Buying a House in 2 yrs - Realistic Numbers?

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So, I am planning on buying a house in the next two years. I'm tired of renting, playing by others' rules. So, my goal is to get into a house in a few years.

I am looking in the $50-$80K range. Around here, you can get:
- Small home in one of the "working" suburbs
- Two Family home in a decent neighborhood in the city.

Not sure which one, just yet. The city schools are horrible, but I don't see myself having children any time soon. Would be nice to have someone else help pay my mortgage.

Does anyone have any good figures as to what I should expect to spend/put down on a house in this range? I googled it and have been talking to a few people but it seems that anything online is just advertisements and everyone I speak to in person did 3% down on a FHA loan.

I have a good amount of student loan debt (around $45K - not making minimum payments).

The car will be paid off next month allowing me to save some interest. Cable will be shut off next month. Both of which will allow me to save up an additional $300 a month for a house.

What should I expect to spend?

I am planning on saving up $30K. Is that a good assumption to get into a house in the $50-80 range? Should I increase it a bit more?

I don't know what other fees in addition to the downpayment. What would be a good downpayment? Ideally I would save up the entire amount, but what I spend in rent is going to be less than what I would spend in interest.

It's a trade off. I'm sure with what I have saved now, I could get into something next spring ... but I would have a bit less to put down and I would be spending more on interest.

Any help would be appreciated! Thanks!
 
You should go to your bank or credit union and talk to them to get the exact details of your situation. I wouldn't wait around for two years saving up a huge down payment you don't really need. Interest rates and prices are going up.
 
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I think realistically 30k could get you into a much bigger house than 80k, I got into an 80k with the option of NO down payment at all.. I still put some down. I realize this leads to more interest/a longer loan but I was ok with that. If the 50k/80k is your range, I would think 30k saved is overkill, in the best possible way.

Another thing to consider, what the above poster mentioned, prices and interest are going up.. so you may want to try and get into a house sooner, then you can just pay more than the minimum monthly payment, the sooner you pay off the house, the less interest you'll have spent over the duration of the loan. IMO as long as you can get a loan with no early pay off penalty I see no benefit in saving 30k for a house that cost 50-80k
 
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You will still be playing by other's rules: those of your lender.

School systems very much matter for resale and appreciation. Just remember the 3 "L" s of real estate...

Start becoming familiar with your area. Spend time on Zillow, or other real estate sites, to understand the neighborhoods, asking prices, etc. Buyer's agents represent you, but only you are truly acting in your best interest. They just want a closing. That's how they get paid.

As was said, learn what your bank, and others, require for down payment, income verification in your income and credit score range. It's become very restrictive. Forewarned is forearmed.
 
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Originally Posted By: Astro14
You will still be playing by other's rules: those of your lender.

School systems very much matter for resale and appreciation. Just remember the 3 "L"a of real estate...


Well, yes, but their rules will stop me from changing my own oil, plant a small garden, change tires in the living room ...


Originally Posted By: actionstan
I think realistically 30k could get you into a much bigger house than 80k, I got into an 80k with the option of NO down payment at all.. I still put some down. I realize this leads to more interest/a longer loan but I was ok with that. If the 50k/80k is your range, I would think 30k saved is overkill, in the best possible way.

Another thing to consider, what the above poster mentioned, prices and interest are going up.. so you may want to try and get into a house sooner, then you can just pay more than the minimum monthly payment, the sooner you pay off the house, the less interest you'll have spent over the duration of the loan. IMO as long as you can get a loan with no early pay off penalty I see no benefit in saving 30k for a house that cost 50-80k



I only need, or want, so much house. If I did < $10K down on a $50,000 house ... would I be paying too much in interest?

I don't really need or want a big house.

Something with two bedrooms, maybe detached garage.
 
Prices are going up in most places a little bit, but rates are staying steady and that probably won't change any time soon, though two years is a long time.

Get a home inspection before you close, that is probably $300. Plan on up to $5,000 in closing costs, but this is a high estimate. This would include closing costs to the bank (some banks have $0 closing costs or $500 or something instead of the more typical $2000 or so, but sometimes those reduced closing costs come with a slightly higher rate on the loan), title insurance, and in some places you need to escrow a years worth of property taxes and insurance.

You can try to work in closing costs into the final deal. For example, if the house is $80,000, you could offer $78,000 plus $3000 in closing costs. So really the seller is getting $75,000, it is just that they get $3000 less at closing and you get that money to put toward closing costs.

If you put 20% down then you won't have PMI (private mortgage insurance) which for a house in that price range probably runs $30 a month added to the cost of the loan. Once you have made enough payments to make up 22% equity in the property (remember though, initially most of your payment goes toward interest so you'll pay down the balance of your loan relatively slowly) then by law PMI goes away too.

The shorter the loan the more of your monthly payments will go toward principal even from the start. The less total interest you'll pay, too.

If you can save up $10,000 that's probably when I'd start looking if I were in your situation. Then try to get some seller-paid closing costs in the deal.
 
Go here and pull credit report for free from all 3 and review for errors. And bad things. If you have a year there are things you can do to improve credit, like open a credit card, but have almost zero balance.

https://www.annualcreditreport.com/index.action

Get a FICO credit score even if you have to pay for it once. The other credit scores are worthless.

A bank or credit union can tell you the debt to income ratios they look for.

Remember closing costs, from filing fees, document fees, lawyers, mortgage tax, prepaid interest, tax escrow.

Lastly how likely are you to stay in the house for 5 years?

PM me with help on improving credit report.
 
Bite soon if not now.

You may pay a bit more in PMI etc which is a waste, but it's usually $150 a month, probably less for your cheap house. This is cheaper than renting. Sitting around diddling your thumbs paying rent is wasting your life. 20% down is usually the thing to avoid PMI-- but 20% equity will do it too so if you get something with 3% down you can throw money at it and dump PMI in a year.

Get that starter home, but put a little thought into it. If you get locked in due to another recession or high interest rates, you want it to be somewhere livable.

You are right to be paranoid about condo associations and HOAs making rules to subvert your automotive lifestyle.
 
OP - are you around Syracuse? Is there much appreciation in housing there? I'd consider that before you justify that you can move in X years.

You should be able to back into a pretty good picture of what you need at closing, bunch of stuff is going to be dependent on escrow timing and when you close. Take a look at taxes, figure out when the peak escrow would be, and factor that in.

Any big bank "closing cost estimator" will put you in the ballpark for the third party fees (transfer tax and such) likely plus or minus 10%. Here's BofAs:
https://www.bankofamerica.com/home-loans/mortgage/closing-costs-calculator-results.go

Stop by a couple of local banks, ask them for an estimate and know your inputs. When they ask you if you know your score or tell you you need to have your score pulled just tell them to give you the estimate for say 740+ and explain you're not buying today and don't need a credit pull on your report, obviously nothing they tell you is subject to g'tee.

At 30K saved you'll have more than enough to cover 20% down payment and closing costs with some left over for the nice stuff that brakes right away. Personally I'd be less worried about minimizing the lifetime interest via saving now versus catching a good rate and finding the right house.

Add: Check out a calculator for your front end ratio and back end ratio, that plus whatever you have saved will allow you to back into pre-approval amount pretty accurately as well.
 
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Saving $300 a month for the next two years will be $7200. If you want to avoid paying PMI, you need to put more than 10% down. I had to get PMI when I took out my first mortgage, and it took 6 weeks to get approval. In my region, $70-80K will buy you a small house in a rundown neighborhood. Decent middle-class homes can be had for $110-120k. If you want to get a mortgage without jumping through a lot of hoops at the bank, have 10% down plus about $4-5k for closing costs. So you need about $15-17k to get into a decent house. Keep your credit cards paid off. If you paid off your car loan on time, that looks good on your credit report.

I know it's hard, but if you really want to get into a house in the next two years, I think you'll have to sell your Focus to get the down payment. Nothing good comes easy.
 
Originally Posted By: Donald
Go here and pull credit report for free from all 3 and review for errors. And bad things. If you have a year there are things you can do to improve credit, like open a credit card, but have almost zero balance.

https://www.annualcreditreport.com/index.action

Get a FICO credit score even if you have to pay for it once. The other credit scores are worthless.


Good advice form this poster. Make sure your credit reports are accurate, since it is the information in the reports that reflects your score. And all three might be different. I have always had good credit, and this past February applied for a credit card and was denied. Turns out two of the three bureaus had my file cross-listed with someone else. Took two months to get it all straightened out and now my reports and scores are back to normal.

They said my situation happens all the time. So definitely get your reports and scores for all three bureaus (Experian, Equifax, and Transunion). I think the FICO score is based off of the Transunion score, but I'm not positive on that. Regardless all three bureaus' reports and scores matter. Banks will check all three.
 
I dunno, I still have regrets about buying my house. I really can't sell it, could stand to move at least a few miles closer to work; it depreciated instead of appreciated, and now is the time I wanted to flip and get a bigger house. Plus, if I was still renting, I would not own a camper nor a third vehicle, things which also suck money and take up space. Now is the time to buy but only if you plan on staying long term.

Will say though, I'm almost envious about being able to seriously shop $50-80k houses. It runs 2x that up here in the sticks.

Recently I spent some time looking up how my roof should have been ventilated. I came across a couple books on house inspection, on google books. Some day I plan to read through them. Had I known then what I know now about house construction I would never have bought this place. You'll still have to get a home inspector, but if you read up I suspect you'll be able to all but do it yourself. Honestly, I'm not sure I got my money's worth from the inspection I paid for.
 
Originally Posted By: eljefino
Bite soon if not now.

You may pay a bit more in PMI etc which is a waste, but it's usually $150 a month, probably less for your cheap house. This is cheaper than renting. Sitting around diddling your thumbs paying rent is wasting your life. 20% down is usually the thing to avoid PMI-- but 20% equity will do it too so if you get something with 3% down you can throw money at it and dump PMI in a year.

Get that starter home, but put a little thought into it. If you get locked in due to another recession or high interest rates, you want it to be somewhere livable.

You are right to be paranoid about condo associations and HOAs making rules to subvert your automotive lifestyle.


This is right on. Why are you waiting years to save up 50% of the purchase price? Get 10% together and go buy one, pay it off quickly and your PMI will end as soon as you own 20% of the value. PMI is less a waste of money than rent because PMI is tax deductible.
 
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This is what I say. Seriously $50-80k is not much money for a home. around here, 2-4 times that for any sort of single home. Try for an FHA loan so that you can only put down 5%.
Do it now while the housing market is as low as it now. Never can tell what the future brings
Originally Posted By: bepperb
Originally Posted By: eljefino
Bite soon if not now.

You may pay a bit more in PMI etc which is a waste, but it's usually $150 a month, probably less for your cheap house. This is cheaper than renting. Sitting around diddling your thumbs paying rent is wasting your life. 20% down is usually the thing to avoid PMI-- but 20% equity will do it too so if you get something with 3% down you can throw money at it and dump PMI in a year.

Get that starter home, but put a little thought into it. If you get locked in due to another recession or high interest rates, you want it to be somewhere livable.

You are right to be paranoid about condo associations and HOAs making rules to subvert your automotive lifestyle.


This is right on. Why are you waiting years to save up 50% of the purchase price? Get 10% together and go buy one, pay it off quickly and your PMI will end as soon as you own 20% of the value. PMI is less a waste of money than rent because PMI is tax deductible.
 
Good Luck!

-if you need to relocate for job, can you rent the place? (HOA rules can be changed....)
-find a good mortgage broker
-find a good real estate agent
-find a good lawyer too. it matters at contract signing things time.
-know your area. zillow and redfin helps. they are other websites that pull/filter info from MLS. learn them. (until you have your real estate agent; after that they will be you backup if agent is not skilled enough with MLS filtering)
-learn to read between the lines (property on and off the market, how old are the posted pictures, how often the neighboring properties sold)
-short sales could get you a deal... but time spent is random from 2-3 months to forever.
-some house where you need to invest some "sweat equity" could be good. i think you already have some of the essential tools.
-sometimes beside the ForSaleByOwner, they may be some "black" sales.(usually somebody trying not to get foreclosed/short sale at the last moment, or somebody circumventing the real estate commission). you can get to them with enough construction/mortgage broker connections.
-when you enter a property, you have to look past the carpet, paint and a few others. squicky floors, old power outlets, old power panel, no sump pump, wrong materials in the bathroom, cracks in basement walls or exterior walls, or signs of some repairs.

educate yourself! it's your money!
 
Originally Posted By: Donald
Go here and pull credit report for free from all 3 and review for errors. And bad things. If you have a year there are things you can do to improve credit, like open a credit card, but have almost zero balance.

https://www.annualcreditreport.com/index.action

Get a FICO credit score even if you have to pay for it once. The other credit scores are worthless.

A bank or credit union can tell you the debt to income ratios they look for.

Remember closing costs, from filing fees, document fees, lawyers, mortgage tax, prepaid interest, tax escrow.

Lastly how likely are you to stay in the house for 5 years?

PM me with help on improving credit report.


Well that was a bit of a surprise! I have under $40K in student loan debt. I wasn't thinking correctly - I consolidated two student loans into one with a shorter term and lower interest rate. Instead of getting rid of the old one, I just kept thinking I had both!

I didn't pull a credit score, will have to do that.

If it's just me - I plan to stay there many years. If it is a two family ... I'll probably move out and rent my half when I get enough money saved up for my own house.

Originally Posted By: 99Saturn
OP - are you around Syracuse? Is there much appreciation in housing there? I'd consider that before you justify that you can move in X years.

You should be able to back into a pretty good picture of what you need at closing, bunch of stuff is going to be dependent on escrow timing and when you close. Take a look at taxes, figure out when the peak escrow would be, and factor that in.

Any big bank "closing cost estimator" will put you in the ballpark for the third party fees (transfer tax and such) likely plus or minus 10%. Here's BofAs:
https://www.bankofamerica.com/home-loans/mortgage/closing-costs-calculator-results.go


I'm in Syracuse. With all of the bad news the area has been given lately, it's certainly not going up ... or fast if it is. Stagnant at best.

According to that calculator, I could do an $80K house today! Well ... stuck in a lease for an apartment.


Originally Posted By: A_Harman
Saving $300 a month for the next two years will be $7200. If you want to avoid paying PMI, you need to put more than 10% down. I had to get PMI when I took out my first mortgage, and it took 6 weeks to get approval. In my region, $70-80K will buy you a small house in a rundown neighborhood. Decent middle-class homes can be had for $110-120k. If you want to get a mortgage without jumping through a lot of hoops at the bank, have 10% down plus about $4-5k for closing costs. So you need about $15-17k to get into a decent house. Keep your credit cards paid off. If you paid off your car loan on time, that looks good on your credit report.

I know it's hard, but if you really want to get into a house in the next two years, I think you'll have to sell your Focus to get the down payment. Nothing good comes easy.


Property values are low here. Even $80K in a small house in a nice neighborhood.

The $300 is in addition to what I save now.


Originally Posted By: bepperb
Originally Posted By: eljefino
Bite soon if not now.

You may pay a bit more in PMI etc which is a waste, but it's usually $150 a month, probably less for your cheap house. This is cheaper than renting. Sitting around diddling your thumbs paying rent is wasting your life. 20% down is usually the thing to avoid PMI-- but 20% equity will do it too so if you get something with 3% down you can throw money at it and dump PMI in a year.

Get that starter home, but put a little thought into it. If you get locked in due to another recession or high interest rates, you want it to be somewhere livable.

You are right to be paranoid about condo associations and HOAs making rules to subvert your automotive lifestyle.


This is right on. Why are you waiting years to save up 50% of the purchase price? Get 10% together and go buy one, pay it off quickly and your PMI will end as soon as you own 20% of the value. PMI is less a waste of money than rent because PMI is tax deductible.


10% I can do now. I'm stuck in a lease , though.

HOA is something I will avoid 100%. I don't want someone telling me what color plants to have, what type of vehicle to drive, etc.
 
You can buy a house for less than $100,000 ? The 2 bedroom condo less than 1300 sq-ft is more than $300,000 here in Irvine, CA. A 3 bedroom 1500 sq-ft detached house is more than $500,000.
 
Maybe look at a place with a basement student apartment too. Finding a family that you want to share a wall/house with might be harder than finding a reasonably quiet student. Might get you into a place with a good size garage too.
 
As much as I hate second mortgage and its insurance, I'd buy right now instead of waiting. The whole world is printing money and try to out do each other on that right now, and we are still in a tail end of a recession that you can buy at a cheap price in many area.

At your income, debt, and saving, I don't think a "good school district" home is in your reach. Just buy whatever that you can live in for a least a few years and worry about moving later on when you can afford to. I know a lot of people overextend their debt for a good school district and end up having to move anyways, and end up losing a lot of money compare to what they could have over buy a realistic home to begin with.
 
Originally Posted By: Miller88
Originally Posted By: 99Saturn
OP - are you around Syracuse? Is there much appreciation in housing there? I'd consider that before you justify that you can move in X years.

You should be able to back into a pretty good picture of what you need at closing, bunch of stuff is going to be dependent on escrow timing and when you close. Take a look at taxes, figure out when the peak escrow would be, and factor that in.

Any big bank "closing cost estimator" will put you in the ballpark for the third party fees (transfer tax and such) likely plus or minus 10%. Here's BofAs:
https://www.bankofamerica.com/home-loans/mortgage/closing-costs-calculator-results.go


I'm in Syracuse. With all of the bad news the area has been given lately, it's certainly not going up ... or fast if it is. Stagnant at best.

According to that calculator, I could do an $80K house today! Well ... stuck in a lease for an apartment.

Not sure when your lease ends or terms to end early, but honestly, no harm IMO in looking now. Will take a minimum of 2 months to close the loan, possibly 3 months or longer (IMO likely no more than 3 months).

As I mentioned think hard about the time frame when you pick a place out. I don't know too much about the Syracuse market but lived in Binghamton for a while, think there is some similarity to the market.

Getting over the initial closing costs before moving on the the next place in a market that is stagnant can be difficult. I know people in Binghamton that thought it would be a great idea to have a home for 4-5 years, then they planned to move to something/somewhere else. What they didn't anticipate/consider is their home did not appreciate much (actually I think they closed for slightly less than they paid) and that they would be sitting on the home for months and paying the mortgage and taxes even though they were not living there. - Spend your free time now getting to know the local market if you don't already, check out homes selling prices vs initial list, how long they are sitting, what they sold for 5 and 10 years ago, etc. Between Zillow and your local county real estate tax database you'll probably get a pretty good picture.

Find out facts about the area like how common a 2 bedroom home versus 3 bedroom home is in the area and think about down the road not today. What sounds good today (like a 2 bedroom, 1000 sq. ft) might end up not make sense quickly when needs change (like another bedroom) and you find out everybody else is looking at 3 bedroom, 1000 sq. ft. and doesn't want to consider your home.

Good luck.
 
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