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first time home buyer, few questions and needed finance advise

reign1 128 21 September 15, 2015 at 04:13 PM in Home & Home Improvement (2)
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Not sure where to start but we accepted a counteroffer of 240k plus 9k sellers assist (249k total) on a home yesterday and now have to make the decisions on where to allocate money and future payments. We are planning on doing FHA because it will most likely go in her name too with my credit not being very good while hers is between 670-689 which are the 2 scores we got during the preapproval process a few weeks ago.
At first I was concerned with avoiding PMI but @ .5-1% is it more beneficial to put available funds towards other loans? Same with downpayment, obviously its a little late to put a lot of money together for it but again is it worth it with low current rates to put money/more money down instead of paying off loans?
Here is all info I can think of
House Price: $240k
RE Taxes: $6400

Me: no real liquid assets besides few hundred in bank, just went back to work after 2 month layoff
CC: Amex balance of 1130 with 1000 limit
I own a property that I bought 10 years ago valued between 85-110k, 52k left on 15yr/85k ($700 per month) mortgage that has been vacant for 2 years and my younger sister is moving in end of this month @ $850 per month plus utilities.
Employment in construction union which has been rough last 5 years but this year and future look very promising but still I can work steady 40hr weeks for 6 months or laid off at any time. Hourly @ $42/ $1130 after taxes per week.

Her: Currently renting a house
2-3k liquid
can borrow up to 16k from retirement acct, think 403b.
Salary at 97k + OT @ childrens hospital.

Student Loans:

Discover Student
8k @ 3.25%

AES
45k @ 4.87

Navient Dept of Ed and Federal Loans
126k rates range from 6.55-8.25%

Amex 4k (10k limit)

Lowest rate was through a family friend @ 3.5% and no fees

Now on a completely different subject...House was up for 250k, we offered 235k including 9k sellers assist, didnt hear back so our realtor reached out to theres and they said they were insulted by low offer and didnt even counter. Agent said they wont budge below 240k so thats how we arrived there....2 days after they accepted offer of 240k they said they wanted us to sign contract asap so they could sign a lease elsewhere (not sure if this is standard) but disclosed to our agent they had a previous buyer who backed out when home inspection found cracks in the foundation and although they hired a structural engineer to further investigate who said it was normal and due to "settlement". That was yesterday, now today we hear that 2 structural engineers looked at the property, 1 saying above but other saying needed 25k to repair and we are still waiting on this paperwork to be forwarded to us. We really love this house after looking at close to 30 in last 18 months but obviously want to avoid a "problem house"

Thanks for any and all advice, i know thats a wall of text above and we arent in the greatest of financial shape...I lost alot in a divorce few years ago and she has only been out of school for 5-6 years, but we are hoping to move forward.

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#2
let this one go. It already sounds like a headache + whatever financial headaches/issues you already have.

Save up more money. wait until you are in a better financial situation to purchase a better home (pay off credit card debt).

no need to start off this marriage/relationship with financial issues + home repair issues. just more stuff to fight about.

the structural issues are enough to back out. all you lost was an appraisal and home inspection ($1000)

the structural repair $25k plus sellers assist $9k (WTH is this?? sounds like a way for realtors to pad their pocket) = $34k on a $240 k home. thats almost a 15% markup just to live in the house. plus the added cost of furnishing and decorating,
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Last edited by jaqnabox September 15, 2015 at 04:44 PM
#3
I have never even heard of "sellers assist". That sounds like a complete joke that they played on you to convince you it wasn't simply the cost of purchasing. You're basically paying the asking price with that included.

Am I reading correctly that you have nearly $200k in student loan debt between the two of you???
If my finances looked like yours I would not purchase a home or do anything but work on reducing expenses like crazy.
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Last edited by redass September 15, 2015 at 04:36 PM
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#4
Quote from redass View Post :
I have never even heard of "sellers assist". That sounds like a complete joke that they played on you to convince you it wasn't simply the cost of purchasing. You're basically paying the asking price with that included.

Am I reading correctly that you have nearly $200k in student loan debt between the two of you???
If my finances looked like yours I would not purchase a home or do anything but work on reducing expenses like crazy.
sellers assist is a part of almost all houses sold around here, my friend buys and flips and he said about 30% request it. Its money included into the mortgage that is then given BY seller to buyer to pay for closing costs.

you must be misreading, I have $1000 in CC debt, 52k mortgage on a property worth $85k-110k. She has student debt in the range of $185k, CC debt of 4k
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#5
house is 240k, seller states house is 249k so that you can take a loan out on 249 and not 240. seller gives you 9k so you have extra cash to close.

the agents get their 5-6% at 249k not 240k.

you now mortgage 249k instead of 240k.

your property tax is now at 249k instead of 240k.

sounds kinda stupid.
Seller - pays more listing fees to agents, plus needs cash to fund your lack of cash
Buyer - you pay a higher property tax plus higher mortgage
Agent - collects extra $ that he/she got both of you to pay.

why dont you just negotiate harder or walk away.

is the seller really going to let you walk away on 9k and a structurally damaged home? wish the seller best of luck selling his structurally damaged home.
Seems like the seller is paying you with your own money to take the damaged home off his hands.

Or you can save 50k, and put down 20% on a house and not pay PMI. and not borrow more than you need. and not buy a structually damaged home.
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Last edited by jaqnabox September 15, 2015 at 05:16 PM
#6
I don't understand. You two have ~200K in debt and it does not sound like your income is stable at all. That is too big of a house for your cash flow.

In your shoes I would stay renting or move into your property, living with your younger sister and aggressively save money to pay off debt. I will not think of buying a house until you are debt free.

I won't be able to sleep well even with 5k debt, let alone 200K or 450K (once the house is purchased) in debt without enough liquidity to back it up. That is a financial disaster in the making.
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#7
Why don't you just move to the house you already own and have your sister find another place?
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#8
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#9
That's how I read it. new loan at 249k
you need a third structural engineer that you find yourself

I'm not worried about debt. I think buy now rather than wait.

Why were you slow in construction until now? what state you work in?
I see another layoff

1900 house payment
you're dragging that girl down with you...
2 years vacant that could have produced $$... I'm not going to say it....
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#10
is it possible to refinance ur existing loans? aim for at least 2% lower than what u have, that'll lower ur bills
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#11
You're in no position to buy a house.

This is a terrible idea.
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#12
As others already voiced bad idea overall not to mention this house/terms are way too sketchy... Move into your existing property, create a strict budget/plan, start paying off that debt and re-evaluate in a year or so. With both of your income and hopefully you can continue to work consistently I think you both have potential getting out of that hole rather then digging yourself deeper.
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#13
Okay, first things first.

You say "me" and "her". This implies you are not married and would be a weird way of conveying "togetherness". Neither of your credit scores are all that high.

Her debt is massive and the total financial savings is nil.

You will likely go ahead and purchase the home but it truly and honestly is a poor decision at this point.

Is there a reason you cannot continue renting? (The answer to this is no, btw)

It sounds like you have better options and are looking for the option you WANT but shouldn't have. You have a vacant house, is there a reason you can't live there? You have a lease currently, no reason you can't continue living for a period of time. It is better to rent and not gain the equity than to purchase a home out of pure emotion and suffer the financial consequences.

Do not borrow from retirement account for your home. Please, don't.

She could probably afford that house if she drops the debt first although this is slightly out of the range for her single income IMO.

Your best bet for a successful financial future is to budget, budget, budget. Pick an aggressive debt-repayment plan while building up an emergency savings. Neither of you have any savings to speak of. I'm not sure how you plan to maintain a home without any money set aside for that either. First home issue and you two are broke, broke, broke.

Definitely avoid purchasing a home at this time and focus on your finances. Failure to heed this advice will CERTAINLY end in continuing financial problems -- I can assure you of it.

Best of luck to you.
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#14
so whens the housewarming party?

i'll bring dip
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#15
Quote from jaqnabox View Post :
so whens the housewarming party?

i'll bring dip
skip dips, bring gold ingots instead hug
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