Can I afford a house?

Question

With mortgage prices spiralling out of control, and interest rates through the roof, I feel I just won't be able to afford a home of my own. My friend told me it was possible to part buy and part rent a house, but what are the pros and cons of this type of deal?

Answer 1

Phil D,
please do your homework.
get a 'house buying for dummies' read digest understand.
get a budget, learn to live on LESS than you make and SAVE the rest. need to earn more get 2 more jobs p-t, it is not forever.
pay off smallest bills first (mental victories) then next largest and on up. destroy the slave cards.
never ever (f)lease a car all ways buy cash .
get a solid plan of what type of house you want and why. bankers love to have you oversold, they win both ways.
visit daveramsey.com to learn what bankers pray you never ever learn or apply.
never get variable rates or 80/20% loans or zero% always get fixed rate 30yrs or less.
your principle and interest payment should equal one weeks take home no more.
taxes , insurance, upkeep, transportation, gas , water, electric , association and empty of contents syndrome will take out of you pockets the other two weeks of take home pay, guaranteed .
never buy a house for "Tax breaks" 85%of home owners do Not qualify to use that 'break'
IRS fact.
Interest rates are at historical lowest rates in last 50 yrs. bought first house in 70's at eighteen percentage 18% that Phil is high.

Answer 2

I think it really depends where you are living.

We live in the Metro DC area. Let me tell you- it's almost impossible to purchase a first home in this area as many of the townhomes are in the upper $300k range.

We, personally, refuse to be house-broke. Moreover, if you are nervous about being able to afford the home and are forced to take out some sort of inventive mortgage, then you are more than likely purchasing more house than you can afford.

I would say wait. We are as the market seems to be softening a bit. We have friends who purchased this summer, at the height of the boom, for $340K. They've put about $30,000 into the house- and are still living in a construction zone. The house was just appraised for $300K.

If you can't afford it, then you need to wait until you can. What if something was to happen to you and you lost your job? How long could you pay your mortgage, utilities, and cost of living expenses? For most Americans, about 2 paychecks. If you don't have those expenses in savings, then you'd really be in trouble.

Do not forget closing costs either- they run about $10K for a $300K house in this area.

Answer 3

Natalie B's answer is correct but there are various housing trusts where you buy 50% of the house, on a mortgage, and you rent the other half. Then, as you get more affluent, you can purchase the remaining half or add it to your mortgage.
However, there are a lot of restrictions on the use of the house and you may have to ask permission if you want to rent one of the rooms out.
The key to it all is SAVING. Save your money, take on extra work to get that deposit. It's boring, I know, but if you could just take one year out of your life and, in addition to your normal job, work every Saturday (at a shop, bar, etc.) then you would probably have a reasonable deposit for your house. It really is a matter of having the discipline to work hard and save.
Good luck

Answer 4

A lot of places might not give you a mortgage because if you fall behind with repayments then they can only get back part of the property.

On the other hand it is a lot cheaper than renting and you can buy the rest of the place in a few years when you can afford it.

Answer 5

its a good option for first time buyers . the government have introduced it in a few areas already. it means you get an ok house to live in for a price you can afford. there will be a date that you must buy the rest of the property off of them though, thisis usually 10 years or so. one downfall is that you will be unable to secure any loans or anything against your house as it is not yours in an entity. there are quite a few mortgage companies that have these particular mortgages tailored to the style of buying. i know abbey have one as do nationwide. good luck buying a home it is the best investment you will make and beats rent in a whole.

Answer 6

Go to www.realtor.com.

Plug in your stats and it will tell you what your monthly payment will be on a house that either is exactly what and where you want it, or close enough so that you know what you're getting yourself into... it is interactive too so you can adjust your down payment and your interest rate. After that... contact different loan agencies and banks to get the lowest rate... Shop around.

Seems like everyone is getting 5 year Arms and losing their asses these days... I don't know about you, but as far as a trade goes... an arm for an as*s is not my idea of the American Dream! Be careful!

Answer 7

Phil. I'd really recommend that you wait until the bubble inevitably pops. And when it does pop - so will the economy to some degree. Furthermore, mortgage lending rates will also become more favourable.

There'll be plenty of repossessed houses at great prices by then.

It's worth holding out - as otherwise you, yourself, may be one of these unfortunate people who can no longer afford to pay their mortgage.

Answer 8

The answer to this question depends on you. I.E. How much you make monthly versus how much you pay out. Call around to a few different lenders and compare what they offer you. Only you will know whether or not you can afford the monthly payment. They should be able to take your information and work it backwards up to a maximum loan amount you qualify for. Good luck.

Answer 9

It's not the interest rates you need to worry about. As the previous guy said they are still relatively low compared to say 20 years ago. It's the ridiculous prices of the housing stock itself thats going to screw you over.

Answer 10

You will only end up owning part of the house!
It might also be harder to move out of the house too