We try really hard to stick to a budget that allows for savings but our savings is not very big and it's slow going.
We have no credit card debt because we don't even have a credit card, but it concerns me that we won't be able to get a loan because we have developed no credit.
We do have student loans but we haven't started paying them back yet.
Any suggestions on what we can do to get into a house of our own? We really want to quit wasting $700/mo renting a way too small apartment when we could own a home of our own, we just have no idea how to go about it.Carly, Here is what you need to do. No on on here knows what position you are in and what you need to do! You need to call a reputable mortgage company and let them look at your credit even though you don't have any and they can tell you exactly what you need to do. You can probably get down payment assistance and as long as your credit's not bad and you can show that you pay your rent on time every month and all that good stuff. They can tell you what you qualify for and you can start looking in your price range. I bet you will qualify just fine! If not, they will tell you what to do!I'm sorry but with your situation right now and with the high cost of real estate, it's impossible. I suggest you look for a COOP housing.If I were you, I would get all of the student loans repaid before you consider moving into a house with a mortgage. You will need to be sure and have money in a savings account as well because owning a home is a financial responsibility that goes beyond the mortgage, taxes and insurance.Not sure where you live but in Massachusetts we have housing lotteries if you qualify and special FREE counselling for first time home buyers. There are also Hud Homes, Habitat for Humanity. Your local bank mortgage department could probably tell you about agencies in your own area.See what your state FHA offers to first time home owners. The state of Florida gave us our down payment completely. You will probably need some sort of credit history, so get a credit card, put a couple items on it, pay it off every month and you should be good.wait till the market is near the end of the down turn. Right now house prices are still falling and will more than likley do so most if all of next year.
What you should do now is scout a few places you are intrested in see how long they have been on and see if they have been doing any price adjustments since it hit the market.Pay off those loans because when you get a mortgage it will be even harder. There are also property taxes, interest and utilities to consider. Save as much money asy ou can each month, forgo eating out and buying clothes.Not knowing where you live and the cost of living in the area it's really hard to say.
Don't eat out.
Buy groceries in bulk when you can.
Our grocery stores put the meat on sale early in the morning.
You'd be surprised if you start keeping a log of what you spend - there will be surplus somewhere.I know you won't want to hear this but you're really not in a position to buy a house at this time. Look at the glut of foreclosures on the market today--- lots of those were once owned by people on tight budgets. Without credit, you'll be paying the highest interest rates on your mortgage and that's a bigger waste of money than rent. Take a year to get your finances in order, even if that means one of you has to take a second job; cut out premium cable channels, get by with one car if you have two, clip coupons, whatever it takes to get on more stable financial footing before looking for a mortgage. The "wasted" rent will be well worth it when you are getting a more attractive interest rate.I highly recomend you to start making some credit. This is not hard at all but it have it tricks, wich are not to pay your debt right away, and always make a little more of your minimun payment ( ALWAYS IN TIME).
Apply for a credit card with www.bankofamerica.com, which had a product for "newbees", and try to pay everithing with it ( of course, repay it monthly to avoid interest fees)
You can also request a department store credit card ( Sears, Penny, Macy's) wich are very easy to have.
Good luck!Talk to;
A person in real estate that you trust..
The mortgage loan department at your bank or credit union
If you have a tax preparer, talk to them also..
Don't go overboard on buying a house, start with something small that you can put sweat equity in...
Normally you need 15-20% as a down payment, for HUD it's less
To save money,put money in savings first, not last...
If you are a Christian, increase your tithe from 10% to 20%, and take that out first, then savings......There are more options for buying a house now than in the past, because so many low income people want to buy a home instead of renting. One option is to talk with someone at the bank about FHA loans and other types of mortgages for first-time home buyers, but to get any kind of loan, you will need some credit. Another option is to rent-to-own, where the landlord will put a portion of your monthly rent towards a down payment. If you have little or no credit, owner financing is a good option, so you don't have to get approved through the bank. You can probably find a house where you can get both a rent to own and owner financing deal. If you can get approved for a small loan, you can buy a HUD home or a foreclosure at half market value, but be prepared to do some repair work. Also, mobile homes cost half of what site-built homes cost, so a mobile home (that comes with land, not in a trailor park) is a good option for a low income. It will take a lot more investigating, but you can find an abandoned home, track down the owner, and make an offer. Sometimes, if the owner has no use for the home, and is behind on taxes, they'll sell it for whatver they owe in taxes on it (WAY below market value) just to get it off their hands. If you choose this option, the home will probably require A LOT of repair work, and may need new copper wire in the walls (people steal it), but you may be able to get it at such a low proice that you won't even need a mortgange, so the cost of the repairs would be worth it. However you go about buying a home, you'll pay half as much in mortgage as you would in rent, for a house of the same size, in the same condition, and in the same type of neighborhood, because you won't have a landlord who's making a profit. Owning a home is a bigger responsibility, and you're responsible for taxes, insurance, and repairs, but it will save you a lot of money in the long run and it is worth it.First of all I would look at your total picture. The market is there to purchase and rates are still very good. You do NOT need credit to buy a home contrary to popular opinion. The question of your student loans does concern me though. Are they in forbearance and just gaining on you? Or are they just not in repayment since you do not have to pay yet? If they are in forbearance then you need to get them current ASAP as forbearance is not a good thing to an underwriter. If you are not able to save now then you must go down in monthly payments so you will not be married to a house. All family's need to have a budget and they must include entertainment in this budget as well. It is a buyers market and there are many options available to you. Just don't buy as much home as you qualify for as it will become a burden instead of a blessing.
I am a mortgage banker in TN & KYHIDDEN COSTS OF HOUSE OWNERSHIP:
Replacing boiler: $3,000.00
Oil heating: $400.000 for 3 mo. during winter (varies)
Water: $200.00 for 2 mo. in 4 person family home
Electric: $250.00 every two months, more in summertime (varies)
Old kitchen appliances suck the life out of your energy bill so those would have to be replaced. Ex.) under-the-counter microwave over is about $300-500.00
(all based on est. current north east rates)
Then there's student loans, auto payments, auto insurance, cell phones, cable, internet, food bill,...
Also, frozen pipes, salting driveway during snow storm, trimming hedges, mowing gigantic lawn, raking leaves (including those of your neighbors that fall over property line), killing weeds with insecticide that grow in cracks on drive-way, sealing cracks in foundation with polyurethane, resealing loose roof shingles (to prevent water damage), fixing leaky water pipes (I hope you know how to do what plumbers charge $250 for), noisy neighbors, sealing drafty windows, spraying for termites annually ($400.00 WITH contract) etc.
Even with good upkeep, these things give out over time and you eat that charge if you don't know how to do it yourself, NOT covering material costs!
After 10 yrs., a new home will require a complete remodeling so you'll have to take out a home equity if you don't have enough saved up in your account. That's about $15-20,000.00 right there. I hope you're seriously prepared for all of this.Carcar- you have some good advise here, but some really bad. First:
-Use one credit card to build up your credit. DO NOT USE A STORE CARD. High interest. I would go for a card with low interest and use it 6 months before the interest goes up- then pay off. Even with a low balance on cards, the interest alone kills you. We had to rebuild our credit but DID NOT DO IT with credit cards- because they are awful. We did the following:
-to establish good credit- we started at out bank by taking out loans that were 300.00 which is all they would allow us. We'd pay that off in 2 months, and ask for another loan- slowly that loan amount went to $1000.00 or more- and we paid it off each time.
We had been members of our bank for a long time and that was the best way to do it. The payments went on our credit history and all loans were paid off early- showing good credit.
-Talk to a mortgage lender now. See what you need. We just built our house- but talked to many many many before we decided to do that to get what we needed.
-Buy a foreclosed home- you can get a great deal at a cheaper price in your area from a foreclosed home.
Home ownership is an INVESTMENT. Please ignore those that say not to do it- you are literally throwing money out the window when you rent- and I had done it from the time I was 16 years old.
Good luck to you!