Can I afford a house?

[thedisciple1976]

@aprilranta Don't forget about PMI (mortgage insurance). If you don't put down 20% or more, you have to pay PMI, which is several hundred dollars more a month added to your mortgage.

 

[abarairukia]

@aprilranta You don’t show here where all of your ‘about 10k’ before taxes go. If you only have a car loan and 600$ in collections, how do you not have a 6 month emergency fund? This should exist SEPARATELY From your house down payment/closing costs so it’s available for after the house is yours.

you both need to sit down and figure out exactly where all of your paychecks go each month. Any non fixed/required spending can be changed to quickly build your e-fund and THEN build your down payment/closing costs. If you don’t do the work of analyzing your monthly spending and budget now, you ru. The very high risk of being in a bind with emergency house expenses and little to no cash for it…then into credit card debt.

 

[lbwilliam]

@aprilranta First things first — what are the property taxes on comparables? That's a ongoing fixed expense.

What is the quote from your insurance company for HO3? If you're planning on having some nice furniture, art or jewelry up your policy to HO1.

Are the houses you're looking at located in a HOA?
If so, what will the "membership" in the HOA cost? This too will be an ongoing fixed expense.

How much is the water bill? Gas bill? Electric bill?

You're also going to have to pay a lot more just putting 3% down. Any loan where the lender is holding more than 80% of the loan requires the lender to force you to pay Private Mortgage Insurance. At 3% down, the lender is on the hook for 97% of the loan. When you have paid off 20% of the loan, the Private Mortgage Insurance will be discontinued.

You're being wayyyy too rosy in your expectations. What happens if you or your spouse becomes partially or wholly disabled? Can the payment still be made?

Get a good disability insurance policy on both of you. Enough to cover the house payment.

Get two whole life insurance policies so either way you or your spouse can keep the house.

Get two inspections instead of one — this way you will know just about everything about your new home before you buy.

Do the above way before you put an offer on any property. This way you are covered for death and disability and you know the true cost of buying.

Your house payment cannot be any greater than 28% of your GROSS INCOME. It would be very prudent to consider spending no more than 25% of your monthly gross – that way, there's some wiggle room when the hot water heater finally fails.

You can significantly cut the length of time you have on the loan by calculating 1/12th of the monthly Principal + Interest. By sending 1/12th of the Principal and Interest to the bank with your regular monthly payment — you will cut a 30 year loan down to 17.

Before you make an offer, talk to other real estate agents about the neighborhood. Call your County police and ask if you your house is in a safe area.
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[victorray]

@lbwilliam FHA MIP is Life-of-Loan... Only way to get out of that is refinancing... or more money.

Also, MIP has an upfront charge at closing unlike the a traditional conforming mortgage.

Lastly, making one extra mortgage payment a year only takes of ~7 years off a 30 year fixed and not 13.

 

[jerri34]

@lbwilliam That def convinced me not to invest in real estate. Haha.