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Buying Forever Home (Time to Prepare)

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Anonymous
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Buying Forever Home (Time to Prepare)

Hi Guys,

I am aware I am a little early, but I like to get the ball rolling as soon as possible to see where I am at. My wife and I are planning on buying our forever home at latest in 2019. I guess the main focus of this post is to see if we can pull it off a little earlier. We love our current home (purchased in 2015) but it's not in the geographic area we wanted. We want to live in a small town, very badly. My wife was in the middle of a difficult pregnancy and was getting ready to be pulled from the workforce so we had to rush a bit and ended up on the outskirts of the city. 

 

Here are our "stats"

Mortgage scores all around 700 (690-710 w/ all three, should be higher when we purchase)

Monthly Salary- $9875

Car Loan- $570

Student Loan Payment- $145, doing IDR right now while paying off the medical bills from the pregnancy, will likely switch back to standard plan (around $320).

 

Here is the "kicker". I have $5,000 in credit card debt right now. We had a major financial hit a few months back. I've already paid down $4,000 but having to pay the hosptial bill (over $600/month) has made it hard to pay down the debt. 

 

We also have 401ks with $20,000 combined

 

We are trying to purchase around $300,000. But new construction luxury homes in our area are $320,000-$350,000 so we may be enticed to go a little steeper if we can get good value. About where should I get that credit card debt down to in order to qualify for conventional (looking to get a lower rate). Also looking for any tips anyone can think of.

5 REPLIES 5
Anonymous
Not applicable

Re: Buying Forever Home (Time to Prepare)

Pay down all credit cards to ZERO except for ONE card that you pay down to under 9% (but not zero!).

 

Call the hospital/clinic and see if you can get a lower monthly payment plan going on.  Don't mention the mortgage, but they may work with you just by asking.  Put the difference towards credit cards.

Message 2 of 6
Anonymous
Not applicable

Re: Buying Forever Home (Time to Prepare)

Thanks for your input! 

Message 3 of 6
Anonymous
Not applicable

Re: Buying Forever Home (Time to Prepare)

Excellent advice!

 

Hospitals are very flexible -- they're happy you're paying.

 

Go for a lower payment ... Congratulations in advance Smiley Happy

Message 4 of 6
Anonymous
Not applicable

Re: Buying Forever Home (Time to Prepare)

Hey Bschrader, call the hospital tell them your having a tough time. They will lower your bill way down tell them how much you can pay. $100/mo I told them and I pay $25/mo.

Message 5 of 6
iced
Valued Contributor

Re: Buying Forever Home (Time to Prepare)


@Anonymous wrote:

Hi Guys,

I am aware I am a little early, but I like to get the ball rolling as soon as possible to see where I am at. My wife and I are planning on buying our forever home at latest in 2019. I guess the main focus of this post is to see if we can pull it off a little earlier. We love our current home (purchased in 2015) but it's not in the geographic area we wanted. We want to live in a small town, very badly. My wife was in the middle of a difficult pregnancy and was getting ready to be pulled from the workforce so we had to rush a bit and ended up on the outskirts of the city. 

 

Here are our "stats"

Mortgage scores all around 700 (690-710 w/ all three, should be higher when we purchase)

Monthly Salary- $9875

Car Loan- $570

Student Loan Payment- $145, doing IDR right now while paying off the medical bills from the pregnancy, will likely switch back to standard plan (around $320).

 

Here is the "kicker". I have $5,000 in credit card debt right now. We had a major financial hit a few months back. I've already paid down $4,000 but having to pay the hosptial bill (over $600/month) has made it hard to pay down the debt. 

 

We also have 401ks with $20,000 combined

 

We are trying to purchase around $300,000. But new construction luxury homes in our area are $320,000-$350,000 so we may be enticed to go a little steeper if we can get good value. About where should I get that credit card debt down to in order to qualify for conventional (looking to get a lower rate). Also looking for any tips anyone can think of.


Few thoughts on this:

 

1. You're really going to want as much cash in hand at closing as possible, but you can't do that until the hospital and CC debt is dealt with. Those should be your top two priorities with your net income. Once they're clear you should be able to start putting around $1000/month into a fund for the closing costs/down payment. I don't know how much equity (if any) you have right now built up, but ideally you want to go for at least 20% down + closing, which at your numbers is going to be around $70,000. You can get away with less, but then you're likely to get slapped with PMI and possibly a higher interest rate, which will only eat further into your cash.

 

2. While you can list the 401ks as assets in the application, do not think of considering them cash reserves to put towards a home. You really, really don't want to touch them for this. 

 

3. The other data points you provided don't seem ridiculously out of line for what you're looking to spend on a home, but the numbers are on the upper end. Be careful and be sure it's something you are comfortable with - you don't want to be house rich and cash poor for the next 15 years. It's really easy to let large numbers feel small when you're spending $300,000 - that new construction or nicer kitchen may "only" be $15,000 more, but think about how you feel right now with paying down $5,000 in CC debt, and you'd be paying almost exclusively interest on that extra $15,000 for some time. You can always add to your home later, and keep in mind if you buy new construction you're the one paying the premium for it and it ceases to be new as soon as you step foot in it.

Message 6 of 6
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