. Another mental trick to forcing yourself to save is that in this economy your job might disappear and you would want the cushion. Three to six months of your monthly expenses is the often recommended rate. That's before you start saving for your down payment. Also if you can pay for your own closing costs that puts you ahead of many buyers and gives you additional leverage. Save Mikey, and best of luck!
0 votes Thank Flag Link Wed Mar 31, 2010
I will say NO you are not ready to buy a house.

Financially you are not bad off. Your attitude towards money is not one that will allow you to be a successful home owner. You have to save money for the heating bill, repairs, painting things, roof replacement, and a lot more. You sounds like you are not ready to make that long term commitment to saving for future needs and wants if present day wants come in focus.

When you can save money for the future and keep it even when you see something you want THEN you will be ready to buy. Owning a house is not like renting. You will have expenses that come up. You have to be able to save for the future to handle those unexpected expenses.

Save up $5,000 or more. When you can save that amount of money and keep it (while always adding more) you will be ready to buy a house. The problem I see is not your finances, it is your spending habits.
0 votes Thank Flag Link Wed Mar 31, 2010

Check out the NACA program. It's a great program I hear. You can purchase with no money down on a home.
0 votes Thank Flag Link Wed Mar 31, 2010
Mikey - I think you should wait to buy a home. It's really important to have a downpayment. You're young - of course you spend money! That's part of the fun of being young with no responsibilities.

So...........Here is what I suggest.......(this is mommy advice, as I could be your mommy - my son is 31)...........set aside a certain amount every paycheck - I mean really set it aside - perhaps open a new savings account just for that purpose. Once you put money there, forget about it, and leave it be!!!.. Put that same amount away every month no matter what.
You need to get into the habit of saving!
It's a good habit to develop!

It will grow, and eventually you will have money for a down payment. When you get that $10,000 salary increase - add a little more to your savings plan.

In the meantime, while that downpayment is growing.........enjoy life......go out with friends.....take a vacation...........a few years from now you can take on the bigger responsiblity of home ownership......and who knows.......maybe a lot more!

Have fun and good luck!
0 votes Thank Flag Link Wed Mar 31, 2010
If you go conventional you will probably need 20% down. If you go FHA you would only need 3.5% down. You should talk to a lender to see what or if you can qualify for a loan based on your info and credit.
0 votes Thank Flag Link Wed Mar 31, 2010
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