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I am hoping to buy a condo in the fall. The asking price for condos in the development are currently between $120,000-$130,000

Is this going to be possible? I make $42,000 right now, but would not be surprised if that number rises significantly prior to the purchase date.

I have no concerns about being able to afford the place, but I do have concerns about finding a loan

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I bought a condo 4 yrs ago with a credit score of 640 and combined income of 85K. The price of the condo was 180K back t... (more)

itsmeprinceus (Jan. 26, 2013 @ 9:13a) |

If you don't plan on being there for a while, you're not going to have much equity in the place to sell for a profit, es... (more)

RailroadTrack (Jan. 26, 2013 @ 9:39a) |

Just like most people, I too have wanted to purchase my own home. I'm 47 next month and have never done this. Looking ... (more)

suezyque (Jan. 26, 2013 @ 11:06a) |

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Do you have enough saved up for the downpayment? What are taxes and common charges like? All of these will impact your ability to get a loan.

tony6730 said:   I am hoping to buy a condo in the fall. The asking price for condos in the development are currently between $120,000-$130,000

Is this going to be possible? I make $42,000 right now, but would not be surprised if that number rises significantly prior to the purchase date.

I have no concerns about being able to afford the place, but I do have concerns about finding a loan


Your lack of details is overwhelming.

anks329 said:   Do you have enough saved up for the downpayment? What are taxes and common charges like? All of these will impact your ability to get a loan.


I could save up enough for 20% down, but I would prefer to do 10%. The taxes and HOA combined come out to $440 a month.


This is NJ, the taxes/hoa on this unit would be considered low.

suezyque said:   tony6730 said:   I am hoping to buy a condo in the fall. The asking price for condos in the development are currently between $120,000-$130,000

Is this going to be possible? I make $42,000 right now, but would not be surprised if that number rises significantly prior to the purchase date.

I have no concerns about being able to afford the place, but I do have concerns about finding a loan


Your lack of details is overwhelming.


What info are you looking for?

What's bringing down your score, any old negative items? What's your DTI?

tony6730 said:   
I have no concerns about being able to afford the place, but I do have concerns about finding a loan

Then you have concerns about being about to afford the place...

i didnt know credit scores went that low. straight cash baby

Rent.

RedCelicaGT said:   What's bringing down your score, any old negative items? What's your DTI?


$23,000 debt, student loans.

$42,000 salary (for now, poised to increase).

I had some minor issues in Spring 2011. Nothing else

Glitch99 said:   tony6730 said:   
I have no concerns about being able to afford the place, but I do have concerns about finding a loan

Then you have concerns about being about to afford the place...



That doesnt even make sense..

If you put down 10% and get a $112,500 loan at 5% mortgage for 25 yrs, your monthly housing exp is $1,100 with HOA dues. That's over 30% of your salary and normally this ratio is around 28%. Also, lenders normally go for 36% DTI and I'm pretty sure yours would be well above that.
That along with 669 score, I doubt you'd qualify for a loan. I'd look to improve the score between now and fall to improve the prospects.

tony6730 said:   Glitch99 said:   tony6730 said:   
I have no concerns about being able to afford the place, but I do have concerns about finding a loan

Then you have concerns about being about to afford the place...



That doesnt even make sense..

If you can't get a loan and don't have the cash, you inherently can't afford the place.

Your debt level and income level should be OK to get a $120k loan if you have a downpayment. 669 credit won't stop you getting a loan in general. FHA loans go as low as 580 FICO I believe.

How easy it is to get a loan ... I don't know. You will also likely pay ~0.5% premium on your interest so don't expect the best rates.
I am not a broker or anything though.

edit : hmm, I missed the $440 HOA+tax costs detail. That might make it too expensive actually.

Ask any snake aka real estate agent about creative financing. Something will be found so you can move in soon while regrets and monetary depletion will be at least a year from then. Also ask your credit union and ones you COULD join (for serious now.) Merely asking does not create even a soft pull, many will hold it themselves thereby making credit score pass/fail instead of maybe or lots of points factor. Beware anybody wanting your SSN as this ALWAYS means credit check often with hard pull in view of the large sums, the last thing you need is recent hard-pull inquiries.

tony6730 said:   RedCelicaGT said:   What's bringing down your score, any old negative items? What's your DTI?


$23,000 debt, student loans.

$42,000 salary (for now, poised to increase).

I had some minor issues in Spring 2011. Nothing else

"Minor issues"
What exactly does that mean ? Late payments ?

Or collections and charge offs and repossessions ?
You need to detail exactly what derogatory remarks are on your credit report

there are no such things as "minor issues" on credit report. especially when buying a home

What area of the country are you in? Why not buy a house instead? A $120k condo is like having an apartment for life with a HOA stupid tax attached.

It does sound like renting would be a good option for a while. If your income is rising and will continue to, you may end up moving again soon. Are you married? Planning on getting married within 5 years? If not, where does the future Mrs. Tony want to live (you may not know... that's my point)? Moving within 5 years of a purchase is usually a negative financial move. Renting allows you to save more for a down payment and get your score up.

Rates are expected to stay low for a while, in case the current low mortgage rates are tugging at you...

DB

tony -- life could be a lot easier if you wait 6 - 12 months, then buy. Here's why --

* save up a bigger down payment
* let the "minor issues" age out some more on your credit report
* build your credit score

All of these things could result in a lower interest rate, which will save you $$$ every month for as long as you own the condo.

Moneypyts

debentureboy said:   It does sound like renting would be a good option for a while. If your income is rising and will continue to, you may end up moving again soon. Are you married? Planning on getting married within 5 years? If not, where does the future Mrs. Tony want to live (you may not know... that's my point)? Moving within 5 years of a purchase is usually a negative financial move. Renting allows you to save more for a down payment and get your score up.

Rates are expected to stay low for a while, in case the current low mortgage rates are tugging at you...

DB



This apartment is 5 minutes from my work. My plan would be to live there until such time that I get married. I am 26 at the moment. I dont even have a girlfriend so who knows on that front. I wouldn't mind living in this condo until some point in the future where I am married and ready to have a kid.

I mostly want to buy the condo because it is better then throwing it away on rent. Not to mention that I want to be a landlord in the future.

RailroadTrack said:   What area of the country are you in? Why not buy a house instead? A $120k condo is like having an apartment for life with a HOA stupid tax attached.

This makes no sense. If you have a house instead of a condo, you are going to pay the same costs outside of the HOA (water, trash, landscaping, external repairs). You might even end up paying more.

tjguitar85 said:   RailroadTrack said:   What area of the country are you in? Why not buy a house instead? A $120k condo is like having an apartment for life with a HOA stupid tax attached.

This makes no sense. If you have a house instead of a condo, you are going to pay the same costs outside of the HOA (water, trash, landscaping, external repairs). You might even end up paying more.


Not to mention, most likely higher property taxes (usually, not always) and much higher maintenance costs when that roof goes, or the driveway needs to be redone, or the foundation cracks, etc.

I was probably somewhat similar to you 10 years ago in situation. 45K income, 670 or so score, $120K condo. (about the same for fees, $180 association and $200/mo in taxes) At the time 5% was enough, and the property is considered FHA approved now. However it was a lot of hassle getting the loan through even then.

It will really come down to the dollar what you can get approved. From what I have seen you can either qualify for FHA or similar low deposit solution or not. If not there is nothing between 3.5% and 20% that will make a difference as far as approvals go. There is basically "FHA" or there is "Conforming" to Freddie/Fannie. You won't be a sweet enough candidate for most banks in-house lending.

I still live in the same condo, and we have never had a special assessment and dues have only increased about 3% a year. The only regret, and its important -- its a very small condo but it was all I could afford at the time. Love the location and like the way its managed. I still wish I could trade up to what I can afford NOW though. (I could, really, but not without selling my existing unit first)

tony6730 said:    This apartment is 5 minutes from my work. My plan would be to live there until such time that I get married. I am 26 at the moment. I dont even have a girlfriend so who knows on that front. I wouldn't mind living in this condo until some point in the future where I am married and ready to have a kid.

I mostly want to buy the condo because it is better then throwing it away on rent. Not to mention that I want to be a landlord in the future.


I'm not the uber-conservative financially that many of our peers are on here - but you are going to be throwing significant money away for awhile. It is a sobering thought every year when I get my "deductible interest statement" from my mortgage company. I've lived here three years, and still I paid over $12,000 dollars to the bank for the right to live here - and about $4,000 in actual principal. Not to mention about $6,000 in property taxes and $2,000 in insurance to protect it all. So theoretically, I paid nearly 24,000 dollars in "equity creation" (isn't that why you don't want to be throwing money away on rent?) and my mortgage balance is now $4,000 dollars less. Mind you, when I want to sell this Texas McMansion - at the very least, I either get a FSBO headache or pay 3% Realtor fees (even if I can get a buddy to list it for free) - and probably another 2% in seller paid closing costs.

And, I hold a lot of the risk - if mold hits in the bathroom or if the air conditioning goes out or if some big tree falls in someone else's yard.

When you rent, yes, you're paying that dude's mortgage but you hold none of the risk. The one thing I promised myself that I will listen to Dave Ramsey about on the next house purchase is to buy what I could afford on a 15 year mortgage with 20% down.

You aren't even close..

I understand the psychology of what you want to accomplish - and understand you'll likely do it regardless of what anyone says - but I think you'll be here in about 3-5 years, at the very least either regretting it or maybe breaking even.. Meanwhile, if you rented - you control the narrative.

tony6730 said:   I mostly want to buy the condo because it is better then throwing it away on rent. Not to mention that I want to be a landlord in the future.

1 red flag. 1 yellow flag.

I bought a condo 4 yrs ago with a credit score of 640 and combined income of 85K. The price of the condo was 180K back then. Which depreciated now ... You shouldn't have a problem and try to look around for an FHA loan which is cheaper to start with as it requires a down payment of only 3.5%. There are several government programs for first time home buyers which your realtor can happy explain to you .. Good luck !

tony6730 said:   

This apartment is 5 minutes from my work. My plan would be to live there until such time that I get married. I am 26 at the moment. I dont even have a girlfriend so who knows on that front. I wouldn't mind living in this condo until some point in the future where I am married and ready to have a kid.

I mostly want to buy the condo because it is better then throwing it away on rent. Not to mention that I want to be a landlord in the future.


If you don't plan on being there for a while, you're not going to have much equity in the place to sell for a profit, especially with everyone wanting the seller to pay closing costs these days. If you want to become a landlord in the future, this isn't the best way of going about it. Some condominium communities allow a certain % of the community to rent and if that % is already met, then you're stuck and only have the option to sell.

Honestly, renting is a better option right now from what I can tell. You're not throwing money away renting IMO. If you bought the condo and had to sell quickly, you'd be throwing just as much, if not more money away because you'd have to come out of pocket thousands of dollars to unload it, then renting doesn't sound like such a bad idea since you're only bound by your lease.

Home ownership is great and all, but only when you're ready financially. If you plan on getting married and all that jazz, get the girl, move in together, engaged/married and find a place together instead of you having the burden of a condo over your head.

Just like most people, I too have wanted to purchase my own home. I'm 47 next month and have never done this. Looking back, I'm glad I didn't. You just never know what set of circumstances may befall your life and home ownership is a noose around ones neck. You not only have the initial costs, you also have to deal with all the added costs of taxes, expensive repairs, insurances, etc. You really need a good nest egg to be a home owner.

As a renter, I don't have those issues, so I live a far more carefree life than many people I know that are tied financially to a brick and mortar abode. I've heard so many times, "no, we can't do that right now, we have to put in new windows". or... we'd love to take a vacation with you guys, but we've got to save for a new roof".

Go back to the home ownership thinking when your life is more settled and you have a clearer direction of where life is taking you.



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