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First time home buyer am I kidding myself?

Posted on: 24th Jan, 2007 11:21 am
Hi. I am really happy to have stumbled across this forum! This is my situation. I am a single parent, and a wanna-be first time home buyer with a FICO of 640, about 3K in cc debt, very little savings and 50K salary. I don't receive alimony or child support. Currently, I am paying 915.00 per month rent and we are rapidly outgrowing our apartment.
I have contacted my local HUD agency for help with a downpayment and am waiting on receiving the information. The home I am looking at is currently 199K which is very low for where I live - NY State. The average home price in my area is about 350K.

Before I get my heart set on this or attempt to proceed, with the above parameters, is it even remotely possible for me to qualify and obtain a mortgage? My sons really want a back yard and I'd like to provide it for them, but I don't want to be unrealistic. Any advice, comments, suggestions will be greatly appreciate.
Posted on: 24th Jan, 2007 11:29 am
I checked some RE listings and the school/local taxes on a 200K property are 2 thousand per year, so 1%. I don't know how to determine the insurance rates - forgive me. I am planning to dig my heals into this little house and would be there at least 17 years (till I'm 60).
Posted on: 24th Jan, 2007 12:22 pm
Assuming that you get a fixed mortgage of 30 year term with 6% interest rate, then with tax & insurance of 1.5% and down payment of about $20,000, a house of near about $190,000 is quite a possibility. In addition you will have to pay additional for closing costs also. But the actual figures will differ from the estimated amount I have assumed, overall you can start looking for lenders and see what they are offering.

As for the Down payment Assistance Programs, sometimes also called down payment gift programs, make sure that the charitable organization complies with existing regulations and policy guidelines as specified by HUD and is permitted to give cash gifts to eligible homebuyers.
Posted on: 24th Jan, 2007 02:07 pm
I don't think you are dreaming, Jsays1.

Because you have an annual household income of $50k and "very little savings" I would encourage you to consider talking to the people at ACORN about their home buyer education and their first time homebuyer program.

In NY, you must have no more than 125% of the area's median income average. You don't say where you are in NY, but the lowest AMI in the state is $49,600 so your household income could not exceed 125% of that amount or $62,000. According to your post, you meet that requirement.

The ACORN program provides 100% financing with no private mortgage insurance so the monthly payments are very affordable. If you were to be buying today, the 30 year fixed interest rate with no points would be 5.75% If you purchase the home for $199,000 and finance 100%, then you are looking at a monthly principal and interest payment of $1,161. Add to that monthly prorations for homeowner's insurance (est. $115/mo) and real estate taxes (est. $166.67/mo) you would be budgeting for a monthly payment of $1,442.67. Does that work in your budget?

You can learn more about ACORN at www.acornhousing.org and their office in NY City can be reached at 718-246-8080.

Whatever you decide to do, look for a lender and loan program that won't drain your reserves just to get into the home. Attend a homebuyer education course even if it isn't required by the lender. Ask more questions then you feel comfortable asking to get to a level of understanding as it's the only way to really make a good decision.

good luck.
Posted on: 24th Jan, 2007 02:44 pm
Not dreaming at all!
Posted on: 25th Jan, 2007 12:04 am
Hi Jsays,

Welcome to our forums.

It's good that you wish to have a home of your own.

Your credit score seems to be moderate and there is a chance of qualifying for a loan program with a high rate of interest. I would suggest that you wait for some more time and bring up your score so that you can get a low rate.

As you are a single parent and don't have much savings, therefore I personally feel, it will be better if you wait for some time and accumulate some savings. This will help you in case you come across financial emergencies while managing your loan.

However, if you are interested to go for a loan currently then you may go through the home buying booklet developed by our community. Currently we are also giving a social offer on the booklet. Just go through the thread on this booklet.

You may also check out a previous discussion on first time home buying at http://www.mortgagefit.com/know-how/about6005.html .

Thanks,

Caron.
Posted on: 26th Jan, 2007 03:27 am
Thank you all for your suggestions. I am of course really excited to think about being a home-owner, but also afraid to become "house poor". I will contact the agencies suggested and keep you posted. :)
Posted on: 26th Jan, 2007 12:42 pm
My best wishes Jsays, hope you get the house that you can afford and fulfill dreams of being a homeowner like everyone of us have :D
Posted on: 26th Jan, 2007 01:04 pm
Good luck and keep us posted on how things are going.
Posted on: 26th Jan, 2007 01:25 pm
You are most welcome Jsays. :)

Do tell us when things are all fixed up.

Good luck for your new home!

Caron.
Posted on: 29th Jan, 2007 01:20 am
Good Luck Jsays...let us know how it goes :-)
Posted on: 03rd Feb, 2007 10:35 am
Indeed. Not dreaming at all.

I agree with the advice they gave you here...

I'm from Larchmont NY...this 199K property must be higher up North.

Since you already know your score, income and liabilities...it made a lot easier to get you some real time qoutes...and the numbers are within reasonable parameters...as long as you can provide the documentations of your income, a verification of rental of at least 24 months (cancelled check or management VOR would suffice the requirement.

Rates on higher 5's are rarely seen this days but still available.

More realistic will be 6.125-6.875 on your parameters... try to get a qoute with different lenders...and see which one gets you the best deal...remember it's not only the rate that counts..you have to understand the program that they offer you.

If you have any concern pls. don't hesitate to ask...

Joel
Posted on: 23rd Feb, 2007 08:51 pm
Hi Joel,

Welcome to this forum.

I couldn't just make out what higher 5's are? can you please help me with some details. And what is management VOR?

Thanks,
Jerry.
Posted on: 26th Feb, 2007 12:47 am
Jerry by VOR leojin_inno meaning a verification of rent and higher 5's is the interest rate in the 5 region. He meant that there are hardly any lenders who will be offering a 5. something interest rate and what Jsays1 can get would be more or less in the mid 6 range.

Michelangelo
Posted on: 27th Feb, 2007 10:44 am
Statiscally speaking purchasing a home will be the best thing you can give your children.

Children of homeowners are more likely to graduate high school than renters.

Children of homeowners are more likely to attend college than renters.

Children of homeowners are more likely to be homeowners themselves as adults than renters.

Giving your child a backyard to play in and sit and look at the stars at night to think about the world and life is a gift to your child that is unmeasurable.

I have several lenders who will lend to you at 100% financing, nothing down other than closing costs and even those can be figured into the loan, at low interest rates without having to go through County programs or ACORN program. Although those are great programs, it can present itself with quite a bit of red tape. Red tape is not so bad for those who have the time and patience, but if you're ready now--it can be done.

Let me know

Sharlee
Posted on: 28th Feb, 2007 07:45 am
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