Should we continue renting or try and get approved for a mortgage?

Asked by LILYCLAIRE6, Sacramento, CA Tue Oct 1, 2013

My husband and I are going to be moving out of our current rental in December (we are currently renting a condo and want a house). We are sick of renting and really want to buy a home of our own but I don't think that we would be approved.
My husband's credit is pretty bad so I would try and get approved for a mortgage on my own. My gross annual income is approx. $75K and my credit score is between 680-715 (depending on which credit agency). The bad part is that I have around $15K in credit card debt BUT all of my accounts are in good standings and I have never ever been late on my payments. Also, we don't really have any money for a down payment.
I would really appreciate any/all advice on this matter. Is it worth it to try and get approved for a mortgage or should we wait until my debt is paid down and we have money for a down payment? Thank you!

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Grounded. Re…, Agent, Sacramento, CA
Tue Oct 1, 2013
The first place you should start is with a lender. With a few questions over the phone they can really help you assess your ability to qualify for a loan. It sounds like you are actually in pretty good shape to buy a house, but then again, I'm not a lender so I'll leave that to the experts. I work with quite a few first-time homebuyers and would be happy to help you find a great lender and a great house!
2 votes
Teri Andrews…, Agent, Auburn, CA
Tue Oct 1, 2013
If your eventual goal is to buy a home (even if you are not quite there yet) I would suggest sitting down with a lender face to face and see where you are at, and what you can to do to improve your situation. Then at least you will have a plan and a goal. If you can't qualify right now, you can start paying down the debt and saving for a down payment. One way to save somewhat painlessly is if you have a job with a regular paycheck , next time you get a raise or promotion immediately calculate the difference and have 1/2 or more of that amount automatically deposited into a savings account at a bank or credit union different from your everyday spending accounts. You don't spend what you don't have and you will be surprised how it adds up.

example: you get a $1/hr raise = $40/wk = $160/mo set up direct deposit of $40 per pay period if paid biweekly. End of the year you have $960 saved, if you get the same $1/hr increase the next year you are then depositing $80/pay period or $1920/yr

Good luck!
1 vote
That is a really great idea. Thank you so much!
Flag Tue Oct 1, 2013
Chris Leichus, , Roseville, CA
Tue Oct 1, 2013
Hi. If you are interested in seeing if you qualify for a loan, I would be happy to speak with you and we can review your credit and income and see what type of plan we can out together for you and your husband. We have several "low down" payment loan programs available. Please feel free to contact me at your convenience.

I look forward to speaking with you.

Chris Leichus
Big Valley Mortgage
NMLS #802377
1 vote
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Flag Sat Jan 25, 2014
Sue Archer R…, Agent, Palm Harbor, FL
Tue Oct 1, 2013
Funny question to ask realtors. :)

You won't know if you could buy a home unless you asked. I would contact a lender. (Chris Stahl at Summit Funding is great 916 266-4436) They'll run your credit, check your other factors and help you determine when and if you can buy...and at what price.

I'd like to stress that even if it won't work out right now, it will work out in the not too distant future with a little focus. If you need credit repair that can be accomplished. If you need to save for a little more downpayment, that can also be accomplished. If owning a home is your goal, you can do it.

I don't think we can give you the answer without further financial information that I wouldn't suggest you list publicly here. the lender needs to calculate your monthly payment obligation with relation to what is available to pay for a home. consider that your housing cost should be about 1/3 of your gross income, assuming your other debt- credit card, auto loan, etc is within about 40%....those are raw numbers and better discussed with a lender.

Check that out first and then we could talk about whether what you qualify for makes buying a home doable right now, or if you need to make some adjustments first. Making a plan is the first step!
1 vote
haha...I know, right? Thanks for the response! You are right- at least I can get a game plan going for the future. =)
Flag Tue Oct 1, 2013
Brian Nguyen, Mortgage Broker Or Lender, Mission Viejo, CA
Fri Feb 14, 2014
If you do end up considering to get a mortgage instead of renting, feel free to contact me. I am a lender based out of California and I have done plenty of loans throughout the state. I would be glad to speak with you to help you get the loan that you need. Well I hope this helps. If you have any other questions or need a loan please contact me! Good Luck! Brian Nguyen Sr. Mortgage Banker NMLS # 659743 Phone: 949.667.2887
0 votes
Christopher…, Agent, New Cumberland, PA
Sun Jan 26, 2014
Hi Lily
Speak with a lender. No sense in paying someone elses mortgage and making there bank accounts bigger.
0 votes
Jaime Becker, Agent, Sacramento, CA
Sun Jan 26, 2014
As a follow up, did you ever talk to a lender?
0 votes
Jason Walter, Agent, Sacramento, CA
Fri Jan 24, 2014
Here's a great video if you are thinking about buying a house. Make sure you have a strong financial foundation first!

I also have it linked with additional information to my Facebook page (link is below). Hope that helps!

Jason Walter
REALTOR® - lic #01923240
Certified Public Accountant (CPA) - lic #103885
(916) 945-9243
0 votes
Ramon Limcol…, Agent, Sacramento, CA
Fri Jan 24, 2014
A very smart first step is to talk to a mortgage lender. They will be able to map out various scenarios based on your financial situation. After that, you can decide on whether or not homeownership is for you.
0 votes
Jason Walter, Agent, Sacramento, CA
Tue Nov 26, 2013
Before you buy a home, I highly recommend that you have a good solid financial foundation. That's great that you have been making your credit card payments on time. I assume that your interest rate is fairly high since it's a credit card. Focus on paying that down to zero and formulating a budget for you and your husband if you don't already have one. Once you have paid off your cc debt, start saving for a down payment, talk to a lender and then a Realtor. Hope that helps and best of luck to you!


REALTOR® - lic #01923240
Certified Public Accountant (CPA) - lic #103885
Hammer Real Estate Group
cell ph 916-716-1341
0 votes
Shelly Long, Agent, Sacramento, CA
Sun Nov 24, 2013
Hi Lily~

I work with a local loan officer who helps people clean up their credit as a FREE service to them. She would be able to run your credit and tell you exactly what you need to do and how long it should take before you will be able to buy a home. She just prequalified a client who she began helping a year ago. He and his wife are now in contract in for a $170,000 home. This would typically cost them 3% (approx $5100) in closing costs and 3.5% (approx $6000) in down payment, but she was able to obtain down payment assistance and other credits with their closing costs, so now they only have to pay $1500 total to buy this home. I can pass on her contact info to you if you'd like. Please just send me a private message.

Good luck, Lily~!
0 votes
Jim Walker, Agent, Carmichael, CA
Thu Oct 3, 2013
Most of the real estate agents that responded have a simple buy versus rent computer program that can do some calculations to see if you are ahead on a monthly basis buying versus renting. The program considers The mortgage payment versus a rent payment, but also takes principal accumulation on an amortized mortgage, income tax savings, housing appreciation, maintenance reserve, insurance, property tax and utilities payments into consideration. - and the number of years you expect to own the property.

If you lived in the Midwest US, buying is usually cheaper on a monthly basis than renting, In San Francisco and San Jose, renting is usually less expensive than buying. Here in Sac town, well we are kind of in between the extremes, so it really helps to get someone with the calculator to analyze which is better on a monthly basis.

What may be more important than a small difference in monthly cost is your preferred lifestyle, employment stability, and future plans. If you are going to need to move again within a couple of years, the transaction costs might eat up equity you build in a house by buying.
0 votes
Jaime Becker, Agent, Sacramento, CA
Wed Oct 2, 2013
The best thing you can do for yourself is check into it now. There are really great programs out there that can help with either low credit scores and down payment assistance.

I have a couple of contacts that work with both.

If you can buy, I would buy. Interest rates are staying steady right now and have actually experienced a drop this week. However interest rates are expected to be higher next year.

Feel free to contact me if you need some contacts about programs that may help you get pre-qualified.


Jaime Becker
Lyon Real Estate
Off: 916-484-3610
Cell: 916-715-7454
BRE# 01737783
0 votes
Jamie Collins, Agent, Fair Oaks, CA
Wed Oct 2, 2013
It looks like you should rent, but, there are a lot of other factors that would need to be discussed. Why/how did you get into debt? I do not believe you need to be debt free to purchase. You should have money in the bank for problems that will accure.

Somethings that should be looked at is buying a house may actually be cheaper then renting. This would/could give you the ability to pay off your debts faster.

If you would like we could sit down and go over your personal situation and come up with a game plan. With out a plan you will never get to where you want to be.

Jamie Collins
Over 24 years of experience
in Real Estate Services
Real Estate / Insurance / Mortgage Training
916-257-3779 direct
877-810-2763 fax
Dept. of Insurance # 0H71400
Dept. Real Estate # 0104820
0 votes
JR Thrasher, Agent, San Diego, CA
Wed Oct 2, 2013
It never hurts to know. Weather or not you qualify for a loan you will walk away with a good picture of what you can and can not do. You will also have all of the information you need to make a good plan for the future.

J.R. Thrasher
0 votes
Paul Singh, Agent, Rocklin, CA
Wed Oct 2, 2013
It is always better to buy and pay your own mortgage. Right now you are paying rent, which is the landlords another way to think of it is you are paying someone elses mortgage and they are getting ahead by building equity.

I would first talk to a mortgage broker my mortgage guys are able to pull your credit and be able to advice what best to do so you can qualify for a mortgage and bring your credit card debt down. There are downpayment assistant programs also...with your income and credit score you will qualify for it.

End of the day you need to live in a house/apartment and do some type of payment...being rent or mortgage. It would be better you paid a mortgage and started building equity which get get you ahead.

Also with rate being low right now it would be the best time to look into getting a mortgage. At the sametime we can look at your husbands credit report and help him in what he needs to do to get his credit fixed.

They are other ways we will show you how to pay your credit cards quicker and get ahead.

Call me now and start packing!!!

Paul Singh
Keller Williams Realty
0 votes
Mack McCoy, Agent, Seattle, WA
Tue Oct 1, 2013
You should so rent. You're broke and you owe $15,000! (and his credit is worse!)

Lily, here's my advice. It is so worth it to wait until you have PAID OFF your credit card debt and you have money, not just for a down payment ($14,000 or so with a $75,000 income looking for a loan of around $330,000 or so), but for reserves - the six months' living expenses that you should have socked away "just in case" there's a slowdown at work or the furnace and transmission both go out.

You make $1400+ a week gross, what's that? $1100/week net? You're fourteen weeks in debt already. If that credit card is interest-free, it will take you a year at $300/week to pay it off.

Pay it off. Save some money. Fix his credit. Then, buy a house.

All the best,
0 votes
uh, yeah; but I'm assuming there's money going out for rent...why not put it towards a purchase?
Flag Tue Oct 1, 2013
, ,
Tue Oct 1, 2013
It is always better to buy then rent the same property. It takes you paying for someone else to make profit out of the equation. Contact me if you want to see what kind of a loan you could get.

Alex Greer
Loan Officer
NMLS #1056079

0 votes
Rick Otto, Agent, Arden-Arcade, CA
Tue Oct 1, 2013
All of the responses are respectable and right on point. Listen to the answers and pay attention to them, they speak volumes when it comes to buying a home and qualifying for a loan.

I can't say it any better than Teri, Chris or Sue. They are right on point. Follow their advice.

Rick Otto Owner/Broker
Rick Otto and Associates,
Real Estate Sales and Property Management
(916) 484-0955
0 votes
Matt Bistis, Agent, Sacramento, CA
Tue Oct 1, 2013
I'm sure there are some landlords out there who would suggest you keep renting, but I don't think you'll get anything but a "yes, see if you get approved & purchase if/when you can" answer from any Realtors or Mortgage Brokers. Why doesn't cost anything to ask.

If its going to take a little more time to purchase than December, you may consider staying where you are on a month to month basis instead of moving & committing to another year's lease. Good Luck!
0 votes
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