Can I afford this house? Will I be living beyond my means....?

by **gall** » Tue Jul 31, 2012 1:06 am

Ok, so I'm 27, single and I make about $2000 take home a month...$27,600 annually. At the rate I'm going after paying car insurance ($65) the measly $325 I give mom a month for rent & cell...I should have $25,000 saved up by the time my goal to move out by the time I'm 30 actually happens. (Pray that I'm married by that time! lol) I'm looking into a house that's advertised at $95,000. Is this possible for me? I would also like to keep some of that savings as a buffer & for some furniture as well. I don't know how much monthly taxes, property, sewage, water or electricity costs, so maybe a round about on that would be great too. BTW the property it's on is not leased. I don't know if I listed all the right details, because I have never done this before. Thank you for ANY input!!

by **hampton83** » Tue Jul 31, 2012 1:08 am

That is a good savings goal. You would be looking at cost of about $644 to $759 per month depending on the interest rate (3% and 6%) you qualify for. And The interest rate, the down payment, and any debts you have can make a huge difference in whether you get a house that cost between $77K and $126K. The lower interest rate the more house you get for the same payment. You can play with the numbers with the link below. It is an house affordability calculator. Remember if you qualify for an FHA loan, you only have to put down 3%. And there are programs, depending on the where you live that will help with closing cost (talk to your lender/mortgage broker). This will enable you to hold on to some of your hard earned money, to set aside in an emergency fund, as alot can happen over the course of 15 to 30 years.

by **donough** » Tue Jul 31, 2012 1:22 am

You can apply for a mortgage up to 3 times annual income thus 82k
With your 25k cash you have enough to make the down payment and closing costs.
Just make sure you don't take on any more debt and that your credit is great.
Go to http://annualcreditreport.com and check out the credit report.
Content any errors and clean up any outstanding debts thus in 3 yrs you will have no problem qualifying

by **leonie36** » Tue Jul 31, 2012 1:30 am

It's going to be tight. You won't have much of a life other than owning and living in your new home. Hopefully over time you'll be able t do something about increasing that income. Better paying job or a second part time job. Good luck.

by **archy** » Tue Jul 31, 2012 1:32 am

It's going to be tight. You won't have much of a life other than owning and living in your new home. Hopefully over time you'll be able t do something about increasing that income. Better paying job or a second part time job. Good luck.

if you bought the house and put down a $25,000 deposit i think you would be struggling to keep up the payments. there's no room for error, if your car died and you needed to buy a new one for example, you couldn't because you'd have no spare money, it would all need to go towards the house.

i suggest you get a second job. $500 a week is not going to be enough if you want to buy a house. even i you just work one day on the weekend or 3 nights a week, you could put it all away in savings and increase your deposit. i think that's the only way you would be able to get this house in the next 3 years.

by **jerrick** » Tue Jul 31, 2012 1:42 am

You have gotten some VERY GOOD answers. The only thing I can add is that your monthly mortgage cost is not your only monthly cost. Every month you'll need to pay for utilities (Gas,water,electricity,trash pick up,cable,Internet PLUS your house insurance and property tax.)
Add to this food,gas for your car,car insurance. That will be about 65% more than your house payment. Then think if the refrigerator blows out. If you have no emergency fund you are stuck.
Owning a home is a wonderful thing but it's also very expensive.
You say the property IS NOT LEASED. No land is leased except for mobile home parks.My guess is you are talking about buying a mobile home(?) in one of the few parks that does not charge monthly rent but you actually own the land as well. Am I correct ?
Also there is no telling where house prices will be in 3 years. In my area (Southern California) prices are still DROPPING. A very few areas in the country have the prices rising (Seattle,Washington DC,Boston,Dallas) but most places the prices are still in free fall.
It would help if you had a higher-paying job or got a second job to help more with the finances. Your monthly cost will be much higher than you think it will be.
Good luck.

by **chadburne48** » Tue Jul 31, 2012 1:47 am

First of all, good for you for saving and having a goal. Disciplined saving and investment is the way to go. Don't forget to set aside money towards retirement too. Now as to the specifics - gas or oil or electric costs are going to vary by area and by the specific house. For an existing house, you would be able to get an idea of energy costs from the previous owner. Taxes, too, are going to vary drastically from place to place but you should be able to figure that out by the assessment records for the house with the municipality. I have NO idea what you're talking about when you say that the property it's on is not leased. If you are buying a house, it is attached to the lot. The two come together.

I am a little confused about your focusing on a specific property when you won't be in a position to purchase for another three years. Who knows what will be available then, and what real estate prices will be?

A guideline for housing affordability is that the monthly costs of the house, including taxes and all utilities, shouldn't exceed 30% of your monthly income. You need to do the homework to figure out the numbers for your area. (and as a mom,.I wonder why you're asking us instead of your mom?). In the meantime, watch Property Virgins on HGTV to get some idea of the process......

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