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Advice for my situation...Looking to buy 1st home as a Single Person

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  • Advice for my situation...Looking to buy 1st home as a Single Person

    I'm 35, single, no kids. I gross about $50k/year and take home roughly $2400/month. Credit score is around 800. I currently pay no rent (live at home). No debt, other than a little (usually under $300) on my CC which I pay off every month. I have about $30k in retirement savings between Roth IRA and 401K. I have around $30k in the bank. My question is....Based on my financial situation, how well off am I to be able to buy my 1st home? Houses in my area are priced on the lower end compared to the rest of the country it seems. But being single is what makes it a little tougher and scarier to figure out. I am looking to spend no more than $130k on a home. Preferably around $100k-130k. I just don't want to bite off more than I can chew with a single income. I don't know if I should wait longer and keep saving, or how much should I put down based on my current situation? I know 20% is recommended but that just seems unreal for me now. Any advice is appreciated. Thanks

  • #2
    I think you're fine to buy a house in the price range you're talking about. And I see no reason why a 20% down payment is "unreal". You've got 30K saved already. You just need to save up a little more so you can put down the 20% and still leave yourself a 6-month emergency fund.

    I don't know what you being single has to do with anything really. As long as the numbers work, you're good to go.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

    Comment


    • #3
      I think you've got a great plan, and you're in a good situation for moving forward with buying a house.

      - Minor side issue... What are you getting taken out of your paycheck that you're only getting $2400/mo take-home? You're earning ~$4150/mo gross, so where is the other $1750/mo going? Taxes, SS, and Medicare should be $700-$750/mo total. If you normally get a large tax refund (>$500), you probably need to adjust your withholding. How much are you sending into retirement? Health insurance? You should address these issues, because your take-home is low based on your gross income.
      ​- What are your current monthly expenses? What do you expect them to be after buying the house? You'll want to have an emergency fund of 3-6 months' expenses I'm place when you buy your house. My guess is that your expenses will end up around $2k/mo, so let's settle for a round $10k emergency fund.
      ​​​​​​- My philosophy is to plan for the worst, and hope for the best. So plan to spend $125k on the house, which means a $25k down payment. All you have to do is save up another $5k or so to boost your emergency savings, then you'll be good to go & ready to buy the house!
      - Based on a $100k 15-yr mortgage ($125k purchase price), around 4% interest rate, with a 20% down payment... You're looking at around $750/mo in principle & interest, and just got the sake of argument (and easy numbers), we'll guesstimate another $1000/yr in RE taxes, and $800/yr in insurance. So overall, your total PITI payment would be around $900/mo (21% of gross income), which should be reasonable for you.
      - You want the 20% down payment because it prevents you from having to pay for PMI, which is literally the same as burning money. It'll be another $50-$100 on your monthly mortgage payment, but you get absolutely no benefit from it--PMI is only for the benefit of the bank.
      - You want a healthy emergency fund because you never know what will happen, especially with a new house. The roof leaks, water heater explodes, or whatever else. You want to have some money that's always ready & set aside for when life happens.
      Last edited by kork13; 09-27-2018, 08:49 PM.
      "Praestantia per minutus" ... "Acta non verba"

      Comment


      • #4
        I was in a similar situation as you when I bought my first home. I bought something in your price range on a 15 yr fixed note and 20% down. Everything worked out just fine.
        Brian

        Comment


        • #5


          Originally posted by kork13 View Post
          I think you've got a great plan, and you're in a good situation for moving forward with buying a house.

          - Minor side issue... What are you getting taken out of your paycheck that you're only getting $2400/mo take-home? You're earning ~$4150/mo gross, so where is the other $1750/mo going? Taxes, SS, and Medicare should be $700-$750/mo total. If you normally get a large tax refund (>$500), you probably need to adjust your withholding. How much are you sending into retirement? Health insurance? You should address these issues, because your take-home is low based on your gross income.
          ​- What are your current monthly expenses? What do you expect them to be after buying the house? You'll want to have an emergency fund of 3-6 months' expenses I'm place when you buy your house. My guess is that your expenses will end up around $2k/mo, so let's settle for a round $10k emergency fund.
          ​​​​​​- My philosophy is to plan for the worst, and hope for the best. So plan to spend $125k on the house, which means a $25k down payment. All you have to do is save up another $5k or so to boost your emergency savings, then you'll be good to go & ready to buy the house!
          - Based on a $100k 15-yr mortgage ($125k purchase price), around 4% interest rate, with a 20% down payment... You're looking at around $750/mo in principle & interest, and just got the sake of argument (and easy numbers), we'll guesstimate another $1000/yr in RE taxes, and $800/yr in insurance. So overall, your total PITI payment would be around $900/mo (21% of gross income), which should be reasonable for you.
          - You want the 20% down payment because it prevents you from having to pay for PMI, which is literally the same as burning money. It'll be another $50-$100 on your monthly mortgage payment, but you get absolutely no benefit from it--PMI is only for the benefit of the bank.
          - You want a healthy emergency fund because you never know what will happen, especially with a new house. The roof leaks, water heater explodes, or whatever else. You want to have some money that's always ready & set aside for when life happens.
          Thanks. I work for a class 1 railroad which does not take out SS. We pay into Railroad Retirement instead and I think itís more than SS would be. Health care is $230/month. Union dues are another $100/month. I also contribute to my 401k which ends up being $240/month. After all that including Fed, State, Local taxes, my deductions are pretty substantial, usually $700-$800 each paycheck (bi-weekly). My yearly income tax returns are usually around $1200.

          My monthly expenses arenít too bad. I try to live somewhat frugally.
          Cell phone $65/month
          Car insurance $60/month
          Gas $60 every 6 weeks
          Food $150ish/month
          Credit card is less than $200/month (pay it off every month). I mostly only use it for gas, food. some most of that balance comes from that stuff.

          Regarding the emergency fund, I know I donít want to spend my entire $30k in the bank for down payment. I do plan to keep at least $10k for emergencyí fund.
          Last edited by SilverJK; 09-28-2018, 08:13 AM.

          Comment


          • #6
            Suggest you review mortgage rates and fees/expenses + how may 'lock-in' days are available from various lending entities Brick & mortar, Credit Union, electronic and Brokers as rates are increasing and every point is huge when multiplied over 30 years of payout. What history of your CU pay-out in 'sharing?' Ask for or run your own mortgage amotorization schedule to fully understand how your monthly contribution will be distributed, PITI and anything else tacked on. BTW, you can ask for anything you see in a house, written into the offer.

            If it's a new build, check the ratings and licensing of builder/contractor with BBB. In a developed area, check with police for 'activity' and Insurance Broker for rates before giving 'Earnest Money.' Do serious research, ask family, friends, your lawyer, for recommendation of Home Inspector. Most of these guys have no credentials. Create your own list from online research and plan to be on site for the inspection. This is just as critical on a new build because mistakes are expensive to fix.

            Check on-line for best rates on house insurance, suggest using an Insurance Broker for bids. Branding doesn't matter because it's re-sold to one of the big re-insurers. You can usually get a discount if you combine vehicle & home.

            Comment


            • #7
              I understand how being single factors in to your decision-making. When my husband & I bought our first place (over 25 years ago), it was a bit of a stretch to put down 10%. It left us with a very small EF. But we had 2 incomes. We limited our options only to places where we knew we could make the mortgage payments and cover our other basic expenses on only the smaller of our incomes. We ended up choosing a condo over a house, one that included new appliances (no need to immediately purchase or start saving for replacements), within walking distance of a good bus line and grocery store (making it feasible to get by with just one car). It wasn't what we had started out looking for, but we adjusted our expectations and went with what was practical.

              We went with a lifestyle that was sustainable if either one of us lost our jobs. We had each other's incomes as our safety net.

              We both kept our jobs and made extra payments to principal to quickly get our equity up to 20% to eliminate the PMI. (Ideally, we would have put down 20% and have never paid PMI. But it's what we did.) We now own a house and we're doing just fine.

              If I had been single, I would not have purchased with only 10% down. Heck, I probably would not have purchased with 20% down unless I had a really fat EF. And the thought of it all being "on me" would have made it a lot scarier and tougher. I get it.

              My suggestion? Start managing your finances as if you had already purchased a house. Put what you estimate would be your PITI in to the bank. Keep doing that until you have enough for at least a 20% down payment, whatever EF you feel comfortable with, moving expenses, fix up and new home purchases (appliances, furniture, yard gear, etc), deposits for utilities, plus a little bit more. Good luck.
              Last edited by scfr; 10-01-2018, 08:01 AM.

              Comment


              • #8
                While I like scrf's point of managing your finances as through you already bought a home, I have a different view on appliances I wouldn't have them included in the mortgage. I would buy by basic models, gently used or rejected by homeowners whose vision requires high level models in spite of low level cooking skills, modest need for an elegant W/D or difficult to organize fridge that looks spectacular . Better to pay cash than the costly amotorization schedule.

                Comment


                • #9
                  Thanks for the advice. I usually put $1000/month or more into savings to build my downpayment fund. My EF should be already good at $10k and that is left untouched. I plan to keep saving and hopefully buy my first home the right way with 20% down and a 15 year fixed mortgage. $130k house with 20% down at 4.15% = $965/month for 15 years. (including taxes/insurance). 20% down would be about $26k plus closing costs..etc. I'd figure I would need at least $30k to buy the home. I am currently about $8k-10k shy of where I want to be. So hopefully within the next year I can make it happen. Thanks again for all your advice.

                  Comment


                  • #10
                    As a single person, I have bought homes twice. For the second one, I was around 45 but already having major problems with my knees and as an RN that wasn't the best way to be with 20+ more years till retirement. My main goal was to find an affordable house that I could afford even if I had to quit working earlier than expected. I found a house for $60K, not big, not fancy, nothing of that sort. It was affordable and two blocks from town, 3 blocks from the PO and my church, 2 more blocks to the library. I could still walk those distances at that point. I bought it moved in. Was enjoying getting to know the place. I had met hubby in June and as he was the only guy friend I knew before I bought the place I asked him to look it over and tell me what he thought. Crazy a few months later we were engaged and with not even having been in the house a year, my reason for buying the cheapest house in town became fulfilled as I found myself permanently disabled by arthritis. Less than a year after I bought it! I had been living in an apartment prior to that that had been running almost $900/month with rent increases every year. This place was ~$600/month. Eventually, we moved into the home he had been building so had to sell my little house.

                    One thing to caution you about as I have no problems with you buying a home. Notice I did not say house. A house brings along fun things like yard care or paying someone else to do it if you don't want to do it or have bad hay fever and can't. If you live in that part of our country, snow-shoveling. Do you know how to make simple repairs or will you have to hire someone or get a book and figure it out? My first husband after we had been married for 7 years and living in the same house for that amount of time one day said "I'm cold. How do I adjust the thermostat."!!!!!!!!!!!!!! Obviously, guess who had been doing all those 'minor' things for 7 years or the bigger things his dad did. Most of which he never noticed them being done.

                    If you are someone that doesn't mind challenges like learning the care and feeding of a home, go for a house. Or you could always go for a condo where your condo fees cover those things like snow removal. And there is no reason if you are really handy to take on a place that needs some TLC if you and your wallet feel up to it.
                    Gailete
                    http://www.MoonwishesSewingandCrafts.com

                    Comment


                    • #11
                      Originally posted by Gailete View Post
                      As a single person, I have bought homes twice. For the second one, I was around 45 but already having major problems with my knees and as an RN that wasn't the best way to be with 20+ more years till retirement. My main goal was to find an affordable house that I could afford even if I had to quit working earlier than expected. I found a house for $60K, not big, not fancy, nothing of that sort. It was affordable and two blocks from town, 3 blocks from the PO and my church, 2 more blocks to the library. I could still walk those distances at that point. I bought it moved in. Was enjoying getting to know the place. I had met hubby in June and as he was the only guy friend I knew before I bought the place I asked him to look it over and tell me what he thought. Crazy a few months later we were engaged and with not even having been in the house a year, my reason for buying the cheapest house in town became fulfilled as I found myself permanently disabled by arthritis. Less than a year after I bought it! I had been living in an apartment prior to that that had been running almost $900/month with rent increases every year. This place was ~$600/month. Eventually, we moved into the home he had been building so had to sell my little house.

                      One thing to caution you about as I have no problems with you buying a home. Notice I did not say house. A house brings along fun things like yard care or paying someone else to do it if you don't want to do it or have bad hay fever and can't. If you live in that part of our country, snow-shoveling. Do you know how to make simple repairs or will you have to hire someone or get a book and figure it out? My first husband after we had been married for 7 years and living in the same house for that amount of time one day said "I'm cold. How do I adjust the thermostat."!!!!!!!!!!!!!! Obviously, guess who had been doing all those 'minor' things for 7 years or the bigger things his dad did. Most of which he never noticed them being done.

                      If you are someone that doesn't mind challenges like learning the care and feeding of a home, go for a house. Or you could always go for a condo where your condo fees cover those things like snow removal. And there is no reason if you are really handy to take on a place that needs some TLC if you and your wallet feel up to it.

                      Thanks. Yea I am open to all options, and being single and a somewhat of a minimalist, I would consider a smaller 2 bedroom house or even a townhouse/condo if the right one came along. A 3 bedroom would be ideal, but at age 35 and single, I don't know what the future holds, or if I'll ever marry and have a family. I am healthy and have no problem doing yard work/maintenance. In my area it seems all the houses are either way too expensive for me or are total dumps that need a complete gut & remodel, which I don't want to get into. There's very few in between.

                      Comment


                      • #12
                        Originally posted by disneysteve View Post
                        I think you're fine to buy a house in the price range you're talking about. And I see no reason why a 20% down payment is "unreal". You've got 30K saved already. You just need to save up a little more so you can put down the 20% and still leave yourself a 6-month emergency fund.

                        I don't know what you being single has to do with anything really. As long as the numbers work, you're good to go.
                        agree with this . if anything being single is a good thing. you don't have other responsibilities just yet.. so you can afford to make a mistake. It's easier to overcome some setbacks.

                        Comment


                        • #13
                          brah - get a house, it will make your life so much better. Like you will have a lifetime of home improvement project n stuff.

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