Just approved for a mortgage and scared. Would you buy?

[ILoveLucy]

I just got a call that we were approved for a mortgage. It is very embarrassing to admit this, but I've never owned a home. DH went through an extended period of un- and underemployment and we have rented all our marriage. We've live in the same house for nearly 9 years. We have been back on our feet, so to speak, for a few years now and are really wanting to get out of our too-small rental and buy.

What is mainly worrying me is that we are paying for my stepdaughter's college 100%. She will graduate next May--this is a certainty--and at that point we will have apx $2500 more a month than we have now. This $2500 will be going out August 2010 through May 2011, as we're done paying for this year.

We could afford the mortgage without that $2500--the whole thing, including taxes, etc, would be about $100 more than our rent. However, we would be using pretty much all our cash to get into the house and would be relying on the $8000 tax rebate for first time buyers to put in the bank to have cash on hand for repairs or what have you.

We have credit scores in the high 700s and have been approved for an amount quite a bit higher than what we would actually buy at, and we have extremely stable jobs--DH with the fed govt, me in healthcare. We've been in a house so we are understanding of lawn care, etc, and would be purchasing a close to new home that doesn't need work.

I don't know if I'm just nervous because when you make it to 40 without owning a home, it is just a foreign concept, or if we should put it off until DSD is done with school. I hate to miss out on the rebate (probably not a lot of money to most of you, but it is to me) and/or the rates may get a lot higher, However, things might be tight for the next year if unexpected expenses come up. Staying in our rental would be okay, but we are cramped and the landlords gripe if they have to do anything to it, so carpets, etc, are pretty worn after 9 years and I'm just tired of paying this much money to rent after all these years.

I know most of you on this board own homes--any advice to me? Thanks!

[ThreeofUs]

I'd be nervous, too, in your shoes. But it sounds like you can afford it if you're only going to be $100 more than your rent. The rebate would take care of most surprises. (That's a LOT of money.) And if there are no surprises you'll be ahead.

Even with surprises, if you could live with them for a year or so, as of May of next year, you'll be able to take care of most anything. Including new kitchen, addition, or what have you. ;)

It sounds like you've really thought it out well, and like you're ready to move. I'd go for it.

[codex57]

It's understandable being nervous. We're talking hundreds of thousands of dollars here.

That said, the rebate is HUGE. Covers a lot of unexpected repairs. If not, it's great for property taxes, improvements, etc.

If it's just $100 over rent, that's really no risk at all. Plus, you've got all that money coming in soon from no longer paying tuition. Shoot, your stepdaughter is lucky you're paying everything at all.

[salsah]

i agree, it is a scary thing to get into, but hopefully worth it. and it seems that you have done the research and calculations and are not just jumping in blindly. with a mortgage of $100 more than your rent, you should be fine. have you also estimated the monthly cost of property tax and insurance?
good luck! I feel for you. we still rent too. if we buy a home in our area (with 20% down) we will spend more than 3 times what we spend on rent.

[dcmom2b3]

Have you calculated the income tax savings? Mortgage interest deduction, property tax deduction? That's something to consider -- made a huge difference for me when I was buying.

I would do it. Even if the worst happened, couldn't your stepdaughter borrow to cover a portion of her tuition, or be eligible for financial aid based on your changed circumstances?

[megs4413]

i would do it. the market is upswinging, IMO...at least around here it is. strike while the iron is hot!

[hillview]

Is it an older house or younger one? How was the inspection? Do you have family you could borrow from in a crisis?

If you have good answers to these questions I'd totally go for it. If not, I might rethink.
/hillary

[khalloc]

I would definitely do it. It seems like a waste of money to continue renting. AN extra $100 a month isn't that much, and you'll get alot back in taxes, etc...and I think the rebate is a huge deal. I wish (sort of) that I could buy a house now and get that, but I'm not a first time homebuyer.

[JTsMom]

I agree with you that the rebate is HUGE. It certainly was for us at least. It is scary, but you're going into it with your eyes wide open, so that's good. If there was some sort of a crisis, could you cut something, or work more to bring in extra income? Did you remember to account for closing costs, higher energy bills and homeowner's insurance? Sometimes, if you have multiple policies, your car insurance will drop. Good luck, whatever you decide! :)

[alexmommy]

I would do it if the following apply:
1) You have no or little other debt
2) You have a plan for maintenance (handy husband or cash for hiring stuff done)
3) You can budget for all the other extra things--maintenance, HOA fees (if applicable), insurance, misc house stuff, and set aside $ for long-term maintenance

We purchased our first home in 2008 and it has worked out well for us. Nice income tax deductions. But a lot of unexpected things have come up that we needed or wanted to do, but we had $ set aside for fixing it up. We bought a house that was a foreclosure and had been empty for a year. It was in decent, liveable condition, but we tiled the kitchen floor, painted inside and out, etc.

[bubbaray]

As long as you can afford ALL of the costs (closing fees, property taxes, HOA fees, utilities that you maybe aren't paying for separately now, house insurance), then *I* would do it. It might be worth a trip to an accountant to flesh out all the costs.

Your realtor should be able to get 6m worth of utility bills from the current owners (usually provided here out of courtesy if asked), you should be able to find out your property taxes from your city/county. Don't forget to account for any city utilities (water, garbage, sewer), not just electricity, phone & cable.

GL!