| Should we buy house in our situation ? |
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yt620028
New Poster
Cash: $ 0.45
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Joined: 24 Jan 2010
Location: Canton, MI
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| Should we buy house in our situation ? |
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Hello,
We are thinking about buying a house in about 6 months from now and wanted to get some opinions.
- We are married, I am 32 and she is 31
- We do not have kids, but plan on having them soon
- 56K debt on Credit Cards
- 20K Car loan (matures June 2013, but will pay off sooner)
+ 120K take home between the both of us
+ 20K in Savings
+ 8K in IRA that can be used towards first home purchase
- $1600 rent on a condo, currently in our 2 yr lease
- Our credit is around 700-720 in FICO
We are currently saving 5K every month, so we would have about 55K in savings by about June 2010. We are looking for a single family home in the range of 250-300K.
Dilemma
We are torn between the following two options
1. Pay off the debt, extend our lease one more year. Save 20% down and then buy a home
2. Buy home around July. This would put our payments around 1600$ for a 300K home or less if the home is of less. So we would be around the same situation as we are in now. We start paying off debts after we buy the home
Thanks
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Sun Jan 24, 2010 1:49 am |
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oldguy
Senior Member
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Location: arizona
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quote:
- 56K debt on Credit Cards
- 20K Car loan (matures June 2013, but will pay off sooner)
quote:
We are currently saving 5K every month, so we would have about 55K in savings by about June 2010. We are looking for a single family home in the range of 250-300K.
I would get rid of the CC debt before buying a house - that is varable rate revolving debt, subject to changes to both rates and minimum payments rules.
I would keep the car loan for the full term, that is a low rate fixed rate amortized loan, a 'keeper', it is more important to keep your cash in reserve than it is to prepay the car loan.
I would save the 20% for a DP as you suggest, but then not use it for a DP, keep it in reserve. Get the largest mortage that you can while still getting the prime rate. Your reserve account will be protection against being upsidedown (in case you need to move, you can buy out, it doesn't matter whether your money is held in house equity or in a reserve account, it is the same money).
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Sun Jan 24, 2010 2:29 am |
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coaster
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Location: Wisconsin
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That is a HUGE amount of credit card debt. That is a HUGE amount of month saving potential. That is also a very tidy dual income.
Get rid of that credit card debt. You should be able to do it in less than a year.
Then smooth sailing...... 
~Tim~
Eye Candy : Why Whimsy
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Sun Jan 24, 2010 6:13 am |
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yt620028
New Poster
Cash: $ 0.45
Posts: 2
Joined: 24 Jan 2010
Location: Canton, MI
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So, we decided to pay off the debt first. Debt is now down to 40K 
We were leaning towards the house because we felt we will be paying same amount as we rent now. But it didn't feel right. We also wanted to take advantage of the first time home buyers credit.
Btw, most of our Credit Card debt is at 2.99 APR which are all balance transfers. However, like oldguy stated its variable and may go up.
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Sun Jan 24, 2010 11:28 pm |
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coaster
Senior Advisor
Cash: $ 1318.80
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Location: Wisconsin
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Thanks for the update. Good luck with your finances.
~Tim~
Eye Candy : Why Whimsy
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Mon Jan 25, 2010 6:19 am |
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wizz_tm
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Joined: 11 Apr 2010
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The worst debt that can be is the credit cards debt because of the interest rates, you must check your interest rates and see the conditions when you go overdraft.
So to answer your questions in your case first will get rid of the credit card debt then I will think about buying a house, the house is an investment that you will see its benefits in time
Crude Oil Trading System
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Sun Apr 11, 2010 8:53 pm |
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