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to consider buying this house, another house, or paying bills (this is very, very long)

post #1 of 30
Thread Starter 
I'm very new here. I lurked for a little bit, but joined because I thought I could maybe help out with some people who had coupon questions. But, I have a couple of questions of my own.

My husband and I both work kind of irregular jobs, part time, but definitely high paying for the area we live in. He gets anywhere from 20 to well over 40 hours per week. I seem to currently be settled into a routine of 36 hours a week, but just last month it was 24 hours a week. I don't think mine should be changing too much now, but one never knows in this economy.

We currently rent and are on a one year lease which will expire at the end of October. We had a new landlord purchase our house in a bankruptcy of our former landlord about 4 or so months ago, so I'm not positive if our rent will go up or not. We currently pay $845 with is pretty cheap for a 3 bedroom house. When our new landlord first contacted us (he bought the house sight unseen), he wanted to know if we would be interested in buying the house, and we said we were (we had hoped it would linger long enough in the bankruptcy that we could've gotten it for the song he probably got it for). I told him that we didn't have very good credit, but that I had some stock that would become available to me in July which we wanted to use as a down payment. When he came over to talk to us, he mentioned that he #1 wanted $120,000 for this house and #2 that he was asking residents to move at the end of their leases if they weren't buying their houses they were renting from the old landlord.

So far, my stock paperwork hasn't become available to me, I was last told at the beginning of September, but she (from the company that does the stock) said they had until October 15, so I am actually still waiting on that stock. It is in healthcare, so I'm hoping it has gone up slightly. Last year I was 80% vested and my available portion was $73XX.00. I am no longer with the employer that the stock is thru, so my vested portion will not go up any further.

We also had a hail storm and are hoping to get a nice amount of insurance money from that. Our vehicles are 2001 and 2004, so I don't know that we will spend the money to get them fixed, but rather just live with the damage that doesn't inhibit the vehicles' ability to function.

OK, here's the dilemma. The house we are currently renting has issues, big ones! It needs a new roof, the current one is original to the house (1976) and has been patched with tar prior to us moving in. We've so far had no issues, but I know previous tenants have. There is most definately water damage to the attic area which would mean insulation, new wood, etc. The windows are good except one that is foggy. We've gotten an estimate on that for $300 and had considered paying out of our own pocket to repair it even as renters, but so far haven't done so. It has composite siding in very poor condition. The deck has weak spots. It needs new flooring throughout. The bathtub is all rusted. The bathroom and kitchen need serious updating. It has some areas that need mud jacking because we have water leaking into the basement. The gutters need redone and there is mold all over the soffit (I think that's the right word) all around the house. I can see this house being worth $120,000 in perfect condition, but in its current state, no way! I mean, it looks nice if you're an outsider not inspecting too closely, but once you dig in, there's issues.

We found a house we really like in a neighborhood we previously lived in and loved (not too far from our current house, maybe 1.5 miles). It is in move in ready condition for $94,900. It is an older home and doesn't have a garage. We think there is space to build even a 2 stall, though. Also it has gravel driveway which we weren't crazy about, but otherwise it's beautiful.

I had applied for a loan online for $120,000 and told it I had no down payment, and it denied me especially mentioning the no down payment. I will have some down payment hopefully soon, however.

So, with my stock money and insurance money, should I consider trying to get a loan for a house or not? If I did get approved for a mortgage, would you even consider our current house? Or, would you pay bills? We still owe about $7000 between our 2 cars and both have high interest rates. I really don't have a credit card. We filed bankruptcy in 2003 and the only card I got after that point had a limit of $750 on it, and I've been plugging away at it after cancelling it for about a year ago. It still has $130 on it, but I think I'll be able to pay it off next billing cycle. I also have about $5000 in student loans which are currently in deferment. Any other debt we have is like medical bills or old, old utilities, that type of thing which isn't currently accruing any interest just possibly not looking good on our credit report.
post #2 of 30
I would not buy the house you are currently living in. It sounds like a money pit. It does not seem to me that you are financially secure enough to buy a house at this point. I would say you should focus on using any money you have now to establish a small emergency fund ($1,000), pay off debts (car loans and old debts, I think it is ok to pay off student loans over time as long as they are government loans an not private). After that you can save money for a down payment and all the expenses home ownership brings.
post #3 of 30
With student loans in deferment, credit card debt which is going to take more than a month to pay off $130, two car payments and you want to take $7,000 to use for a house downpayment? You can't afford a house.
post #4 of 30
No, you should not be buying a house.
You do not have dependable employment (in the eyes of a bank). You can not/should not buy w. 'irregular' hours.
You can not keep up with current payments (making payments on past accounts)
You have student loans in deferrment...the bank is going to see those

You do not want to buy a house with roofing issues, mold, foundation issues... all those are red flags
post #5 of 30
Nope.

For all the reasons people mentioned.

Home-ownership is a great goal, but it is not something you should do until you have your finances completely in order. Learn from the housing collapse of the last couple of years.

Don't just look at the payment, and think you can squeak it out. When you own a home, you have to pay multiple taxes (school district, municipality, county, etc), you are responsible for your own repairs (and it sounds like you will have a number of them), there are utitlities (water/sewage are very expensive in our area), waste management, insurance...The mortgage payment is just the tip of the iceberg.

Before you start looking to buy you need to:
-Come up with a stable, workable budget that takes into account your irregular income. Find the amount you need to live on (bare minimum), and live on that only, even if your income exceeds it, so that on months when the income is down, you have money in the bank to live on and pay bills.
-Make a plan to kill the debt you have as quickly as possible.
post #6 of 30
Seconding what everyone else said. Also if you have old utility bills and old medical bills - sorry but that's debt you need to pay down if not off. If the old utility bills are with the same company they may also prevent you from getting a house hooked up as the owner.
post #7 of 30
Another vote for not buying any house, much less the money pit you currently live in now with all the issues.

You have debt that needs to be addressed first. You have no savings basically, that should be addressed now as well.

get rid of the debt, save an emergency fund, then work on saving a downpayment.

Renting isn't bad, we rent and will continue to do so until we have at least 40% down as well as an intact emergecny fund and household emergecny fund.
post #8 of 30
agree with PPs.

For further insight, read through past threads in F&F on variations of: "help! we were ok... but then this has come up .. and now we are facing foreclosure/ eviction/ bankrupcy/etc."
post #9 of 30
Thread Starter 
We do have a $1000 emergency fund.

I am just worried we will be required to move in just over a month, and I can't find any houses suitable for us to rent it seems like. We do not want to move from the school district we are currently in, and I've seen houses for rent in the $1100-$1600 range.
post #10 of 30
Even though you may have money coming in through ins. etc. and you have $1000.00, your income is not a definite. It is better to rent, until you can buy. Please listen to everyone's advice here. With the economy the way it is, no bank is going to give you a loan, with a zero down payment. If they do, run far away, you will end up with a balloon payment, that right now you think you might be able to cover in the future, but it rarely works out that way. That is why I rent, yes after 33 yrs. of marriage, we don't want to get trapped into home ownership, because no job is definite, and besides we are nomads. Love just getting up and going when we want to. You can't do that owning a house. Just my opinion.
post #11 of 30
You won't be able to find a house to buy and close in just over a month either. If you could get a loan, the issues you've described your house having would require would need another $50,000. Where would that come from?

new roof 5000
water damage to the attic area 3000
window 300
siding 10,000
new deck 5000
new flooring 3000
new bathroom 5000
new kitchen 10-15,000
mud jacking - no idea
water in basement $$$$$
new gutter 2500
cleaning 500

We are in comfortable financial shape and having to do the roof and the siding within even a couple of years of each other would stress us. Add in basement water issues and redoing the attic for water damage and we'd need second jobs, I think. Those are the biggest, most expensive things that can happen, and they cannot be left or they just get worse and more expensive until the house is condemned. And you family suffers health wise because of the mold in the walls. roof and basement. I would not buy this house if I were planning to live in it. I'd buy it to demolish if I were going to build apartments on the site.

And, it's almost beside the point because I don't think the FHA would approve the loan with a leaking roof, and they're the only ones that let you put 3.5% down.
post #12 of 30
OP, what about apartments? Is there a reason you need a house?

Even if house rent for a new house will be way higher, you are definitely not ready to buy if your SL's are in deferment and you have a CC balance just a few years after BK?!?!
post #13 of 30
I'm in agreement with most folks here - now is not the right time for you to buy a house but if you take this desire for a house and focus that energy into paying off debt, etc you will be ready and able to buy a house in a few years.

We are homeowners, going on year 9 in our house. We needed to replace our air conditioning unit (we live in Arizona and have a son with epilepsy so we couldn't swing it with just window/room units) - that was $10,000. Two years ago we spent $3,000 getting our air conditioner to last a little bit longer. My brother-in-law is in HVAC and did the repair a few years ago so it was almost entirely parts.

We are missing concrete tiles on our roof from a microburst. The cost isn't high enough to warrant a homeowner's insurance claim so we'll need to fix those pretty soon.

In January we had a different microburst/possible tornado come through and it took down a 35ft tall saguaro cactus and our fence. Saguaro cacti are a protected species and so it takes a specialist to determine if the cactus can be saved and if not it needs to be disposed of properly. This was in pieces with half in our yard and half in the desert wash. Typically this would have been a 50/50 expense between us and the homeowner's association but since the cactus was in the common area, they covered it all. The cactus inspection, removal, and fence rebuild was close to $5,000.

Now on the smaller end of things. Our HOA fees started off at $10/mo and now they are $24/mo. The $14/mo isn't a make or break it thing for us but when something like this happens with everything across the board, it does add up. If you're already tight financially, this could make things stressful.

So there are all kinds of weird expenses that come up when you own a home that you don't plan on. These are things that may be covered by homeowner's insurance but you risk getting dropped for too many claims. So for us, we view homeowner's insurance as something for catastrophic events.

I'm not sharing this to try to scare you or imply that we aren't happy to be homeowners but more to just give you more insight into the "true cost of ownership".

Good luck!
post #14 of 30
Thread Starter 
We just moved out of an apartment a year ago, we hated it! I want to be able to do my laundry and have privacy. I have a large stockpile (I'm a couponer). We are a family of 5, and were extrememely cramped. We had to rent a storage shed big enough for a semi to put half our belongings in which cost an additional $125/month. Nope, wouldn't even consider an apartment again.

What about buying on contract? Does anyone know anything about this?
post #15 of 30
Quote:
Originally Posted by TTLLM View Post
We just moved out of an apartment a year ago, we hated it! I want to be able to do my laundry and have privacy. I have a large stockpile (I'm a couponer). We are a family of 5, and were extrememely cramped. We had to rent a storage shed big enough for a semi to put half our belongings in which cost an additional $125/month. Nope, wouldn't even consider an apartment again.

What about buying on contract? Does anyone know anything about this?
I'm going to be blunt here. Your situation (lack of downpayment, debt, bad credit) restricts your choices. Get rid of stuff so you can fit into a smaller place. RENT a house. But don't buy. Heck, I don't even think you'd qualify, to be frank. The banks have definitely tightened up on their lending guidelines and I doubt you'd be a candidate - at least not for a "good" loan. Maybe before the economic mess we're in now you might have qualified for one of the sub-prime mortgages that were the catalyst for this mess.

You need to listen to Dave Ramsey and read his book The Total Money Makeover ASAP.

I can't get my brain around the fact that you have student loans in forbearance - regardless that they're "only" $5K - and you want to buy a house.
post #16 of 30
Quote:
Originally Posted by TTLLM View Post
We just moved out of an apartment a year ago, we hated it! I want to be able to do my laundry and have privacy. I have a large stockpile (I'm a couponer). We are a family of 5, and were extrememely cramped. We had to rent a storage shed big enough for a semi to put half our belongings in which cost an additional $125/month. Nope, wouldn't even consider an apartment again.

What about buying on contract? Does anyone know anything about this?
Rent a bigger apartment with a washer in the unit. Get rid of things you don't need so you can either have a smaller storage unit or none. There's a whole board dedicated to decluttering here.
post #17 of 30
Quote:
Originally Posted by TTLLM View Post
We had to rent a storage shed big enough for a semi to put half our belongings in which cost an additional $125/month.
Quote:
Originally Posted by Tradd View Post
I'm going to be blunt here. Your situation (lack of downpayment, debt, bad credit) restricts your choices. Get rid of stuff so you can fit into a smaller place.

......

I can't get my brain around the fact that you have student loans in forbearance - regardless that they're "only" $5K - and you want to buy a house.
Quote:
Originally Posted by Delicateflower View Post
Rent a bigger apartment with a washer in the unit. Get rid of things you don't need so you can either have a smaller storage unit or none. There's a whole board dedicated to decluttering here.
Let's assume the storage unit was for 1 year. $125 x 12 months = $1500. That's a LOT of money. That money could have gone towards a larger space so you could fit everything or towards paying down debt, like that student loan. It won't be in forbearance forever. Isn't it usually just for up to a year?


Your debt is:

vehicles (high interest which tells me high risk loan): $7000
student loan: $5000
credit card: $130
old medical bills and utility bills: ???

Your available assets are:

some stock you may or may not have access to: $7300
emergency fund: $1000

And you declared bankruptcy in 2003?

Um, as kindly as possible, no you are not in a position to buy a home. I think you need to get serious about finding a new place to live since it sounds like your home will not be an option after the end of October.

With your credit history I doubt a mortgage is a possibility. Right now I believe just about everywhere requires 20% down. I'd be surprised if you'd be approved for a rental everywhere as well.

Purchasing a house via a land contract can be done. Hard to find though. Not many people are willing to sit on a property they have paid off and collect a monthly payment on it. In effect, they are acting as the bank. I believe it is usually a short term contract with a balloon payment.

You might want to spend more time on this forum, check out some of the books suggested from the library and figure out a plan to move forward so that you can be in a position to purchase a home. But I really think finding suitable rental housing must be your first priority.
post #18 of 30
ok-- don't ban me.

OP, please consider reading, "The Owner Built Home" by Ken Kern.

You can afford a home-- just not the one you are in, and not the other one you are considering. Think within your budget. There are decent homes for sale for far less.

For your budget, that is far too much debt to take on, esp in this economy.

If the landlord makes you move before you can find "the spot" you may have to accept an apt w laundry facilities temporarily. I know it sux, but you can do anything if you know when it will end. Use that lease to pay down debt and save a downpayment, so next time you can buy a home.

PM me if you want me to explain any of this...

And, Dave Ramsey is the best financial advisor I've ever heard of-- true.
post #19 of 30
Thread Starter 
I know I am allowed 36 months of forebearance and 36 months of deferment on my student loan. We put it in deferment at the advice of a credit counselor we had gone to see to help us with a specific debt we were having issues with, and that debt is now paid off.

If we were just to continue to pay on both cars with just our regular monthly payment, the 2001 would be paid off in February 2012 and the 2004 would be paid off in April 2012. We are actually very slightly ahead on payments for the 2004, however. The 2001 has under 80,000 miles and has so far given us no issues. We've had it a little over 3 years. The 2004 has about 120,000 miles and has given us no issues. We've had it just over a year.

My stock will be available to me, it's just a matter of when. My old employer told me July, but when I called the actual company, she said they had up until October 15. I just don't know at this point what my "balance" is. That's basically what I'm waiting for so they can begin disbursements. Last year my vested amount was $73XX.00, and I am hoping it has at least stayed the same or gone up for this year.

Like I said, my husband and I both have great paying jobs. He is a contract worker for the post office. He is guaranteed 22 hours per week, but he fills in for all vacations, illnesses, or any other time his boss needs him for anything, so usually he isn't that low.

I am in healthcare. I have worked at my current job since 1999 and been almost full-time since March 2009. For one month only (August) my hours dropped due to an insurance issue with my current client, but it is now back up to where it was previously.

I understand we will have a hard time getting a mortgage, and it is somewhat too late to even try to make any arrangements for the end of October. We would never even consider paying $120,000 for this house. We were considering offering him $60,000 if we could get pre-approved for a loan due to its current condition. I doubt he'll make us move because we always pay our rent, the house is pretty much crap (which I don't think he realizes), he'd never be able to sell it for what he wants, especially not in this economy, and we do a lot of upkeep ourselves. I do worry that he'll raise our rent, but he only has 4 more days to send us notification for any changes that will go into effect 11/1/10. I have asked him if he would consider selling on contract, and he isn't willing to do that, and at that time he said (somewhat vaguely) that we'd just continue to rent.

I have been reading Dave Ramsey's first book. I know, it's old, but when I was going thru books here, I found that I owned that particular book and had never read it. I have also gone to the first class and would like to sign up to take a whole session eventually.
post #20 of 30
If you have great incomes, knock out the debt, all of it. Don't just pay the minimum.

Then, when your debt is gone, and your stocks are available, you will be in a much, much better position to have a successful experience with home-ownership.
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