How hard is howeownership?

Question

I would like evryones honest opinon on the pros and cons of homeownwership. My husband and I are looking at taking the giant leap into purchasing our first home.
I am deathly afraid of taking on such a responsibility as we are not financially stable, and our credit is not so good.
He is all for it since we added up how much we have spent in rental and deposit fees.
We are in our early 30's so he says this is the perfect time to take the step and lie a foundation for our kids....
Please let me know what risks are involved and if anyone knows the upfront cost in purchasing a home.

Answer 1

If you a first time home buyer you will be required to put a total of 5% as a down payment of the purchase price.

A word of advice, if you can pay rent, then you will be able to pay a mortgage payment. Just make sure your mortgage payment is in your price range.

Here is a article about mortgages and credit for you to read.

Your credit score plays a heavy role on the interest rate you will receive for your new mortgage loan or refinancing from your lender. One major factor is how many late payments (30 days or more, 60 days or more is even worse) are on your credit report. Late payments of less than 30 days do not show up.

The second major factor is your combined credit rating from all 3 credit agencies. If your credit score is 620 or above you will probably be approved for a conforming loan with a lower interest rate. If your credit score is below 620 you will probably be approved for a non conforming loan with a higher interest rate. Remember the lower the credit rating the higher your interest rate will be. Some lenders accept credit ratings down into the lower 500's.

A third major factor is if you claimed bankruptcy in the last 2 years. Most lenders require that your bankruptcy has been discharged for at least one year.

Remember, know your credit score before you apply for a home mortgage loan. Knowing this will help you know how much and at what rate you will qualify for. If you have a credit score above 620 I would recommend applying directly through a bank than a mortgage broker so you will not get charged brokerage fees and a bank will most likely give you the best rate.

Answer 2

It all depends on where you are, where you plan to buy, and how old the house you plan to buy is. It truly is a buyers market, so it's really a good time to buy that first home... if homeownership is one of your goals.

There's nothing wrong with renting. Contrary to what some people say, you're not throwing your money away in rent. You have a place to stay, and all repairs and maintenance are someone else's responsibility. In addition, you get use of the community facilities that are available without having to pay to clean the pool, mow the lawn, etc.

Now. If you truly want your own home, then there are a lot of pros to that too. You don't share a wall with your neighbor (or a ceiling or floor in the case of multi-story apartments), so you have a lot more privacy. You also get extra tax deductions, can paint your walls whatever color you want, and can have your own garden, if you're into that. You can also put up a swing set or play house for your kids, have a garage to park in, and you'll be the only one with keys to the place.

On the flip side, homeownership carries with it home repair and homeowners insurance. (Although, you should be carrying renter's insurance if you rent.) If you buy an older home, I would recommend spending the $350 or so on a home warranty for the first few years. That way, you don't have to suddenly learn plumbing, appliance repair, etc. if something breaks, and you don't have to spend an arm and a leg on parts and labor.

It is a huge committment and the biggest investment you'll ever make, so think about it carefully. If you're not at least 99% sure it's what you want, you should wait a while before you get into it.

Answer 3

I know how you feel, I am 23 & buying a home with my fiance right now. It is a scary & stressful process but it pays off in the end! For money upfront, have at least like $10K or so just for closing costs, and possible down payment money. We r buying a $339K home & the closing costs are like $13K!! And we HAVE GREAT CREDIT...so, I would def. think about that; we r getting the sellers to pay a portion of the closing costs, and our realtor is giving us a 1% credit..so look for deals like that that will help you out!
*Pros:
-tax breaks (you get back all interest paid on the loan & i think property taxes also - depending on the price of the house & interest you pay that can be a lot of $$)
-it's your nest egg; you can get equity in the home & it's one of the only things you buy that actually appreciates in value...in other words, your home can make you some money
-you are paying for somethign that's yours; your hubby is right rent nowadays is not much cheaper, so your money is much better spent on something u own

*Cons:
-anything that breaks you have to fix, no landlord is around to help you & sometimes these things can be costly.
-you MUST purchase homeowners insurance which adds an extra cost each month
-most places have Home Owners Assoc. fees which can also be costly & they place certain requirements on people living in a community (like how high your grass can grow, how long ur garbage cans can be left out, etc.)

I'm sure there are more of both, but in my opinion the pros outweigh the cons..if you can afford to buy, do it ASAP!! Good luck!

Answer 4

It is a HUGE responsibility.

After you purchase a house, you have many things to worry about IN ADDITION TO mortage payments. Assuming you are buying a second-hand house.....

1) you are buying an empty house. you need 'stuff' to make it livable home. They add up quickly.
2) when something breaks, it is YOUR responsibility to fix it.
3) insurance....
4) when someone gets hurt in your property, YOU are responsible.
5) yard maintenance and equipment.
6) home owner association fees.
7) remember, re-roofing, new A/C, new plumbing, new electrical wires all cost $5K to $10K each.

Be aware, you WILL need some buffer money tucked away as there are always things to fix and things you'll need as soon as you take a possession of the house. I had $10K for this, and it went away very quickly!

Yes, mid 30s is a good time to buy a house, but remember this.... it is far better to NOT have a house than have one and lose it due to financial hardship.

I'd suggest you fix your credit issue first and be financially stable, have some reserve AFTER down payment is paid.

Answer 5

pros-you have to live somewhere
quiet and privacy,staying put, help your credit,
buying a home not wasting money renting,do what you want like paint,loud music ,and parties,tax breaks,pets

Cons- Yard work,responsible for your own repairs,taxes
We paid a little over 2000. We had good credit though. we also got the house inspected before we bought it(200). We had been living in an apartment so you have to buy appliances and lawnmower. Insurance and all that added up to what we were already paying in rent. Make sure you get a fixed interest rate. Make sure you don't try to buy a mansion if you can't afford it. check your finances and see if you can afford it before. Lots of people buy a starter home first.

Answer 6

You might not even bother stressing about it, since it sounds like you probably wouldnt even get approved. Lately, it's super strict out there, and with not great financial stability to prove, and bad credit scores, you would probably not even get approved.
With those two things going against you, if you DID get approved, there would probably be a down payment required, minimum 5%, as well as closing costs upfront (unless seller pays some)
Weigh the two. If you buy a $200k house, your mortgage with taxes and insurance (even though I cant determine taxes as to where you are) would be around $1800, approx. How much are you paying in rent? Factor out the numbers and money you'de have to put in

Answer 7

As far as I can see, you have answered your own questions. Your credit is not good and you are not financially stable. A recipe for absolute disaster and foreclosure. Regardless of the fact that the sub-prime mortgage market is crumbling day by day further and further, to commit to that kind of responsibility, you need to commit to your own stability. Imagine if you got yourself into a loan with horrible rate and terms,( which you will in your current situation) you have a child or two, finances aren't what you need them to be, you fall behind, and loose your home? Your credit is wrecked for years to come, what then? Tell your husband to worry less about where he thinks you should be right now, and worry about the work you have to do first to get ready for that kind of responsibility and commitment.

Answer 8

If you can pay 25% down with your own money, and qualify for a mortgage on the rest, go for it.
If not, don't.