Looking to Buy my first House, Need some Help/Tips

[CollinEstes]

Alright I graduate next month already have a job lined up making pretty good money considering it is entry level and I only have an undergrad. Anyways I have to move to a new city and my wife and I (she is pregnant due in May) want to buy a house this Janurary. Just curious what price range I should be looking with this job that is paying me 45,000 a year but I expect to be at around 60,000 within 4 years. (The job gives raises ever 6 months for the first four year up to 60,000). We have alittle money saved up but I don't think we have enough to even put down 5%.

Any advice is appreciated, buying a home for the first time is pretty overwhelming.

[Worrots]

Wait till you can put down 20%. Private Mortgage Insurance sucks.

Where are you moving to? How much house you can get will vary widely depending on where you are.

Why are you looking to buy so early/young/poor?

More information, please.

[CollinEstes]

[ QUOTE ]
Wait till you can put down 20%. Private Mortgage Insurance sucks.

Where are you moving to? How much house you can get will vary widely depending on where you are.

Why are you looking to buy so early/young/poor?

More information, please.

[/ QUOTE ]


What about doing a 5, 20, 75 Mortgage or something like that, where you put down 5% and then you have two seperate mortgages?

I am moving to Galveston Texas, but in addition to looking there I am also looking in the Southeast Houston Area along I-45 (Clearlake, Friendswood, etc...)

The amount of house is not too, too important 2 or 3 bedrooms would be fine.

We are just looking to buy because we would like too, if it isn't all that smart we may wait, but convicing my wife that we should wait will be hard.

[joshman1204]

Your best move is definetly to wait ... a house is a lot more than just the payment and you can get in trouble real quick.

[IHateKeithSmart]

Well, with the baby expenses too, it might be too much to tackle at once.

RE: the mortgages, though, I did an 80% mortgage with a HELOC for the other 10% (I put 10% down). If you can get 10% down, this is a good option since all the interest is deductible, and the HELOC rate will only be slightly higher (you can pay interest only on that portion as well if you want).

[CollinEstes]

[ QUOTE ]
Your best move is definetly to wait ... a house is a lot more than just the payment and you can get in trouble real quick.

[/ QUOTE ]


Just curious if you could elaborate, I am pretty much clueless.

[Los Feliz Slim]

Plenty of banks, etc, have mortgage calculators that will tell you what you can afford. In brief, the smaller your down payment the larger the loan, hence a larger monthly payment of interest (which is, for the time being, tax deductible). I don't know about the market where you are, but I can't imagine you'd be able to afford much, especially if you don't have $100,000 lying around to reduce the loan amount.

Also, as previous posters have alluded to, you've got property taxes, insurance, and maintenance to think about also. A mortgage broker will factor those costs in, but remember they WANT you to try to buy a house and will play it faster and looser.

[arod15]

Doing a piggy back is not a bad idea (IE 5% then taking a loan) But if you have a small one coming i'd wait. Mortgage payments are a lot to deal with if you have diapers to pay. I'd hold off if you dont have money for at least 5% and 15K plus in the bank. I know interest rates will rise, but you'll quickly see that 45K is not all that much, especially with a baby....

[Worrots]

[ QUOTE ]
What about doing a 5, 20, 75 Mortgage or something like that, where you put down 5% and then you have two seperate mortgages?

[/ QUOTE ]

FYI, I went through this experience this past year also with a pregnant wife.

The less you put down, the more you're going to pay in interest and other fees both every month and over the length of the mortgage. There are lots of complicated schemes to hide this fact, but that's the bottom line. You'll also likely be bearing more and more of the interest rate fluctuation risk the less you put down.

You have a rent vs buy situation. Renting you save up for the down payment, buying you get equity each month. But with so little down, you're not going to be getting much equity at all each month. PMI can bump up your interest payments enough to cancel out the equity you get.

There are budget calculators all over the web, figure out how much you can spend on housing each month. From that figure out how much you can afford to borrow and what price range you're in. Go see the house vs apartment choices in Galveston at $X per month. Bear in mind that closing costs, fees, etc will add to the actual purchase price (depends on local market, don't be surprised if it's another 5%+)

[ QUOTE ]
The amount of house is not too, too important 2 or 3 bedrooms would be fine.

[/ QUOTE ]

Seriously, look into a one-bedroom apartment for a year. Your kid won't need his own room for awhile. You're taking on new (first?) job, first kid, new city (?), and first home all at once? Consider delaying the house a year till you see how the job is, how much the kid costs each month, and you get to know the area well.

[siccjay]

[ QUOTE ]


Seriously, look into a one-bedroom apartment for a year. Your kid won't need his own room for awhile.

[/ QUOTE ]

Isn't this just throwing money out of the window?