# looking for advice, possibly buying my first home



## jessman (Oct 24, 2006)

I am 25 and really wanna move out, cause I feel like a society reject if I am this old and still living at home. It turns out that my step dad's cousin is selling his house and said I could have it for $75,000. It is a 3 bedroom, 1 bathroom with garage and workshop in the garage. I have 2 friends at work that said they would give me $300 a month each for rent, and then split the bills.

I am hesitant about pulling the trigger just yet though because this would be my first house I have ever owned, and I don't wanna go bankrupt. I have like $25,000 in my account right now, and I pull in on average around $1200 a month, but I just don't know how fast my money is gonna drain with the house payment (is this the same as a mortgage?), insurance, the bills, and everyday cost of living (food, random purchases)

Will I bankrupt myself in 6 months time if I buy this house? Or do I make enough that I could keep my head above the water so to speak? Also on my taxes would I have to claim my 2 freinds rent on anything? And do they still do the first time home buyers tax refund that they were doing 2 years ago?

Any advice would be appreciated. The house will be on sale for 3 more weeks, and this is a kind of spur of the moment thing


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## Basementgeek (Feb 7, 2005)

I would say you need an agent/broker involved. My initial thought is if you need room mates to help pay the mortgage/house payment it is not a good idea.

BG


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## Tumbleweed36 (May 14, 2005)

It might be well worth it, but I certainly would have a house inspection (licensed inspector) to look for any long-term damage things that could bankrupt you after you purchase it. For example, a roof problem could cost you upwards of $8000 if the roof is bad, so an inspector can tell you what might need fixed in the near future.

Also, as mentioned, while friends are great to have, some times a business arrangement with them (they rent off of you) sometimes does not work out and can ruin friendships. Without renters, I doubt if you can make it with your present financial setup.

If in doubt, don't, but rent yourself a place first so you know what you want.


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## Basementgeek (Feb 7, 2005)

Why not talk to him about maybe renting it, maybe an option to buy?

Check the county auditors web site for that county and see what it is valued at, what others houses are worth in area.

BG


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## SABL (Jul 4, 2008)

The county auditor's website is a very useful source of info......and free to use. Our local page gives many options for searching properties..... if the owner's name is unknown to you, you can search by address, or intersection. 

Relying on room-mates is very often a bad idea....and often creates ex-friends. A young man purchased a house across the street and a few months later I noticed more furniture being moved in and the sudden 'appearance' of very loud music and more cars and people. Often, the new roomie thinks that being away from the parents means permanent partytime but don't realise the added responsibility of new obligations that were once covered by the parents. Utilities are not cheap...and that's only the beginning. Extra frills cost even more and my cable bill is almost $100 a month for what I consider just the basics.....no HD or subscribed channels (HBO, Showtime, etc.) and mid-range internet speeds......no phone, either. 

$1200 a month is a little light on funds but may be doable with a $60,000 mortgage ($15,000 down payment, $5,000 closing and expenses, and $5,000 in reserve)....depending on local property tax, insurance, and location. Colder areas require heat in the winter and AC in the summer....warmer areas require AC in the summer or most of the year. Where you are located it will take heat in the winter and AC in the summer if the house is equipped with it......AC is not a must and I never had it in my first house. 

You need to do a great deal of research before deciding what to do.....there will be permanent costs as well as routine maintenance.....and it all adds up. Be generous when adding up the expenses and don't cut anything short when making your calculations......expenses often go up more than wages. Take into consideration the nature of your career and what resources for income are available if you lose your job......I have been on both unemployment compensation and food stamps many years ago. Things can change unexpectedly and you need to consider all possible circumstances.....


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## DriftLife (May 27, 2011)

I once heard that your housing expenses should be about a 1/4 of your income.
I think that is really good advice.


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## greenbrucelee (Apr 24, 2007)

I still live with my mum and I am 34 but then again she has parkinsons disease so I look after her. I do plan to move out but not for 3 or 4 years. So you dont have to feel like you have to move out unless you are being forced to.


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## ebackhus (Apr 21, 2005)

I have a house valued at $142,000 and I pay about 1100/mo for it. That includes my insurance, mortgage insurance, HOA fees, and other misc stuff.


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## vincitello (May 17, 2011)

Hi Jessman, 

I imagine that you will need a loan from some financial institution, if that is the case, you can sort of figure out what your monthly payment will be close to. So lets make some assumptions: 

Asking price $75000
Interest rate 5.00%
20% downpayment required.
30 year fixed, conforming loan.

Your mortgage payment should be roughly: 

$75,000-20%(downpayment)=$60,000 loan
$60,000 (loan) x 5.368 (Interest over 30 years) = $322,080/1000 = $322.08

So just your mortgage payment would be roughly $322.08, now you need to add property taxes and home insurance...so lets assume the following (you need to research this info to get an accurate figure as I'm using ramdom numbers for ilustration purposes):

Property Tax: $2,500 / year -----> $209 / month
Insurance: $800 / year --------> $67/month

So, we have $322.08 + $209 + $67 = $598.08 let round to $600.

Your monthly payment is know $600. Now, I'm sure you are going to want electricity, gas, water, internet, phone, cable tv.

Base on what I pay for these per month, it you come out to approx: $584
so: $600 + $ 584 = $1184. I'm sure you would want to eat and maybe drive a car, so figure out the cost of these expenses too. Based on these assumptions you are already in the RED. 

I would not count to your friends help. What if they dont pay you one month, maybe two...what if they decide to leave!!!

If you really want to move out, I would suggest renting first.


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## greenbrucelee (Apr 24, 2007)

Gooda dvice above.

renting is actually becoming more popular than buying now just because getting onto the property ladd is very hard especially in this current economic climate.


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## Basementgeek (Feb 7, 2005)

I would use a mortgage calculator: 

Mortgage Calculator

Regardless you can't afford it.

BG


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## herpfan (Dec 28, 2005)

I lived in an apartment with a roommate. He met a women, moved out, got married, and left the cat. He also liked to spend and frequently skip on bills ie. if you pay the cable now, I'll make up for it when rent is due. Just make sure you can get by if they take off. This is a big committment and can screw your credit if it goes bad so get a renters agreement or lease from your buddies. That can get a little weird if they are close friends, and renting could complicate your taxes.


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## ajax06 (Aug 15, 2011)

All I have to say is that buying a home is the best thing you can do right now. IF you can cover the mortgage when they back out, you are good. If you can't - then pick up a second job, or don't mess with it! Renting to me is never a good option. (unless your a transient or something!)


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## Christing (Dec 30, 2011)

I think you can buy a home right now . You can make a plan for your mony .


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## scalh001 (Dec 17, 2011)

I know this thread is going on 8 months old, but I strongly recommend not buying the house just yet. Your Debt-To-Income (not assuming any other debt you may or may not have) will be high alone just with the Mortgage payment. Many Financial Institutions will encourage you to wait. I bought my first house at 23 for slightly more than that (but under 100K), and I was the sole income at around $2400 mo gross. Looking past all the costs of closing, my finances were utterly tight as far as monthly cash flow. I got a very low fixed-interest rate (for my age and credit) of 4.875% and my mortgage along with all other home bills add up to $1100 per month--on the low end. I was new to home-buying and received tons of mixed advice, but after doing it on my own I found out exactly what it was all about. Although tons of advantages of buying a home, you definitely need to be sure your ready. As far as figures go, most mortgage lending institutions provide decent mortgage calculators, but the very best way to know if you are able to move forward is to start the process of Pre-Approval. You'll have an advisor look at more than monthly payments with you as they will thoroughly review your situation to help you make this decision. Often they will counsel you if you are not quite in position to enter the market, and if you are ready then it's free, no obligation, and you step away with even more insight into the process than when you began. So that I will have the ability to sleep at night, I need to emphasize that taking on such a big, long-term responsibility should not be done with planning room-mates incomes into equation. If you can make it without them, then it would only help if they pitched in, but at this time it looks like it would be pretty tight just by yourself. I don't foresee you feeling that sense of freedom (as far as finances) if you make that move with your current monthly income--being honest in an attempt to help. To really know, go get Pre-Approved.


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