To buy or not to buy?

[sarah_bella1050]

Dh and I found a great house. 3 be 2 bath 1.5 acres. We can have backyard homestead like we have always dreamed. The only problem is it is a bit more then we planned to pay. Our mortgage would be 300 more then planned and would be 1/3 of our lowest possible take home pay. If we stay in budget we will have about 500 left over to put in savings each month.

We would be putting all our saving into the down plus borrowing 3k from dhs awesome sister. We would be getting a 30 year fixed at 3.5% and putting 3% down. We have no other debt besides a 7k student loan.

It seems risky but do you think its TO risky? We have always been very fiscally responsible and don't take many risks so this is hard for us! We are just so sick of renting, we have been renting for 9 years now and if we wait until we have 20% to put down it will be another 3

[wildmonkeys]

Hmmm...that is a tough one. I will say that we have a mortgage that is a large percentage well over half of our lowest take home pay and we have just found other places to save. Maybe you would be more comfortable if you sit down and see if there are areas where you could make up the $300?

[grandma of 3]

Have you considered the benefits of homeownership includes a savings in insurance (homeowners & auto) as well as the annual tax savings/refund? 

I am able to see a 1200.00 year insurance discounts as well as and additional 3000.00 a year tax benefit which equals 350.00 a month savings.  Just an FYI

[caiesmommy]

If you are TRULY going to homestead have you thought of the start up costs of that/savings from not having to buy as many groceries?

Dh and I have figured us buying enough property where we can have chickens for eggs and gardens/fruit trees and space for a decent size clothesline will DRASTICALLY reduce many of our bills. It may not be the same for you and your dh.

If you believe this house will give you enough space to grow into then that's also a plus to take on the bigger mortgage. Our starter home was great when we bought it. At ONE child. Now I'm about to pop out number 4 and losing my mind at the lack of space.
 

[Vaske]

Seriously, I would wait, save and plan like crazy for the next three years, and learn/practice all the homesteading stuff I could while renting--there is always more to learn.  I wouldn't want all my savings to go into the down payment, either--keep some back for startup and for emergencies/mishaps/ill fortune.

[sarah_bella1050]

Very good point about the taxes and ins.! If you count all the interest we will be able to write off at the end of the year, we may just break out even.

When Dh and I lived at our previous rental we had chickens and a large garden. I can extra produce and jams and bake my own bread, so I really think we will make good use out of this land. It would be so lovely to produce our own meat and honey as well. I think what I like the most avbout the house is I can see us living there for 10+ years, it feels like stability. Even though its a financial risk.

[sere234]

Don't forget to account for the cost of chickens, a coop, amending soil for a garden, materials, a mower, canning supplies (unless you have them), upkeep on the house, ect. Not trying to be a Debbie Downer but a homestead comes with a lot more cost and time than renting.

Hope you are able to figure out what is best for your family, good luck!!

[zebra15]

3bed 2 bath  3 kids and homeschool??   that sounds tight IMO for space.  Yes there is a yard but the inside space.  Depending on if there is a basement, loft, attic etc.  I realize each kid doesn't need a bedroom but if you plan on having more kids, homeschool, homestead etc... all that needs space.

I would keep looking.

[worthy]

Originally Posted by zebra15 

3bed 2 bath  3 kids and homeschool??   that sounds tight IMO for space.  Yes there is a yard but the inside space.  Depending on if there is a basement, loft, attic etc.  I realize each kid doesn't need a bedroom but if you plan on having more kids, homeschool, homestead etc... all that needs space.

I would keep looking.

Depends on the layout.  I have four kids (two teens, two preteens) in a 3 bedroom 1.5 bath house and we homeschool, and it's fine.  We currently have 1450 sf.  When they were younger (3 kids age 5 and under) we had an 1100sf townhouse with 1.5 baths and it was fine.  I think many other factors can help, like the yard, neighborhood, layout of the house, does the house FEEL spacious even if it's small, or does it feel claustrophobic, etc.  I think one thing that helps in my current house is the high ceilings.  Feels spacious even though we literally lost 950sf when we moved from our previous house.  My oldest has a room in the attic, but that means we have three kids sharing two bedrooms, and it's fine.

I would consider doing it, personally, if that extra $300/month is a reasonable stretch and your income is very secure.  It's a pretty good time to buy with interest rates low and house values low.  I always preferred owning over renting because you can settle in for a lifetime if you want to, and with homesteading you will want the investment of your time toward permanent improvements to count for the long term.

[3timesamom]

I would NEVER wipe out my savings to buy. IMO that is the only issue here. I think otherwise you can afford it. I also hate that you will start out with home ownership in debt twice. Once to the mortgage company and then again to your family. Family debt is a no no IMO. A deal is no deal if you're not ready for it. IMO if you need to borrow and clean out savings you are not ready yet.

[TiredX2]

Originally Posted by sarah_bella1050 

Dh and I found a great house. 3 be 2 bath 1.5 acres. We can have backyard homestead like we have always dreamed. The only problem is it is a bit more then we planned to pay. Our mortgage would be 300 more then planned and would be 1/3 of our lowest possible take home pay. If we stay in budget we will have about 500 left over to put in savings each month.

We would be putting all our saving into the down plus borrowing 3k from dhs awesome sister. We would be getting a 30 year fixed at 3.5% and putting 3% down. We have no other debt besides a 7k student loan.

It seems risky but do you think its TO risky? We have always been very fiscally responsible and don't take many risks so this is hard for us! We are just so sick of renting, we have been renting for 9 years now and if we wait until we have 20% to put down it will be another 3

Have you calculated fully any "extra" costs that will come with homeownership--- increased utilities/ property taxes/ insurance/ does that number include PMI?  The average rule of thumb is no more than 35% of take-home on housing.  Does that work?  How much of your income does your student loan payment represent?  Is that $500 into savings on top of or instead of retirement savings?

Those are just a few things to think about.  Personally, our first mortgage was WAY more than 1/3 of our take home pay (I don't remember the exact numbers, but it was over 60% of take home).  It didn't concern us for a number of reasons:

1) the amount we had been saving for a down  payment PLUS our rent was more than the mortgage for our house (so, we had been effectively "paying" that amount for some time).  It sounds like you have "extra" savings each month as well, so you might be in the same boat.

2) we were predicting DP's salary to increase more than average over the next few years which would rapidly bring us within more reasonable guidelines.   Now, I don't think we EVER actually got under that 35% but it wasn't that big of a deal

3) we were not low income.  Having 30% of your income left for food/clothing/car/etc... when you're only making minimum wage simply doesn't leave you enough to live.  On the other end of the spectrum, Bill Gates spending 90+% of his income on housing would still leave him with MORE than enough to live an extravagent lifestyle.  For people in high COL areas this is often true--- the "others" beyond housing simply take a smaller percentage than they would in a lower COL area (after all, there are many places where houses cost 5-10 times as much as others, a car or a gallon of milk (excluding Alaska or the like) isn't going to vary by nearly as much).

4) we were putting money into retirement savings.  While we wouldn't *want* to stop those contributions, it would be a quick way to increase our take home pay.  It provided an emergency cushion if we ever needed it (which we didn't).

Good luck making your decision. 

[sarah_bella1050]

We have been low income and no debt for most of our marraige. Dh has been an RN now for 8 months now. We would have 500 extra after all exspenses including ins and PMI. I hate that we have to pay 80 in PMI every month but we can drop it after we pay down 20%. Our total payment for the house is exactly 33% of dhs lowest take home pay. Not including any OT or weekend diff. If he starts coming in 4 hrs once a week which would bring him to 40hrs the payment would only be 25% of our income.

Dh has agreed that if we get this house he will work OT until we have a 10k EF which I think will take us about a year.

The house comes with chickens and a coup and I plan to use my household and grocery budgets to purchase seed, dirt and meat chicks. The rest of the homestead will come over time as money and time allows. I will probably have part of one of dhs OT shift go towards some fruit trees b/c I will want those in ASAP.

[mum4boys]

Originally Posted by zebra15 

3bed 2 bath  3 kids and homeschool??   that sounds tight IMO for space.  Yes there is a yard but the inside space.  Depending on if there is a basement, loft, attic etc.  I realize each kid doesn't need a bedroom but if you plan on having more kids, homeschool, homestead etc... all that needs space.

I would keep looking.

I do not think that it is too small at all. We lived in 1200 square feet with 5 kids, 3 bedrooms and home schooled and did just fine. We have friends that have 10 kids in a 3 bedroom 2 bathhouse and home school also. They are doing quite well with what space they have also. 

Originally Posted by sarah_bella1050 

We have been low income and no debt for most of our marraige. Dh has been an RN now for 8 months now. We would have 500 extra after all exspenses including ins and PMI. I hate that we have to pay 80 in PMI every month but we can drop it after we pay down 20%. Our total payment for the house is exactly 33% of dhs lowest take home pay. Not including any OT or weekend diff. If he starts coming in 4 hrs once a week which would bring him to 40hrs the payment would only be 25% of our income.

Dh has agreed that if we get this house he will work OT until we have a 10k EF which I think will take us about a year.

The house comes with chickens and a coup and I plan to use my household and grocery budgets to purchase seed, dirt and meat chicks. The rest of the homestead will come over time as money and time allows. I will probably have part of one of dhs OT shift go towards some fruit trees b/c I will want those in ASAP.

Have you been approved for the mortgage yet? It sounds like an awesome house. When do you find out if you have it?