Looking at buying the Rental I am living in

[Anonymous]

My landlord called and told me that she was planning on selling the house that I am living in.  She stated that I have first dibs if I want to buy it, before she puts it on the market.  I was planning on buying a house when I got my bills under control and my score a little higher.  Currently my score is in the mid to low 600's.  So I applied and was approved with conditions.  Once I meet these conditions I would be approved for an FHA loan. 

I am not sure I want to do this as my monthly rent is $1350 and my new home loan payment would probably be around $2600.  Now I could afford this if I did not have any bills.  It has been mentioned that I may be able to get some money back to help pay off my bills.  Also with the houseing market the way it is, it has me a little worried as I do not want to buy a house and then in a year end up owing more that what it is worth.  One of the main reasons I want to buy this house is I make good money, but do not have any write offs when it comes to tax season and I always end up owing Uncle Sam.  With this house, I would have the write off's.  But also the house is in a good location with a good sized yard, on a dead end road with wonderful neighbors.

Has anyone been in this type of situation?  Can you give me any advice?  This would be my first home.  Should I buy something smaller and cheaper?  Help, not sure what to do.

[Junejer]

Hi wisdom, welcome to the forums. Please read Credit Scoring 101 and some of the other stickied threads. Learn as much as you can from all of the knowledgeable people here.

We can't tell you what to do per se. I will tell you this though, if you do not feel good about it in your spirit/gut/knower/whatever you call it, then don't do it. The last thing you want is a $2600/month buyer's remorse. Look at everything, and evaluate from there. And, never fall in love with anything that can't love you back.

[Anonymous]

Without knowing all of the particulars of the deal, I would look at the following:

What percentage of your gross income is the mortgage plus the real estate taxes?  If it is much more that 30%-  red flag!

If you add together your mortgage, taxes, insurance plus all of your other monthly obligations such as your car and student loans, what percentage of your gross income is that?-  If it is over 40%, you will surely be struggling, dude.  Unless you are willing to stay home and live on peanut butter and corn flakes, I wouldn't do it. 

[treschic]

i read a really good article in the washington post, that was about how to know when is a good time to purchase.  and in the article, the advice they gave was that if the amount of your new mortgage is around the same as your rent, it's a good time to purchase.  in my own opinion, i think that you should be able to comfortablly be able to pay your bills, pay your mortgage, and have some money set aside for savings.  i am in the same situation, my landlord has told me that he wants to sell his condo to me, so it doesn't sit on the housing market, but in my situation, my mortgage would be very close to what i pay in rent, including taxes and everything.  my only issue is that with the housing market right now, i can also get a 3-4 bedroom townhouse or even a single family home across the street for the same price the condos in my development are selling for.  so, it's a personal decision, but you have to ask yourself can you comfortablly afford it.