Anonymous
Anonymous asked in Business & FinanceRenting & Real Estate · 2 years ago

Buying a home at 25?

Hi. Me and my fiance has been together for 9 years and lived together for 6 years. He works as a computer programmer and Im a special ed teacher. We bring in around $8,000 a month. We’re currently renting a condo for 1,200 a month. I have been saving up ever since my first job and my savings is around $15,000 and he also has been saving up since 16 and has $11,000. We’re looking to buy a small home and we found this perfect home for $71,000. We will have to do some renovations if we do end up buying which is probably another $10,000+ and other costs for closing and fees. we’ll be putting down 20 percent down payment. We both have relatively good credit scores, 712 and 765. I was wondering if we are qualified to buy a home? Or are we too young for that? We’ve been planning on getting a home for half a year now and our wedding is in October 2019 and we wanted to get a home before our wedding so we can start a family right away.

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  • Anonymous
    2 years ago

    If u have steady jobs and 20% downpayment and your house is quite cheap - no problem at all, u will be qualified and your age has nothing to do with anythkng. Good luck with your new home!

  • 2 years ago

    You will EASILY qualify for a mortgage of $57k with 20% down on a $71k purchase. You are actually qualified to go substantially higher, with as little as 3.5% down on an FHA. But it's smart to start small and not get more house than you really need starting out. 25 is NOT too young, maturity level is far more important than age. I was not yet 22 when I signed my first purchase offer (accepted).

    If you decide to do the 20% down, you will have more than enough to cover closing costs and the things you must pay in advance, a year of property taxes and buying a homeowner's insurance policy. But you would be a little short, maybe as much as $5k short, on your budget if $10k for work you want to do. If you went with an FHA loan with as little as 3.5% down, you would have much more cash on hand. Talk to a loan officer at your bank, no obligation. I think you'll see that the small cost you will have to pay for the FHA insurance will be worth paying in order to preserve your cash. In just a few years, the equity you have in your home from doing upgrades and from a rise in property value could mean refinancing with no mortgage insurance at all. If your income stays only at your present level when you refinance, you would be approved for it with NO problem.

    Your decision in the end, but starting out, I really would consider tying up as little of your cash as possible in a down payment. This is what's known as leveraging your investment.

  • 2 years ago

    Talk to a realtor.

  • 2 years ago

    You are not too young to purchase a house. You are at around the correct age to get out of the renting business. You have also saved a sufficient amount to be able to purchase a house and pay the down payment as well as the closing cost.

    The most important factor I see in the purchase of a house is the fact that you are not currently married. This would not prevent you from purchasing a house together, however, this fact present legal problems if your relationship does not work out as you plan.

    Our real estate laws are geared toward married individuals and not individuals that are not married. There are clear legal guidelines on the separation of real property if a married couple decide to end their relationship. These guidelines are not present for unmarried couples.

    There are mortgage loans that require less than 20% down. I would look into these type mortgage loans, and keep my savings in my savings account. You might want to discuss this with your CPA or financial advisor.

    Putting 20% down would make you a little equity rich, however, this would make you cash poorer than you were.

    If you plan to purchase a house that is in need of renovation, you might want to consider the cost of these renovations as oppose to purchasing a house that is move in ready. There might be a situation where you would save by the purchase of a move in ready house.

    Take a look at the figures and see which is financially beneficial to you.

    You might also consider a FHA mortgage loan that allows you to include some repair funds in your mortgage loan. You would be required to hire a professional to do the repairs and remodeling. This mortgage loan i not fr a do it yourself.

    Buying a house or other property is a step by step process, this is the first step you should take in order to purchase a house is to be pre-approved or pre-qualified for a mortgage loan, by contacting a local mortgage lender. The rest of the steps will fall in place, no matter the type of property you are purchasing.

    In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage lender, you can find one in your local telephone book or google for one followed by the city and state in which you reside.

    Make sure this mortgage lender or mortgage banker is able to do government loans such as USDA, FHA and VA loans if you qualify for one. With a VA mortgage loan you are not required to have a down payment, this will save you on closing cost.

    He will fill assist you in the filing out of the mortgage loan application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

    The amount of your monthly debt payments you are required to pay listed your credit report and the estimated monthly mortgage payment would be added together. Based on your monthly income a formula would be used to determine what is called your debt ration. Your debt ratio would determine the amount a mortgage lender would allow you to borrow to purchase a house. This debt ration should normally not exceed 39%. A good debt ratio would be 35%.

    When you speak with the mortgage loan officer you will need the following documents to complete the loan application, there will be others, but this will get you started.

    #1 One month of pay stubs for each person that will be on the mortgage.

    #2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

    #3 Two years of federal income tax along with the W-2 that match.

    Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

    Make sure, before you get your pre-approval letter, you and your mortgage broker go over all your options, as to all the mortgage programs you qualify for, the interest rate, monthly payments. This will allow you to make an intelligent decision.

    Once you have your pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

    If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

    You should select the loan that best suit your financial situation at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.

    What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

    So select the best option for you and your financial situation.

    You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

    Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign. Your mortgage broker will now order an appraisal to show proof of the property value.

    The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.

    After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

    Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

    You would be required to use a local title company that would make sure there are no additional liens on the property take care of all the legal recording at the county recorder's office. You should be sent a title deed in approximately 14 business days, by the title company used to close your sale transaction.

    The down payment of a house would depend on the mortgage loan program you are approved for.

    There are many and varied mortgage loan programs available to you than just the conventional mortgage loan, as well as the down payment required of each mortgage program.

    #1. Conventional mortgage loan

    Normally 5%-10% down payment.

    A. 20% down If you want to avoid Private Mortgage Insurance (PMI)

    #2.FHA mortgage loan

    Normally 3.5% down payment

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    #3. VA mortgage loan

    There is no down payment

    You must have been in the United States military active duty, veteran, or retired.

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    Also your credit score is not used in determining your eligibility to be approved for a VA mortgage loan.

    #4. USDA mortgage

    There is no down payment required

    Normally to be approved for this mortgage loan the property you are purchasing must be a farm or rural property.

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    I hope this has been of some benefit to you, good luck

    "FIGHT ON"

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  • Maxi
    Lv 7
    2 years ago

    Go and speak to your bank/s about what you can loan........... generally you can get a mortgage x3 the amount of annual salary you earn, so you can easily get enough to purchase using just his salary

  • 2 years ago

    I think you have a great Idea there. However, remember moving costs will be significantly higher than you expect, renovation costs will be higher and closing costs will eat you along with your escrows. I recently had this experience. I purchased a home for significantly more. It was ready to move into but I had a couple renovations I wanted to do first. Renovation cost double what my budget had planned. Closing costs ate me up and moving cost nearly $20,000. By the time it was finished. I had shelled $200,000 out of pocket. It was rough for a couple months and yes I had to perform some creative financing to get it done but I am much happier in having gotten it accomplished. Just remember whatever cash outlays you plan, double your estimate.

    • Lv 7
      2 years agoReport

      Then u suck as a renovator. Or can not hire proper people to work for u. 200 k on closing costs and renovation? In the house ready to move in? Sounds bollocky to me

  • Anonymous
    2 years ago

    1st thing you MUST do is get married !!! trying to buy while fornicating will not work

    • curtisports2
      Lv 7
      2 years agoReport

      My, what ignorant judgmentalism. We bought our first house while we were engaged. My wife did not move in until we returned from our honeymoon. We did not spend one night together alone during the seven months I lived in it by myself.

  • Anonymous
    2 years ago

    There are multiple factors that go into qualifying for a home loan other than your credit score. Yes, credit score is very important, your income, down payment, note amount, and even the condition of the home for certain types of loans are all factors that can play into qualification.

    Based on what you are telling me, the two of you should have no issue qualifying for a loan. I would personally recommend getting married before purchasing a home, however I understand that doing so is not always an option, especially if you find your perfect home before your wedding date.

    Good luck and congratulations to you both. Home ownership is a wonderful thing and an amazing feeling to know that you have a home to call your own.

  • 2 years ago

    You aren't too young to buy a house, but you need to look at your spending.

    You have about $5000 in disposable income every month.

    You have both been saving up for years and have only saved $15K and $11K respectfully. How can that be?

    = It looks like you should have saved more than that in 2017...

    Something to think about = you think a fixer upper house is going to be $10K and 4 months worth of work... in my experience it has never been that in actuality. You have a lot going on - are you sure you want a fixer upper. You should be able to afford something around $300,000 as long as you have the employment history and debt to income ratio to qualify..

    - don't buy something where it's "the cheap turns out expensive" (i.e. too costly to repair, a neighborhood you don't like, too small for your needs, etc).

  • Thomas
    Lv 7
    2 years ago

    Your age has nothing to do with buying a house. One question is what you are spending your money on if you are bringing in $8000 a month and have only $26,000 in savings between the two of you. Buying a house - putting 20% down and fixing it up and the closing costs will use up basically all of your savings. It is good to buy a house. That way you are paying into equity and not just paying rent. So the question I would have is where is all your money going? If you could save more money, that would be helpful. Your credit scores are good. The real issue is where is all your money going if you have $8000 a month coming in. You are qualified to buy a home. But the costs of the down payment, renovating the house, closing costs and other fees will basically drain all your savings. There are other costs associated with owning a home - property taxes, repairs. I would suggest you get a home warranty that will cover most appliance repairs including the heating and air conditioning system but also the washer and dryer, plumbing and stove.

    • Lv 7
      2 years agoReport

      They are young, they like to live their lives. This ks here their money is going. And still they save. Good for them!

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