Advice to buy or not

[forry]

I'm new to this site, just wanted to get peoples opinion on whether it would be better to keep renting until we are out of debt, or try to get into a house.

We have a lot of credit card debt built up and are making all of our monthly payments on everything. Never been behind or late etc, just the total amount is up there.

We did call Ameriquest once, but have never met with anyone, because of course I'm leary because without any savings and a large amount of unsecured debt, didn't think it would ever be possible for us.

Possible or not?

Wait till debt is gone? (Which totally would be 4 years using the snowball plan).

Any and all advice welcome and Thanks ahead of time.

Forry

[kashi]

If you could get a mortgage that was a lower monthly payment than your current rent, it might be worth it. Keep in mind that you'd have to pay to fix things if they broke, and all that. Good luck getting your debt down, and welcome to the site!

[forry]

Thanks, I have been tooling around in all the different topics, I think I'm going to learn alot.

If we did end up buying (if we're able) luckily, hubby is a handy man who fixes just about anything.

Forry

[terry1156]

While I am probably in the minority, I would suggest you continue to rent. There are a few reasons for this.

First, houses are VERY expensive. Most people just compare the the mortgage payment and the rent payment. I would say your true costs in a house are double (maybe even more) than your martgage payment.

You can't forget taxes that you need to pay on the house. Then there is an increase in utility bills since a house is bigger than an apartment. Then you have a yard which needs to be taken care of. Because a house is bigger, many people need more "stuff" to fill it. Even if your husband is handy in repairs, you still have to pay for the material to fix it. Then there is insurance for the house. I could go on and on.

If you buy a house, I would imagine it will take you much longer to get out of debt.

[skipper]

In my area they offer a first time homebuyers course for free they will help you figure out the best route to take for your personal debt and help get you ready for owning your first home. Check with your local community college or Chamber of Commerce

[DivaJen]

I think you're best bet is to sit down and really do some calculations. Set up a spreadsheet if you're comfortable with that sort of tool. Figure out exactly what you're paying now in terms of rent and utilities, and then figure out what you'd be paying for a home in terms of mortgage, property taxes, insurance, repairs, utilities, etc.

Mortgage interest is tax deductible, which is really nice.

In owning our home, our property taxes are currently equal to almost two mortgage payments. We pay gas, electric, water/sewer, and trash. If we had cable we'd have to pay for that too. Our homeowner's insurance is equal to almot one mortgage payment, and in looking at it we've realized that it's not enough anymore, as the cost to rebuilld our home exceeds what our home is insured for.

Just some food for thought.

Welcome to the forums.

[forry]

My main concern in getting into a house right now was having the amount of unsecured debt.
We are looking at buying land from a friend at a reduced price as far as value. One time he quoted like 5000 an acre and I know its worth twice that if not more.
After the land issue we had checked into a pre-fab type home, maybe putting on a slab or if we did a basement we would do just a small two bedroom. The pre-fabs we've checked into run as low as 35000 to 40000 up too 70000 to 80000. I have never wanted a big home, my theory, we just sleep in the bedroom, no need for big there, cook in the kitchen, eat in a attached dining area, lounge in the living room, one and half baths would be sufficient. My husband and I drive around and see all the huge homes being built, first we can't believe how they can afford it and second, why so big?
If we did this it would be where we would retire, our kids are older but two are still with us.
Our ultimate plan will to try and stay at or around 100,000 complete, might sound unrealistic but its that way or no way. Our rent is 850.00 and if we go into a home, I want the mortgage payment around there including the taxes and insurance.
So that is my dream, at this point in our lives I would never want to be stapped with some big huge mortgage etc. I'd rent forever if that be the case.

Thanks for the information.

Forry

[kashi]

sorry forry! after reading Terry's post, I realized I am way out of my element, and I probably should not have posted. I have never owned a home, so I should let the people with mortgages answer.

good luck with your decision!

[mbhunter]

Just be advised that most lenders these days have a very simple loan approval process. They stick two fingers on the side of your neck to see if you have a pulse. If you do, you get the loan. If you don't, they'll call your heirs and they get the loan.

Well, not quite, but let it be said that they are very lenient and will let you borrow way more than you can afford, as a general rule. There are way too many lenders out there, and they need all the business they can get.

If house prices fall, you could easily be upside-down on your mortgage (owe more than the house is worth). Worse, if you have an adjustable-rate mortgage (something they might steer you towards if you have a heavy debt load -- go figure), you'll likely start to pay more per month after the intro period. Also, don't forget PMI if you put less than 20% down on your house.

On the other hand, if you continue to rent, you can move without needing to sell your property. There is a freedom that comes with renting.

Scare you enough? I'd just tread very carefully with buying a house because it's very much a seller's market these days.

FWIW

[jmjj215]

I agree with Terry. If I were in your shoes, I would attack your debt with a vengeance and keep renting. It's worth the peace of mind. Just nail those debts - do everything possible to pay them down. The faster you're out of debt, the faster you'll be into a house, so use that as a motivation.

[Tree0164]

I would attack your debt. Right now you have a good price on rent. Focus on getting that paid down as quickly as possible.


Then if possible try to do a 15 yr mortgage rather than a 30 yr. It is not the just the mortgage that costs you but everything extra as well.