Hellobee Boards

I'd say if you have a decent amount saved for a down payment, and know with a good degree of certainty that you would want to be in that home (specific home, geographic area, school district, etc) for at least the next five years, I'd consider buying. I'd also caution you that even though your mortgage might be lower than your rent, home ownership comes with many unexpected expenses, from the small of needing to buy assorted lawn care tools that you've never thought about before to the big of having emergency repairs that can run thousands of dollars. So I'd think about how you are going to handle those expenses as they come up as well. Good luck! House hunting is such a fun time!

I would start by talking to a mortgage banker and getting a preapproval. You have a fair amount of debt and you are young which means you haven't had a lot of time to build a ton of credit, so you may not get as good of a rate as you expect to. Which would mean your monthly payment wouldn't be as low as you are thinking. Also, taxes and insurance will probably eat up that $300 difference right away (before you even start thinking about the extras that mamabolt talked about). Lastly, ask the mortgage broker about the HELOC. My understanding is you can only take out a HELOC on the amount of equity you have in the home. If you only have 10-15% equity then you don't have a lot of lending power. And if you take it all you could become house poor very quickly since the housing market hasn't stabilized yet.

@MrsBrewer: That's my understanding. Essentially you can only lend against something you own. You don't own the portion of your home's value that is on your mortgage. If you were to default they could only sell the home once but they would have TWO loans that need to be repaid (the mortgage, and the HELOC).

Yeah, don't forget about property taxes and homeowner's insurance in your monthly payment. If $3k is the tax for the house, that's about $250/month. Plus insurance, which isn't much (about $600/year), so you'll be about even with the rent payments you have now.

If you buy a home through an FHA loan, you only have to put about 3% down and you can have more cushion in your savings, or you can pay off more of your student loans. I don't know much about HELOCs, but I don't think many banks are doing 2nd mortgages anymore.

Good luck! Prices around here (Orange County, CA) are SUPER low, so it's definitely a good time to think about buying!

I think you should sit down and talk to a mortgage lender first and see what they say. Do you have any idea what your credit scores are? We just recently sat down with our lender (we currently own, but will be building soon). The rules have tightened up quite a bit recently. For a conventional mortgage, we were told you’ll need scores of at least 680 and they are looking for at least 10% cash down as well as good job history (i.e., years at same jobs). FHA is a lower % down, but if you do a FHA loan and only put like 3.5% down, your PMI insurance will be several hundred a month on top of the actual monthly mortgage amount. Taxes are an additional expense which are usually at least several hundred more a month.

Homes (even new ones in great condition) will have issues that will eat up $$. If you have consumer debt (cars, credit cards, other consumer type loans), I would probably try to pay those off before buying a home. You might also want to look into a consolidation loan through a private education lender if your rates are 9-10% for student loans. That’s crazy high! There are not that many lenders who do consolidation loans these days, but there are some.

@MrsBrewer: That’s awesome – wish I had been in your position at 23!! You might want to make an appointment with a mortgage lender then to go over your options. Just don’t overextend yourself and make yourself house poor (which can be easy to do!), and sounds like it might be a good time to buy. Good luck!

@MrsBrewer: all elements you've mentioned combined with historically low interest rates = good time to buy regardless of age, if you are financially stable and have a decent amount of savings, I don't see why you couldn't be in the market for a house! definitely see what your options are your bank and don't be afraid to ask questions here my dh is a bank manager and i know more than i'd like to about the current market and changes in law/etc.