Can I afford a house?

[aprilranta]

Hey y’all. I’ve got house brain right now. I’m thinking of applying for a FHA home loan with my husband in the next 6 months but I wanted to see if perhaps you guys could give me some clarity on if we’re in a good spot to purchase a home in that time frame or not. Here’s some more details about what we’re going for:

We both make 65k a year. About 5k per month each before taxes. I’ve got a good credit score just over 720. But my husbands credit score needs work at 620. (Hence why we’re waiting another six months for him to pay off some debts and wait for it to go up). Tbh his debts are not significant at all. About 600$ in collections. He’s just very forgetful but now that he knows we’re on a schedule there’s a little more urgency for him to fix it.

We only have a car loan we split. And it’s just 200$ per month. No other debts on my part.

Between the two of us, we have $10k in savings. I want to save another 5 or 10 before we apply for a FHA mortgage in order to put that 3% and cover closing costs. Average prices in our area are around 400-450k for houses.

What do you think? Are we on our way? Or do we have a lot more work to do? Any insight would be great!

 

[eddie61]

@aprilranta Not yet. You need an emergency fund and a downdown payment.

 

[onyx208]

@eddie61 Down down payment,
Yo street in a Range Rover

 

[dantheman1999]

@aprilranta If your husband is aware of the debt in collections, it’s very small, you have a load in the bank—

WHY DOES STILL EXIST? CALL AND PAY IT OFF.

 

[utcool]

@dantheman1999 This is very troubling to me. I hope it's in fact only $600, and he's not lying to her.

 

[aprilranta]

@utcool I can confirm not lying! We looked over his credit karma together to get a full picture of what we need to do!

 

[harsin101]

@dantheman1999 Yeah $600 being paid on a schedule with $130k household income is throwing up some major red flags. A combination of potential undisclosed debt and/or general financial illiteracy.

 

[cal]

@dantheman1999 Why pay off the old debt already in collections unless they agree to delete if paid in full? Wouldn’t that hurt the credit rather than help?

 

[aprilranta]

@dantheman1999 Lol I showed my husband this comment and he’s biting the bullet and calling today. I think he was hoping it would fall off soon. But it’s just a couple years old.

 

[cal]

@aprilranta Talk to a credit specialist before doing this, everything I know about the subject is that paying it off if it’s more than a year old can actually hurt your score. Even talking to them on the phone and admitting it’s your debt can reset the clock on the 7 years it takes to fall off. I’m by no means an expert, I’d wait for someone else to reply to my comment who knows 100%. The only thing I’ve been told before can actually help is if you negotiate something called a pay to delete. Hope this helps

 

[aprilranta]

I hear you all loud and clear! After reading all your comments. I think you’re right that maybe 6 months is too soon and perhaps we should save up even more to avoid getting hit with huge interest rates.

I’m definitely anxious to get out of renting and to finally live in a place that I own and can build equity on. But I should definitely think more with my head than with my heart. Thanks for your insight y’all!

 

[akingbade]

@aprilranta Yeah...you need to get his score up and build up your savings. Remember you are going to have to pay closing costs, which are several thousand dollars, on top of the 12k+ in minimum downpayment. And depending what time of the month you close, you may pretty quickly also need your next payment on hand, too, which will be over 3k.

 

[tongdtbds4]

@akingbade Plus, your down payment should NEVER (gonna repeat this, NEVER) come from your emergency fund, which you should build to cover the new expense of owning the home immediately.

 

[kglahoda]

@tongdtbds4 Yeah, definitely not. Both places we bought had stuff crap out shortly after purchase. In this house it was the aging HVAC. We’d hoped it would chug along another year or two, but it was within a month or so of moving in. We had an emergency fund (or rather enough funds) so no problem, but even so.

 

[tongdtbds4]

@kglahoda It was HVAC for us too. We specifically had a “new home surprise” fund to pull from so we didn’t even pull from our EF. Haven’t met a homeowner yet who hasn’t had one big expensive surprise in the first few weeks.

 

[randomallocation1]

@tongdtbds4 Met one now. Nice to meet you. No surprises. Everything worked in the house we bought (10 yr old remodel). Been there since 2019 no major issues.

 

[tongdtbds4]

@randomallocation1 You got very lucky! I don’t think there is a single home in my town that is younger than 40 years old which is a factor. My house just turned 100 this year and we have big plans for the centennial

Is it ten years old or the remodel was done ten years ago?

 

[randomallocation1]

@tongdtbds4 Remodel was done in 2010. House was built in the 1950s.

 

[davidfmayerphd]

@tongdtbds4 One of our major appliances broke beyond repair within 2 weeks of moving in and another broke about a month later. One was the range and it almost set the kitchen on fire in the process of breaking. So that was fun. The home warranty our seller paid for only covered a small fraction of the replacement costs.

 

[tongdtbds4]

@davidfmayerphd OMG I am going to have nightmare about that.