Mortgage/Home Buying Advice

spend a little time reading some of the threads here ....then, put your money into two FDIC insured accounts and rent a nice place.

I think one FDIC insured account should suffice

Thanks for the responses.

If I was compelled to buy however, what would your advice be?

supposing you were compelled to jump from a six story window...would you want advice on how to get the window open and do your swan dive or would it be more appropriate to tell you jump to not from the window?

why are you compelled to buy?

You cannot qualify for that mortgage yourself. It doesn't matter what your girlfriend has agreed.

kcw--

I hate to be a party pooper, but I would urge you to think VERY carefully before purchasing a piece of property with a girlfriend. If you two break up it could get very messy very quickly. It is good that you are not planning to co-own--which would be a complete and utter mistake--but even counting on her as a contributor could be risky (she could eventually try to claim part ownership citing monies paid towards your mortgage and maintenance).

If you absolutely MUST go through with this, I'd suggest having an attorney draw up papers that very clearly state the funds paid by your girlfriend are rent to you for her use of the space, and NOT contributions to the mortgage or maintenance. Not very romantic, I know, but it could save you a potential headache down the road.

nothing like a prenup before the nup

Squid, thanks for the advice.

From a purely financial perspective, what are your thoughts?

asked and answered:

from a purely financial perspective, you can't afford it.

hi there

i am in a (somewhat) similar financial/graduate situation as you are kcw984. all except my annual income is a little more than double yours, but ANYWAY. I put down 10% on a new development condo @500k last August in Manhattan. Then the bottom fell out of the market, and I was terrified that I'd loose my 50k. By the grace of God the building decided to go rental and I got my deposit back. From August until last week I was in a frenzy that even ambian valium could not fix. So I managed to go through all this unscathed, but now I can see that the time is NOT right to buy--AND I learned how to go through all this without having the huge mortgage at the end of it all. My advice to you is same as everyone else...save your money and split a great affordable rental w/your girlfriend until the real estate market dust settles. You said you were just out of college and you have all your life to do this. I know interest rates are 4% or so...that is just 1 piece of the puzzle. I REALLY want to buy too but I am so thankful I did not do it right now. Save your cash in a safe place and research research research for the next few months/1.5 yrs and you'll find a place. I promise. There is NO shortage of places to buy in this city. Don't be in such a rush. Just relax and be happy you have all those financials in your court when the time is ready to pounce you'll be fine and ready to plunk all your savings down. Good luck!

also agree w/ columbiacounty. DO NOT DO NOT DO NOT buy a place thinking that you'll be able to afford it if...i have a roomie, if i get the tax break, if if if...real estate transactions are EXPENSIVE and if you can just barely make the ends meet abandon and wait until you are not living paycheck to morgage payment...you will hate your life if you do that!! remember what got us into this mess in the first place. learn from the last 9 months of watching CNN drone on and on and on

I'm a broker, and I'm going with columbiacounty on this one. (Is that a first, cc?)

Given the fact that you're looking in Williamsburg, I would recommend you hold your deposit in a relatively accessible account and wait for a property to come on the market at a price you can qualify for on your own. In the meantime, talk to a bank or mortgage broker about your long-term plans, and make sure you get your credit scores up to the best possible numbers. (Spending a year bringing your credit north of 750 can pay for itself, even if the base interest rates rise). If your scores are already at 800, ask a mortgage broker/banker what you can honestly afford - and stick to that number!

Williamsburg is a great neighborhood to rent in as well. You and your girlfriend should enjoy this time together without the stress of agreements and ownership disputes. Make a nice home together in a rental and continue your search - and if something comes up at $350K or whatever your banker says works for you, grab it. In the meantime, be patient!

Tina
(Brooklyn broker)

first of many, perhaps.

Everyone, thanks for your comments.

This has been informative.

Aside from the fact that it's a terrible idea to buy a piece of property with someone who's not a legal spouse -- you guys can't afford it. Even with the $130K down, you'd be mortgaging nearly FOUR TIMES your combined annual income. The general rule of thumb is your mortgage shouldn't exceed two and a half times your household income.

Keep looking for something based on YOUR base salary alone.

Have to agree with what the other posters are saying about the "affordability" issue.

To add color to the bank loan (mortgage) discussion, I recently went through the process myself and I am around the same age as you are, though it seems like I may have a longer credit history.

What I can recommend you do is find a way of accessing your FICO score - either buy it, or try to go through the mortgage pre-approval process on your own and ask them for the 3 scores. Mortgage lenders typically take either an average of the 3 scores, or the median of the 3 scores. Even with a perfect payment history, if the credit card is only a year old, it will be very difficult to have a score that is "high enough" for this loan market. A key factor in the FICO score is how long you have had outstanding credit, and 3-4 years with one "lender" (aka credit card) is required, at minimum. If your car ever had a loan, though it doesn't sound like it ever did, that loan would also help.

Good luck - you WILL find a great place to live and something you can afford - it may not be this year, but it will happen eventually!

The mortage company will not consider any "income" from a roommate (or girlfriend in this case). I bought a couple years ago, when the lending was less restrictive with the plan of having a roommate. I got the loan but when they calculated my income, they did not include the roommate. From what I was told, the mortgage company will include it in income if it is a seperate rental property, ie. two family and you were renting out the other 1/2.