Originally Posted by kijip
A downpayment on a 60k home is not $7000, it is $12,000. A downpayment on a 120k house is $20+ k alone. You do not, and will not have the money to buy this or any house right now. Rent, get out of debt and save towards that goal in the future.
No, you could have as little as $2,100 for a downpayment on a $60,000 house or $4,200 on a $120,000 house. But even if you have $60,000 to put down on a $120,000 house you still may be unable to afford it. If your income is low and your job unsure you'd better better off putting the minimum down (3.5% recently) and putting the rest of the money in a high interest savings or rolling CDs.
More relevant than having the money for a downpayment, is having a good emergency fund and having enough room in your budget to replenish your emergency fund in time for the next emergency. Housing maintenance does not scale in proportion to the size of your home, so while a new roof for my $300,000 house might be $10,000, it's still most likely going to be $8,000 for a $120,000 house (if the roof is any smaller, which it may not be). We just replaced our garage door. The door doesn't know the value of the house it's going into, it just sits on the shelf at Home Depot with its $160 price tag. The plumber doesn't ask how much our house was before writing the bill to fix a leaking pipe, etc.
The $130 credit card bill you're struggling to gather the cash for would barely cover a plumber visit. And you can't let a need for a plumber wait even a day, because water will destroy your house.
|I was talking about our furniture, off season clothing, home decor, books, toys, etc. etc. We had previously lived in a 3 bedroom home, so to downsize to an apartment where we were living for a year with the bare minimun, we had to store a lot of stuff!
If you're going to be in a three bedroom apartment for the next three years while you save for a house and get rid of your debt, how much will it cost you to keep the extra furniture in storage for that long, vs replacing it when you're ready for a house? When we looked at storage between houses it would have been something like $2,000 a year. I could buy a decent amount of furniture for that, especially since I like to buy non-upholstered things on craigslist or unfinished. Recently I discovered this website http://ana-white.com/
where she takes furnitutre from gorgeous stores like Pottery barn and Crate and Barrel and gives you plans to make them for a pittance.
|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.
But, if you get the house for $60,000, where will the tens of thousands of dollars you need to make it safe and watertight come from?