03-15-2013 04:44 PM
I would like some opinions on a situation I am finding myself in. I really want to buy a house here in FL. But I became self employed in January 2013 and it is looking like I will have to wait until 2015 to get a mortgage.
I think I will be in a position to buy a starter house here in FL cash (arnd $75K) in September/October of this year. I live at home right now so am able to save all my money, and I am working a lot!
Would this be a good idea? I would make sure I would still have about $10,000 in an emergency account but would basically use the rest of my money to buy my own house outright. Is this a good idea or a bad idea?
I have no credit card debt, no auto loans but I do have sizeable student loans, think 6 figures.
Are there other things I should be thinking about if I decide to pay cash?
03-16-2013 10:19 AM
03-16-2013 11:19 AM
horrible idea. its not like rates are 10%. take advantage of the rates. 10k in emergency funds really isnt alot when you are a homeowner. if the roof busts or heater/ac craps out you can be out a couple grand. completely unexpected. what if you want to update it? last thing you want to be bud is house poor.
03-16-2013 12:05 PM - edited 03-16-2013 12:06 PM
Well, I can't get a mortgage until I have 2 years worth of tax forms as being just self-employed.
I have been working and freelancing on the side for the last 4 years but the mortgage brokers want to see tax returns as just self-employed.
In 2 years I will qualify for a mortgage of about $450,000 based on my monthly student loan payments. Meaning I would qualify for about $500,000 but after I deduct the monthly payments that is what it says I will get based on my income.
I would buy a house that costs around $150,000 and put about $100,000 down.
But that means I am stuck living at home for 2 years or spending $1500 a month on rent.
Or I can buy a house, possibly up to $100,000 in September/October. It would be in a niceish area, mainly senior citizens. I'm not worried about building up my nest egg again. I make a good monthly income with student loans being my only real bill asides from a cell phone.
I don't trust the stock market, I am pretty risk averse. I have people who have lost everything due to stocks.
I guess I'm just not sure what the right move would be to make at this point.
Based on that new info, does anything change?
03-16-2013 12:07 PM
Also, one of the reasons I want to pay cash for a house is because I am self employed. I don't know what's going to happen in a few years. I would rather have a house that is paid off so if my income dries up considerably, I'm not scared of losing it!
03-16-2013 03:33 PM - edited 03-16-2013 03:34 PM
Average Total Monthly Income is $14,500 (Before 40% taxes that I have to pay being self-employed)
Student Loan payments per month is $1500.
Total student loans is $200,000. This is from college and grad school programs and licenses.
03-16-2013 03:50 PM
This is just my opinion... but student loans can not be discharged in BK, if anything ever happens to you and you had to file for BK, you are still stuck with those loans which are A LOT, I would put the money towards the loans, live at home and pay off the rest, then buy the house I want. If you are young, and you make this kind of money, whats a few years at home?
03-17-2013 11:37 AM
03-18-2013 07:14 PM
If I could afford to pay cash for a house, I would. (I try to do the next best thing and pay it off as quickly as possible!)
There's something really nice about not having a mortgage and having the house paid for.
As for student loans, if you feel you can afford to have a house, have a maintenance fund for the house, and still pay your loans, go for it.
If you would rather stay at home and pay off your student loans faster, go for it.
Both situations are a win-win.