Hello, I’m seeking advice to see what my options may be at this time. My credit is around 620 ( I am 21 years old) I had 5 missed payments from a credit card in 2022, messed up and went through hardships trying to start a business. Glad I learned young… anyway. I am now making 80k yr (2 years last week at job) , I still do have minimal down payment around 2500-3000 down. I am still working on paying my debts but doing better than I was before. Since the missed payments I have made on time payments. I am an authorized user for a card 7 months opens now. Student loans - $7800. Personal - $700. No auto loan - No other current loans. (No collections). Paying 1650 for rent currently (1.2 years). Also credit limit is high ($5300 total - $4600 used). Should I wait to pay down another 7 months? My rent is expiring in February as well. My budget range would be 125-200k. Just seeking someone’s brain on my potential outcome here? Thank you for help.
This calculator can help you too: Loan Calculator
OP i would wait pay down another 7 months… Simultaneously build up for more of a down payment … just know, this 7 months is nothing … In the whole scheme of things
Just rent OP, if you can’t afford a downpayment and have a very short window of good credit
Your 21. You have PLENTY of time. Personally I would pay off everything snowball style and then start saving up. With your income if you get a roommate and save almost half your monthly expenses you could be in a wonderful position inside 2 years
This is definitely doable. There are down payment assistance programs that go with an FHA loan that can get you in for that amount out of pocket, you may even be able to get into a house with $0 out of pocket if you ask the seller for a credit to cover costs in your offer.
Shoot for $175K, go to Essex mortage and get their 100 or 102% ltv fha program. Keep your cash. You’ll get approved, but make sure you feel comfortable with the payment.
Ray said:
Shoot for $175K, go to Essex mortage and get their 100 or 102% ltv fha program. Keep your cash. You’ll get approved, but make sure you feel comfortable with the payment.
Insane recommendation, can’t even put $3k down on a home in this high interest environment?
@Kip
Running the math, he gets a smaller monthly payment by buying, then gets a few hundred back in his paycheck via w4 adjustment due to tax deduction of interest. Housing is how we start to build generational wealth and since he has kept his payment history clean and if his residual income meets the fha test, he should pursue. He’s getting nowhere renting. Btw- the higher interest rates give him a higher deduction on his taxes partially offsetting their amount. There are a lot of solid earners with few assets and the idea of saving 10-20% is a fools errand in this environment. It could be years before someone has that money to finally buy a home.
@Ray
Nobody with that small of an income is itemizing with how high the standard deduction is. Your math is way off. 'You’re getting nowhere renting’ is also an incredibly bad take too
Kip said:
@Ray
Nobody with that small of an income is itemizing with how high the standard deduction is. Your math is way off. 'You’re getting nowhere renting’ is also an incredibly bad take too
Run the numbers at $150K. Basic assumptions around taxes and insurance put him in a better place monthly, even with small savings for maintenance. You are correct on standard deduction. That was my oversight. However, with his income and lower property value range, can afford to buy. We can agree to disagree on renting. I could easily say, as flippantly as you that your take is a bad one.
@Ray
How did you jump from OP’s $80k salary to $150k salary? Also, you only benefit from itemizing for the amount of interest you can deduct after the standard deduction. So the benefit is even smaller renting allows OP to be flexible to move for higher wages, not having to worry about huge maintenance costs (cheap properties are often in more disrepair bc their previous owners were too poor to fix it), etc. real estate transaction fees eat up any potential gains if OP has to sell in a year or two To say renting is always worse is ignorance