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Message
home buying question
Posted on 7/16/14 at 10:58 am
Posted on 7/16/14 at 10:58 am
A rundown of my situation: I'm 23 I have 6 acres of land that I would like to build a house on in the future. I do not want to rush and build something so early and not be happy with it later.
I recently found a nice starter home. It's an older 3 bed 2 bath home. It's very nice and clean, no work needs to be done. They are asking 140,000 (I'm sure I could talk them down a bit).
My question is, do I pay the 20% down payment (which I have saved up already) or do I try and get FHA loan and keep my savings while paying down my land. Also, last I checked my credit score was around 710. Should I have any trouble getting a loan?
I recently found a nice starter home. It's an older 3 bed 2 bath home. It's very nice and clean, no work needs to be done. They are asking 140,000 (I'm sure I could talk them down a bit).
My question is, do I pay the 20% down payment (which I have saved up already) or do I try and get FHA loan and keep my savings while paying down my land. Also, last I checked my credit score was around 710. Should I have any trouble getting a loan?
3
Posted on 7/16/14 at 11:12 am to Patches O'houlihan
If I were in that situation, my focus would be on paying off the land because that would give me more flexibility in the intermediate future to set a build date for final home. This starter home will be more of an investment and if it has potential to grow (upgrading flooring, counters, add a deck, etc) then you should be able to profit down the road when you try to sell it hopefully in a better market.
Posted on 7/16/14 at 11:16 am to Patches O'houlihan
You should be able to get a conventional loan with your credit score (provided that's your middle FICO score from the 3 bureaus). I wouldn't do FHA if I could avoid it.
Posted on 7/16/14 at 11:28 am to dnm3305
I guess my thought is that if I get into this home that I will not be rushed to build so soon and could possibly make some profit. I will have land paid off 3-5 years.
Posted on 7/16/14 at 11:56 am to Patches O'houlihan
I would stay away from the fha because if the insurance premiums.
Posted on 7/16/14 at 11:59 am to Creamer
Agree. There are conventional loans at 5% down. FHA used to be an alright option until they started with the premiums for the life of the loan.
Posted on 7/16/14 at 12:04 pm to Patches O'houlihan
Keep your savings and find a place to rent!
Posted on 7/16/14 at 12:05 pm to AUtigerNOLA
Thanks for the advice guys!
Posted on 7/16/14 at 12:07 pm to sneakytiger
Why would I throw away ~$1000 a month on rent when I could put less money towards something of my own?
Posted on 7/16/14 at 12:25 pm to Patches O'houlihan
When you add interest on a home loan, property taxes, and general upkeep on the house (yard work, maintenance) you may be approaching $1000 a month.
Posted on 7/16/14 at 12:27 pm to Patches O'houlihan
Assuming that you are going to live there for 3-5 years and then sell to build on your acreage, you will have only built $5-10k equity over your down payment (on a 30 yr mortgage), minus your closing costs on the purchase and a later sale, maintenance, property taxes, etc... you're probably going to lose money, even if home values are stable. Why tie that much money up in a home that you know is temporary?
Have you played around with a good rent vs. buy calculator?
LINK
Have you played around with a good rent vs. buy calculator?
LINK
Posted on 7/16/14 at 12:37 pm to Patches O'houlihan
quote:
Why would I throw away ~$1000 a month on rent when I could put less money towards something of my own?
i thought the same way
i am now 6 years into a mortgage, and if I sold it today, I would still lose money
see if your location and income could qualify for a rural development loan....if so, I would do that.....otherwise you are probably better not doing FHA unless your land loan has a really high rate
Posted on 7/16/14 at 1:00 pm to sneakytiger
There isn't a number that I put on living there. I just know that I'm not ready to build yet. I understand the costs for upkeep and mortgage would be more than rent but I figured that if I stayed in it 5-10 years I would be able to make a little money. I guess that isn't the case.
Posted on 7/16/14 at 1:01 pm to Croacka
dp
This post was edited on 7/16/14 at 1:03 pm
Posted on 7/16/14 at 1:02 pm to Croacka
quote:
rural development loan
You can build a house with a rural development loan?
Posted on 7/16/14 at 1:06 pm to Patches O'houlihan
quote:
figured that if I stayed in it 5-10 years I would be able to make a little money. I guess that isn't the case.
its not not the case, its just far from a guarantee
i gave my example, but i'm sure lots of people have made the right deal at the right time and come out ahead even after just a couple years
Posted on 7/16/14 at 1:07 pm to Patches O'houlihan
quote:
rural development loan
You can build a house with a rural development loan?
i don't know the rules on them exactly, i just know that they have many perks above a regular FHA loan...or at least they did 6 years ago
unfortunately the income qualifications were a little low and we didn't qualify
Posted on 7/16/14 at 1:09 pm to Croacka
I gotcha, I will look into it. Thanks for the info
Posted on 7/16/14 at 9:10 pm to BeaumontBengal
quote:
When you add interest on a home loan, property taxes, and general upkeep on the house (yard work, maintenance) you may be approaching $1000 a month.
Add insurance premiums too.
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