Saving for a house

[dischick4778]

Anyone else saving to buy a house? Currently that is my goal in life. And what a task it is. There is so much to know. And the saving part seems to take forever, especially when your job doesn't pay you millions. I guess I am just writing here for inspiration and support to keep going. And to see that I'm not the only one going through this, which is how it feels. Most of our friends own something either a house or a condo and we have a 1 bedroom apartment in a house my family owns. I feel like I am 2-3 years behind my plan for life and it's frustrating. But I am highly motivated. So good luck to anyone else out there saving like me. And I appreciate any words of advice or encouragement. Thanks!!

 

[sbell111]

From time to time, we all feel like we aren't hitting our milestones as we thought we would. This is normal. Frankly, I'd be worried about you if you didn't feel this way.

It actually sounds like your playing it smart and working on getting a really good downpayment saved up before jumping into a house. Too many people save just the minimum (or nothing) to buy a house. These people frequently flounder as soon as the tiniest bump in the road happens. It's so much smarter to take a more slow and deliberate route. For us, it was religiously dumping every cent we could into paying off all of our bills so we could start saving for our house.

It was hard but, like you, we were fortunate to be able to rent from family (in-laws ) at a favorable cost while we saved. It seemed like as soons as we got our little bills paid off (and some old mess cleaned up) the house savings really took off.

The time it took to save money had a secondary benefit. We were able to take the time to learn more about the home buying process than we previously knew and we were able to figure out exactly where we wanted to live (and could afford to buy). When it was all said and done, we bought a home on the exact street we wanted in the exact style that we were looking for.

 

[PrincessDreams2]

My DD4 and I have been living with my parents for over a year after a financially damaging divorce, saving and paying off as much as I possibly could. In about 4 weeks, I will close on my new home! So it can be done, and if you stick to your plan, you will succeed.

A little advice; there is a plan through some banks called The First Home Club. I believe it is a federal grant program for folks in lower income brackets (in my case, single mom with child help). You set up a dedicated savings account and deposit $167 a month into this account. After 10 months, they deposit $7,500 for you to use towards your down payment, closing costs, whatever. You have up to two years to use the money after it matures. Check with your local bank to see if they offer it. I did it, and that is how I am able to get my new house. I know HSBC, M&T, and First Niagara offer the program, at least in my area. So check it out.

Good luck!!!

 

[Jordans_Mommie]

I'm saving to buy a house also and it is slow motion as I am currently going through a divorce and DH is being a total jerk on top of not paying a dime to me to help with our son . Ok, I digress , back to the topic. Right now, I am focused on paying everything off (car and student loan). I have been making extra payments to both and by my calculations, I should have them both paid in 2 years. I am also fortunate to live in a building owned by my grandmother with huge apartments mine is 3bd 2ba. I have plenty of space and will be able to stay put while I save plus the added bonus of my Mom in the same building to help with my baby.

Hang in there, you can make it! I am a very visual person, so I have created all sorts of spreadsheets with charts that let me know how I am doing and gives me the encouragement to stay the course. It also helps me to resist impulse buying. Many of my friends own property too and many are also hanging by a thread. I do not want to purchase a house until I have 20% downpayment AND at least 6 months ER fund.

Good luck and know that you are NOT alone.

 

[Doodlebug939]

Trust me you are not the only one. We have been working very hard this year to pay off debt so that we will qualify for a loan. We have thought about going to Disney two times this year but have talked ourselves out of it both time because it gets our dream of homeownership a month farther away.

We have set a list of reachable goals so that we when we reach them then we are one step to our goal. We are looking at homes in Jan/Feb and are hoping to close on March 31st. I remember last year thinking that Jan 2009 would never come but it is truely starting to feel that it is not out of our reach.

Keep your chin up. I wouldnt worry about keeping up with your friends because the way the markets have been they could be over they head right now with a mortgage for more then the value of their home.

 

[MRDUCKIE07]

I have the same goal of being able to buy a house some day. Right now the savings part is the hardest. Been divorced for two years and single mom to a 3 year old. All of my retirment from when I was married went to pay off marital bills. So basically starting all over again. Will be looking into this saving plan your referring to tho...sounds like a good idea.

 

[pumpkinfish]

DH and I have rented since we got married...8 yrs. In January I took over the budget/bill paying and got us on track (FINALLY!). The apartment we had been renting for 5 yrs was adding new buildings which blocked our beautiful view off our patio, PLUS they were going to increase our rent.
We had it. In February we decided to buy a house. We didn't have much of a down payment so decided the FHA loan would be the best. Our credit was on track but we didn't have neough for 20% down. In March we moved in with mom and dad (lease was up in apartment) and really buckled down on paying off our debt. Fast-forward to the present...we close on our first house Monday!!!! We are SO excited. I never thought it would come soon enough. In fact, I thought i was content about living in an apartment but didn't realize I had a fear of the unknown with buying a house.

It IS possible to do. Although we sped up our process by getting an FHA loan (we make too much to qualify for the special first time home programs) we are seriously happy. Map out your goals (like a previous poster, I had spreadsheets like you've never seen!) and stick to them. Keep reminding yourself WHY you are doing this.

But seriously look into first-time home buyer programs. The information is out there! Good luck

 

[RIDisneyFan]

DH and I are also saving for a down payment on a house. Our credit rating is not great; DH had to go on disability several years ago (he has multiple sclerosis) and we got behind on our bills. Everything is current now; we've paid off DH's mini-van and most of our credit cards. I got a nice raise a work last year; that has helped a lot. We're not finishing paying off the balance of our credit cards (should be done in 4 months) and putting money in savings for the down payment; I have money deducted from my paycheck and deposited directly into our savings account. The housing market has been bad for a lot of people, but it's brought prices down quite a bit in our area, so it will help us. We're hoping to start seriously house hunting in the spring.

 

[thomas998]

not to discourage you...

But make sure you are saving to buy a house because it makes sense to you and not because you believe that a family has to own a house. In many instances owning a house doesn't really put you ahead of where you would be if you were just renting.

There are some pretty big myths about home ownership that a lot of people simlpy accept on face value.

1. You get to take off all the interest you pay on your taxes... Unfortunately this isn't true. At best you would be able to claim a tax write off if you itemize your deduction and the total deduction (including the interest paid) are greater than your standard deductions. In some instances the standard deductions are still greater than the interst so you get nothing for the interest you pay.... The second issue is some people assume that if they paid $10,000 in interest in a year that they get to take $10,000 off their taxes... well sadly you only reduce the tax bill according to your tax bracket... if you were in a 25% tax bracket then that $10,000 in interest would reduce your tax bill by $2,500... Of course you can't lose sight to the fact that in this situation you are still paying $7,500 of your money to a bank....

2. Owning a home is a great investment. Well, if that were the case we wouldn't have any banks like IndyMac going under would we. I think the best test you can do is look at the cost of a new house in your city... how much is it a square foot.... now look at older houses and calculate their price per square foot. If the old house is selling for the same as the new one then that would be a good deal... but often times you see older house selling for a fraction of the cost of a new house... Houses aren't really investments as much as they are like cars. They start to lose value as they age... the land the house sits on is the only thing that is truly an investment.

And don't forget that owning a house has alot of expenses that you don't have as a renter.

Hope I didn't discourage you too much... I just wanted you to think long and hard about why you want to buy a house, sometimes I think people blindly assume that they HAVE to have a house to complete their lives.

 

[roliepolieoliefan]

not to discourage you...

But make sure you are saving to buy a house because it makes sense to you and not because you believe that a family has to own a house. In many instances owning a house doesn't really put you ahead of where you would be if you were just renting.

There are some pretty big myths about home ownership that a lot of people simlpy accept on face value.

1. You get to take off all the interest you pay on your taxes... Unfortunately this isn't true. At best you would be able to claim a tax write off if you itemize your deduction and the total deduction (including the interest paid) are greater than your standard deductions. In some instances the standard deductions are still greater than the interst so you get nothing for the interest you pay.... The second issue is some people assume that if they paid $10,000 in interest in a year that they get to take $10,000 off their taxes... well sadly you only reduce the tax bill according to your tax bracket... if you were in a 25% tax bracket then that $10,000 in interest would reduce your tax bill by $2,500... Of course you can't lose sight to the fact that in this situation you are still paying $7,500 of your money to a bank....

2. Owning a home is a great investment. Well, if that were the case we wouldn't have any banks like IndyMac going under would we. I think the best test you can do is look at the cost of a new house in your city... how much is it a square foot.... now look at older houses and calculate their price per square foot. If the old house is selling for the same as the new one then that would be a good deal... but often times you see older house selling for a fraction of the cost of a new house... Houses aren't really investments as much as they are like cars. They start to lose value as they age... the land the house sits on is the only thing that is truly an investment.

And don't forget that owning a house has alot of expenses that you don't have as a renter.

Hope I didn't discourage you too much... I just wanted you to think long and hard about why you want to buy a house, sometimes I think people blindly assume that they HAVE to have a house to complete their lives.

We have owned 2 homes, ( now in the 3rd) since DH and I married 18 years ago. Both homes we have sold have been at a significant increase over what we paid. Both homes were not new. The first was 10 years old the second over 30, but both sold with a profit.

If you play your cards right, research the market and buy in a good area with a good school district, your house should increase in value. Hopefully the economy will look up soon.

Renting , IMOP is like throwing your money away. Yea, you have no upkeep, but you also have no equity. DH and I built our current home almost 1 year ago. The homes in this area have already gone up 20% , even with the economy the way it is. And yes the homes are selling.

You are on the right track. Good luck with your future home ownership.

 

[arminnie]

not to discourage you...

But make sure you are saving to buy a house because it makes sense to you and not because you believe that a family has to own a house. In many instances owning a house doesn't really put you ahead of where you would be if you were just renting.

I totally agree with you. Especially in today's market with declining or even stagnant prices.

Yes people in the past 20 years have made a lot of money on real estate - but, it is also possible to LOSE a lot of money.

I've owned almost 10 homes over the years. I made money on some, but lost money on others. There is NO guarantee that the prices will be up when you want to sell.

When I moved to California after losing everything on houses in Texas I rented for FIVE years. I had a great 2br/2ba apartment - with fireplace, w&d, attached garage, etc - brand new. No homeowners fees or maintenance for all of those years.

At the end of the five years I bought essentially the same type of accomodations in a condo but during that 5 years the condo had come DOWN in price over $100,000. That rent that I "threw away" ) ) during those 5 years was WAY LESS than a $100,000 loss would have been on top of a much bigger monthly outgo even after tax deductions.

When I finally bought again I looked at whether the purchase made sense or not financially even if the property did not go up in value. Which is a good thing as it stayed relatively flat for a few years after that. Luckily for me I did end up making quite a big of money on it. But the people that I sold it too have only had modest gains to date - which isn't too bad in this market.

Buy a house because you want to live in a house and evaluate what the true costs of owning are.

 

[Boston Tea Party]

I understand your feelings about "being behind." DH and I just bought our first house last year and I turn 40 this year! Ugh. We took a loan from his 401K - not recommended, but we don't regret it at all. Owning a home is great! Hang in there; you can do it!

 

[DisBride2007]

not to discourage you...

But make sure you are saving to buy a house because it makes sense to you and not because you believe that a family has to own a house. In many instances owning a house doesn't really put you ahead of where you would be if you were just renting.

There are some pretty big myths about home ownership that a lot of people simlpy accept on face value.

1. You get to take off all the interest you pay on your taxes... Unfortunately this isn't true. At best you would be able to claim a tax write off if you itemize your deduction and the total deduction (including the interest paid) are greater than your standard deductions. In some instances the standard deductions are still greater than the interst so you get nothing for the interest you pay.... The second issue is some people assume that if they paid $10,000 in interest in a year that they get to take $10,000 off their taxes... well sadly you only reduce the tax bill according to your tax bracket... if you were in a 25% tax bracket then that $10,000 in interest would reduce your tax bill by $2,500... Of course you can't lose sight to the fact that in this situation you are still paying $7,500 of your money to a bank....

2. Owning a home is a great investment. Well, if that were the case we wouldn't have any banks like IndyMac going under would we. I think the best test you can do is look at the cost of a new house in your city... how much is it a square foot.... now look at older houses and calculate their price per square foot. If the old house is selling for the same as the new one then that would be a good deal... but often times you see older house selling for a fraction of the cost of a new house... Houses aren't really investments as much as they are like cars. They start to lose value as they age... the land the house sits on is the only thing that is truly an investment.

And don't forget that owning a house has alot of expenses that you don't have as a renter.

Hope I didn't discourage you too much... I just wanted you to think long and hard about why you want to buy a house, sometimes I think people blindly assume that they HAVE to have a house to complete their lives.

ITA with this post. Especially at the beginning of a mortgage, a huge majority of your mortgage payment is going toward interest and not equity. That interest is "throwing money away," just like many people say about rent. Yes, you can deduct it but like a PP said, only within your tax bracket, so only 25% of it for example. And what about property taxes? Are they high in your state? That would also be considered "throwing money away."

Before you buy a home, you don't think about all the costs associated with owning a home. What about all the extra work like yard work? The dryer breaks, and you're the one paying the repairman. And forget things like plumbing. We recently had a MAJOR budget buster of about $3k out of pocket to deal with that kind of situation.

With the market in the state it's in now, I wouldn't feel bad about saving up money and renting in the meantime. At least you're making some interest on your down payment.

 

[HugsForEeyore]

I have zero expectations of home ownership. It's simply not possible. I live in one of the most expensive areas in the country, and I am a single income in a not-well-paid profession. I can't move too far since my profession doesn't pay well away from metropolitian areas. Many of my coworkers are in their 50's and 60's and have rented their while lives, and that's what I expect to do.

My best hopes are a nice 2 bedroom apartment in a nice area. Sounds good to me.

 

[Br'erBriere]

As a new home owner, I know where you are coming from. DF and I were planning on buying a home after the wedding and after we saved up more. However, life happens and we had to get it sooner.

I did not have a lot of money to put down, but did get on a nice first time home buyers program, where they took care of a big chunk of my closing costs.

I'm the kind of person who crunches numbers 50+ times before I make financial decisions and even though I am now in the new house, I'm still running the figures.

You sound like you are on the right path saving and all. Just talk to a few banks to get a pre-approval loan amount and they will tell you what you can afford with your current income. Just stay within yourself. Owning a home is very exciting!

 

[ACS228]

My husband and I have recently moved in with his parents to save money for a house. We are also looking to relocate to Florida where I have family so we need as much money down as possible since we know our salaries will decrease significantly there. We are about 1 1/2 years away from moving as far as I can calculate. We are saving every penny we can, having "date nights" in and packing luches. Every few weeks we have a finance meeting where we review how everything is going and what we can improve on. It has been hard and boring (PB & J again?? aughhhh!!!!) and I wish we could move now but we need to make sure we are in a position when we finally buy a house to live a comfortable life and not just work to pay our house. (So no 100% mortgages for us) In the meantime, we are using this time to pay off our car loans, improve our credit ratings and learn as much as we can about the whole home buying process. You are definitlely not alone here, just keep plugging along and one day you own your own home. Good luck!!!!

 

[xoprincessmomxo]

I think the most important thing to remember when buying a house: Stay within your personal budget! So many people today are trying to live out of their means to keep up with their neighbors in an economy when that is just not smart. Home ownership is wonderful when the decisions are made wisely.

 

[proteus]

It seems to take forever, I finally had the money to pay cash for a place only to see it go down 25% in two years. So much for real estate being a good investment, $95,000 down the drain. It will rebound but factoring in inflation (and what I could have earned in interest) I expect it to take 10-20 years before I recoup.

I'd wait for the market to settle, timing is everything.

 

[Chicago526]

It's not that owning a home isn't an investment, it's that it's almost always a long term investment. The real estate run up that happened the first part of this decade is unusual to say the least.

There are other benifits to home ownership than just profit though. Even though owning my single family home costs considerably more than owning my old 2 bedroom condo, I wouldn't go back to the condo for anything. I like being able to do anything I'd like on my property and not have the HOA on my case, or my across the hall neighbor complaining about every little thing (actually, my across the street neighbor now calls the city code enforcement for every little thing. I guess some things you can't get away from!). We have more space, a yard, and more privacy. Those are things it's harder to put a price tag on.

 

[Boston Tea Party]

It seems to take forever, I finally had the money to pay cash for a place only to see it go down 25% in two years. So much for real estate being a good investment, $95,000 down the drain. It will rebound but factoring in inflation (and what I could have earned in interest) I expect it to take 10-20 years before I recoup.

I'd wait for the market to settle, timing is everything.

Mine is the exact opposite. It has appreciated - according to the appraisal district and yes, I did protest - 25% in two years! I wish it hadn't because it's putting me on the hook for higher taxes.