House buying question

[Anonymous]

New user! Followed the forum for some time, finally got pre-approved for 210k.

My question is, while we got approved for a good chunk, we can only afford a down payment of 5k. We don't want to stretch ourselves too thin and items like repairs and other potential problems are a big concern. I think we can realistically afford a house around 130k, but I am leaning towards getting an entry level home in the 90-100k range. Live in there for a while, fix it up however we can, then sell and move up.

I'm tired of paying rent and not getting any equity. Would it be worth it to get a 90k house with the goal of moving in a span of 2-3 years? Or should we stick it out a little longer and keep paying rent to build up down payment? Unforeseen expenses is really the key deterrent to making a decision here. Don't want to move into a house then have a pricey repair like the roof, HVAC, etc. Are there insurances available?

If this is in the wrong forum, I apologize.

[sports1965]

If you don't plan on staying for at least 7 years ,renting is better

[ShanetheMortgageMan]

If you only see yourself owning the home for 2-3 years, then you should really make sure you are getting a steal of a home and/or can fix it up to make a nice little profit.  There are expenses to be paid when selling a home, typically 5-6% of the sales price goes towards real estate agent commissions + you have your own closing costs as a seller + depending on the market a buyer may ask for a closing cost credit.  If you can't sell for a profit that covers those expenses, then even though renting feels like you are throwing your money away you still may end up paying less renting vs. only owning a home for a short amount of time.

[Anonymous]

You can get a home warranty, which would cover your big ticket items like roof and HVAC system, but you will want to make sure those are covered with the warranty you are getting. Sometimes the sellers even provide such a warranty. I just bought my home in August and my 1 year home warranty cost me like $350, but that year gives me a chance to save up some money if anything happens when the warranty expires.

[Anonymous]

Thank you for the feedback! It helped me realize costs wouldn't be worth it if we were to sell a house in a short time frame.

The comment on warranties was very much helpful as well.

If I may ask another question, can an FHA loan go towards the purchase of land with the intent to build on it somewhat soon? There is a nice sized lot with 1 acre of land for 45k. I know that there are costs to install utilities in the land, which mentions that they are available but not yet installed, is my assumption.

I'm wondering if it's possible to pay 10 percent down for the land, then build on it as the funds come in. This would make the mortgage affordable, we get to customize the house a bit (our family has some builders), and I'd like to help on weekends when I don't work.

If it's not realistic I'll keep saving in the meantime. Thank you again for all the comments!

[ShanetheMortgageMan]

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@Anonymous wrote:

If I may ask another question, can an FHA loan go towards the purchase of land with the intent to build on it somewhat soon? There is a nice sized lot with 1 acre of land for 45k. I know that there are costs to install utilities in the land, which mentions that they are available but not yet installed, is my assumption.

I'm wondering if it's possible to pay 10 percent down for the land, then build on it as the funds come in. This would make the mortgage affordable, we get to customize the house a bit (our family has some builders), and I'd like to help on weekends when I don't work.

If it's not realistic I'll keep saving in the meantime. Thank you again for all the comments!

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FHA only finances homes, you can purchase one at the time it's completed or you can get an FHA construction loan which would finance the cost of building a home + the cost of land to put it on... but you can't use it to purchase land which you'll later decide to build a home on.