What can we afford? (loan, premium, credit card, 30 year fixed)

[punch2800]

My boyfriend and I are looking to buy our first home (townhouse) this time next year (July/Aug 2011). Together we bring in a combine 70k a year. Because of the time we have (and thanks to my initial saving) we should have around 50-60k to put towards a down payment. Looking for a 30 year fixed mortgage.
At this point (thanks to the paranoia of our parents) we have no credit. Albeit no debt. So were working on establishing our credit buying furniture, washer and dryer etc. We have been looking in the 220-260k range mostly in Carroll/Howard county MD. Is this out of our price range? Also any other suggestions to help establish our credit would be appreciated

[chet everett]

Originally Posted by punch2800

My boyfriend and I are looking to buy our first home (townhouse) this time next year (July/Aug 2011). Together we bring in a combine 70k a year. Because of the time we have (and thanks to my initial saving) we should have around 50-60k to put towards a down payment. Looking for a 30 year fixed mortgage.
At this point (thanks to the paranoia of our parents) we have no credit. Albeit no debt. So were working on establishing our credit buying furniture, washer and dryer etc. We have been looking in the 220-260k range mostly in Carroll/Howard county MD. Is this out of our price range? Also any other suggestions to help establish our credit would be appreciated

Seems like a realistic range, you have LOTS of savings, I assume that is in interest bearing accounts. I hope you also have retirement accounts and such so that the lender you approach does not fear that your thin credit history is a negative. What about rental history? Have any places you rented run credit checks on you? That can help to establish identity / history of residence. Good lenders also go off that...

Pay off the lending you did for the furniture and appliances early, that will improve score. If you have opened a credit card account use it as frequently as you can, paying off the balance early, and shifting large purchases to it. If the card has no interest for 30 days or what have you and you pay off the balance in full your FICO will go up, and it won't cost you anything... A large available credit limit is not by itself a good thing, but when it shows that you tend to pay off the charges in a timely manner that raises your FICO. Perversely you will also get more CC offers for a while. Do accept them, as having too many credit accounts can hurt your score. After a while the offers will dry up if you tend not be the kind of customers that carries a balance, as the companies won't waste money marketing to a charge user that does not help their margins. It is not you cost them money ( as the fees and charge premium to the clients cover that), but that the make more getting interest as card holder dig themselves a bit of debt mountain. Of course the trick is that the banks do not. Want the borrower getting ogre extended and defaulting , so they eventually reel in available limits for those that are soaring in debt...

[piyf]

You have 50k for down payment and another 10k for closing costs? But in this crap market (will probably be crappy next year), you will probably get the seller to pay most if not all.


It's your first house so don't go for the homerun. And don't listen to the realtor or mortgage company when they tell you that you can afford a 200k home. Yes you will make more money as time goes on but with that comes more spending (it's human nature). 200k mortgage making 70k is to much imo.

And why a 30/yr mortgage? You've saved all this money which is very smart but taking on a 30/yr loan is stupid. Spend a little less on the home and get a 15/yr loan. You will save hundreds of thousands and the house will be paid off before you're old. Then you can reap the rewards of having no mortgage.

just my 2cents


As for getting credit. Try a secured credit card or department store card.

[Poltracker]

...and for your sake, see an attorney about writing up a contract between you and BF on how ownership is to be held and who gets what if you split up. Over on the legal forums, there are unending questions about partners splitting up after buying a house and ending up in a mess. A divorce is a lot cheaper and easier by comparison than a partition suit. Not trying to be negative, but you should always protect yourself.

[postmortem]

Originally Posted by danieloneil01

You have 50k for down payment and another 10k for closing costs? But in this crap market (will probably be crappy next year), you will probably get the seller to pay most if not all.


It's your first house so don't go for the homerun. And don't listen to the realtor or mortgage company when they tell you that you can afford a 200k home. Yes you will make more money as time goes on but with that comes more spending (it's human nature). 200k mortgage making 70k is to much imo.

And why a 30/yr mortgage? You've saved all this money which is very smart but taking on a 30/yr loan is stupid. Spend a little less on the home and get a 15/yr loan. You will save hundreds of thousands and the house will be paid off before you're old. Then you can reap the rewards of having no mortgage.

just my 2cents


As for getting credit. Try a secured credit card or department store card.

I disagree - with today's fantastic best mortgage rates (4.25% for 30 yrs, at best 3.75% for 15 yrs) I see little advantage to strain yourself with 15 yrs mortgage.

About "being first home" - why would they not think long term and think of it as permanent home. Buying again few yrs down the road would cost a lot - new set of closing costs, this time both buying and selling.
With so much cash OP can get it right first time. Based on various calculations, for 70k/yr and 20% down you can afford 250K home (about 3.5x of your income).

One thing I would worry is that OP would be able to pay mortgage only if both of them are working. What happens if one loses job and can't find new one for 12 months? That scenario needs to be worked out.