Why can't I afford my own house?

Question

I work hard, have what's considered a 'good' job with a reasonable salary - so why can't I afford a mortgage? Why are homes so expensive? Is this how it's going to be from now on or will things change?

Answer 1

coz ur poor

Answer 2

Not sure if you feel you cannot afford a mortgage or you cannot get approved for a mortgage. Your mortgage may not be affordable for many reasons. One, is the interest rate. Even small increases in rates can have a drastic increase on your payment. You may have to pay a higher rate if you do not have good credit, or an adequate down payment. Additionally, you may have to pay PMI (mortgage insurance) because you do not have a sizable down payment as well (usually kicks in if your loan is more than 80% of your purchase price). You can avoid PMI with creative finance such as a "piggy back" loan where you essentially take out 2 loans so that your primary loan is not more than 80%. In effect you are just borrowing some of your required 20% down payment. While the rate on the second loan is higher, this additional interest may offset a potential PMI payment. You should also consider real estate tax rates. These can be a significant compenent of your payment. You should note that asking a tax professional about how you can modify your w9 so that you can increase your monthly take home pay, which will offset a larger tax refund you will get from paying mortgage interest all year. Essentially, this can allow you to take this refund home monthly, instead of in a lump sum when you file taxes. This can make a mortgage more affordable as well. Please ask a financial or tax professional for more information on these suggestions as I am not a licensed professional.

Answer 3

Because you missed the boat. Save at least a 5% deposit, 20% if you can.

It's always been incredibly hard to buy a house as a single person, find a partner who can contribute and you may find things get easier.

Look out for repossessions, I shaved around £3-£5,000 off the house i bought that way (although that was 3 years back).

For all those saying the market will be going down, the forecast is prices will dip by as much as 3-5% over the next two years, what you forget is that over the last few years properties have increased by at least 15% so the dip will be negligible.

For the brunette who can't find a property with 250k euros, try aiming lower!

Answer 4

I am in a similar situation. I think I might go down the co-ownership route like others have suggested. I have heard whispers that some time in the future the government will introduce 100 year mortgages thereby stopping property investors outbidding ordinary buyers. I think this would be great. It would also basically eliminate the need to rent from landlords cos the homeowner is essentially 'renting' the property from the mortgage company since they will probably never have the mortgage paid off in their lifetime. Of course they will still have all the rights of homeowners.

I feel sorry for future generations because where I live there is a great shortage of homes for sale thereby hugely inflating prices.

Alot of my friends still live with their parents and they are late 20s.

Answer 5

Try getting another job, thats what a lot of people do when they want more money to waste.

I live in a cheap 1 bedroom apartment and with as much money flows through my bank acct, I probably should own rather than rent, but the cost of ownership in my area is high compared to the cost to rent.

This BTW is the DC area.

If I could afford a house in this area for the same as I pay in rent, or maybe 200 a month more, I would do it in a heartbeat.

I just dont live in a place where that is the case.

Impressario Raiddinn the Beatdropper

Answer 6

How much are you spending?

I know for me it's those trips to Starbucks for a $3 coffee. Or, a $3 bagel/cream cheese...the little things really add up. Also, packing a lunch saves about $300 a month. I buy paper products in balk and save about $100 a month there.

I also buy my chicken in bulk at save a TON of money. Actually, all my meat is bought in bulk (pork, chicken, fish, and beef).

As for the price of homes...it is duanting. Especially for a first time home buyer. We bought a small house - needed some fixing up - at our price range. We were able to add a/c, finish the basement, fix up the kitchen and sold it for plenty more than what we bought it for. With the extra cash from that house we were able to use our savings for a much nicer house. One that we would have liked to have been able to afford the first go around.

Just be sure the house is in a nice area. And, the rest you can do on your own. If you aren't a handy man just get a simple house and do some simple modifications.

ALSO:
Check your state/federal programs. We bought our first under the First Time Homebuyers program. Its a special program for first time home buyers and your fees are dramatically lower. And, you don't need a big down payment.

There is also the AmeriDream program.

Check it out. I'm sure you qualify for one!

Answer 7

Apparently the average price fell 1.2% last month, but still rose over 2% for the full quater.

People have been predicting a fall for a while, but it just doesn't seem to be happening. I wouldn't get too excited about this dip unless much more of the same follows.

If you have a good friend in a similar position, who you'd be happy to live with, you could buy a place together, share the mortgage, and own it jointly. You'd need to plan for what to do when one of you wants to leave though.

Answer 8

Depends a lot on where you live. If you live somewhere decent, it'll be more expensive. So, you can always move to a dumpy town.

A good job allows you to save up for the house you like. If you want a small house, figure out how much it costs and aim for a job that will let you pay for it. Also, saving is key. If you don't know how to do that properly and do silly things like buy 2 $5 starbucks coffees everyday or something, then your behavior is the problem.

Answer 9

have you tried looking for a fixer upper? Thats how I bought my first. Another thing check the hud web sight, by the way if your a teacher or a police you can buy hud homes half off... good luck, don't give up. I sell and buy another every 2 years, I make profit on everyone... keep your eyes open and look for the deals. Have you contacted Fannie May or Freddie Mac? There should be some programs to help you. Or you can see if a seller is willing to do a land contract.

Answer 10

There is an inverted relationship between the price and the interest rates. When interest rates are low, prices of houses are high :::: When interest rates are high, prices of houses are low.

Additionally, when interest rates are low the economy is known as being "Loose Money" ... this means that you can purchase a house at a high cost ::: with a low down payment ::: with low interest rates. Example, House for $250,000.00 you could get with a down payment of $12,500.00 (5% down payment); some of the more shady mortgage officers will get you in for less, but raise the purchase price of the house to compensate the difference. You'd pay it back over the next 30 years at a low interest rate!!!

When the interest rates are high the economy is known as being "Tight Money" ... this means that you can purchase a house a low cost ::: with a high down payment ::: with high intestest rates. Example, the above house price drops and goes on sale from $250,000.00 to $180,000.00!!! Now the bank requires the morgage applicant to put 20% down which is $36,000.00 ( 180,000.00 x .20 = $36,000.00 ).

So, is it easier to put $12,500.00 down for a $250,000.00 House or
is it easier to put $36,000.00 down for a $180,000.00 House???

Remember the cost of paying back the mortgate at the different rates too!!! Actually, the markets are efficient, and wheather you purchase the house at a high price with low interest rates or purchase the house at the low price with the high interst rates, the home owner will on average pay the same because of the inverse relationship (holding that the homeowner holds mortgage till maturity)!!!

Answer 11

There is a new scheme in Scotland (not sure if there are similar elswhere?) called Homestake to help people buy their first home in the open market.
A Homestake owner will generally pay for between 60 and 80 per cent of the price of a property with the remainder held by a registered social landlord using Homestake grant funding.
I have applied with my partner and we are currently looking for a suitable property.