Why are peopel giving him a hard time about buying a house just because he has some debt?
My wife and I bought our house when we were one year out of college. We had a car payment, $60k of student loans, and $20k of credit card debt (most of which was from financing college).
We still bought a reasonably priced house that we could easily afford. Yes we financed 100%+ of it. The mortgage payment was barely more than our rent. so we figured why waste money renting, and spend years saving a down payment if we could get a house for the same monthly cost.
My wife and I bought our house when we were one year out of college. We had a car payment, $60k of student loans, and $20k of credit card debt (most of which was from financing college).
We still bought a reasonably priced house that we could easily afford. Yes we financed 100%+ of it. The mortgage payment was barely more than our rent. so we figured why waste money renting, and spend years saving a down payment if we could get a house for the same monthly cost.
If one of us lost a job, we would be able to get by but things would be tight. I'm working on building up savings in case we were both to lose our jobs. Though that is unlikely as we work for different companies in completely unrelated lines of business.
The more highly leveraged you are, the greater the risks of an adverse event. If one of you/both of you lost your jobs then you're facing a whole lot of defaults. Your monthly interest expense would be immense and your financial flexibility virtually zero.
100% financing was always a bad idea. It relied on housing prices rising very quickly in order for you to have any equity (and without equity, what's to stop someone from walking away from their debt.)
Glad to hear the OP has a down payment, though I think caution is the wisest path here. If he's intent on buying a house, pay of the CC debt (highest interest rate = most expensive to carry)
BoberFett
Lifer
- Oct 9, 1999
- 37,562
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5K is not a down payment. For the house we're about to close on, 5K is just the closing costs. Even a minimum down FHA is 3.5%. You can ask the seller to pay, but the seller is limited in their contribution.
Also, if you just "came into" $10K, the bank is going to want to know about where that came from. They are scrutinizing EVERY deposit these days. They don't want people who got money from mom and dad, they want verifiable income. My company switched to a new payroll system a couple months ago and during the transition I received a one time manual paycheck for a half pay period. I had to get proof of everything and demonstrate that all of our deposits are payroll and not gifts.
Also, if you just "came into" $10K, the bank is going to want to know about where that came from. They are scrutinizing EVERY deposit these days. They don't want people who got money from mom and dad, they want verifiable income. My company switched to a new payroll system a couple months ago and during the transition I received a one time manual paycheck for a half pay period. I had to get proof of everything and demonstrate that all of our deposits are payroll and not gifts.
Or you drive an inexpensive used car!!
Seriously, you don't need a brand new car. A car with about 40-60K miles for ~5K is perfect; you can probably get >50K miles without a problem and buy with cash, then sell for ~3K in 2 years. Net cost: 2K plus gas.
Why buy a brand-new 28K car that will be worth 5K in 2 years? Total waste of money... that's 23K for 2 years of driving.
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