Can we REALLY afford this home?

Hi everyone, I'm a longtime lurker, coming out of the dark with this, my first post....

My DH and I had no plans to house hunt right now, but low interest rates coupled with a new listing on a block that we LOVE have us suddenly changing our minds. On paper, it seems we can afford this house, but I want to hear from you, actual homeowners out there, if you think we can.

The house we are interested in is $350K (but it needs A LOT of work) and taxes are about 8K a year. We have 20% to put down. We make a combined salary of $150K a year. We have no cc debt. We have one car payment of $350. a month. The only other expenses we have are things like car insurance, cell phone etc.

Tell me, can we comfortably swing this? I'm not interested in giving up all other aspects of life in order to own a house. I guess I'm scared of losing our financial freedom. BUT we really do love this house and this area.

I'd love to hear your thoughts.

Edited to address some questions: We have no student loans or other debt. The house needs serious work, a roof, a new kitchen, bathroom, you name it, it needs it. After down payment and closing we'll be left with about 15-20K in cash.

Message edited 1/20/2009 7:11:25 PM.

Re: Can we REALLY afford this home?

You can absolutely swing it if you're willing do work on the house a little bit at a time .........
If you want to take a bulldozer to it BEFORE you move in, or you want things done w/in a year or 2 - that's another story -

Re: Can we REALLY afford this home?

I think you guys can afford it. You just have to keep in mind that the whole house can't be done in 6 months and still try to pay all the bills. Financially you seem to be in good standing, have the 20% down. Do you have money left over for the projects that need to be done? How big are the projects that need to be done? Kitchens and bathrooms cost the most. GL!

Re: Can we REALLY afford this home?

You can def swing this. DH and I bought a house for $440 and we make 130k combined a year and we are fine.

Good Luck!!!

Re: Can we REALLY afford this home?

Going by what you have listed, it seems like you should definitely be able to swing this but buying a house is a big deal so I can see why you are questioning yourself.

Good Luck on your decision!

Re: Can we REALLY afford this home?

I agree!! I think you can totally swing it and still be comfortable!

Re: Can we REALLY afford this home?

you totally can!! go for it! you'll love the income tax returns!!
ha-ha

Re: Can we REALLY afford this home?

Do you have any other debt, student loans, credit cards, cars? Can you budget for the mortgage plus 1000 plus your regular cc bill and other debts and savings?

Re: Can we REALLY afford this home?

You can 100% swing it. Believe me, it takes adjusting to and there might be some things you will have to cut out or at least do less of, but in the end you will not need to stop your life.

This was my fear and I mind f'ed it for weeks, but in the end we are fine, living a very comfortable life and still enjoying the things we love, I am just more cautious of things when before I would spend money like water.

Re: Can we REALLY afford this home?

considering I don't know you- I would not sit here and say you can afford it

only you can determine that for yourself

first- write down all of your monthly bills
(I recently did this - and the number was shocking- I added in Misc. money as well- b/c stuff happens- your car needs something, the house needs something, an expensive rx- life happens)

next google mortgage calculator- and put in the loan amount and the interest rate- this will give you the payment

next add insurace and taxes

I would over estimate everything

I would also double what I currently paid in electric or heat- b/c I live in an apartment now- and these expenses are going to go up

next subtract all this from your take home pay and ask yourself if you feel comfortable

good luck- it's scary- but it will be worth it!

Re: Can we REALLY afford this home?

I agree with Beth but also consider putting 10 or 15% down instead and using some of that money for the repairs because they will come fast and furious when you move in. Stuff breaks and you need a cushion.

Also, you will need money for closing costs.

We did it with the numbers you gave. If it was all the same then you can do it but I don't know you and your debt tolerance.

Re: Can we REALLY afford this home?

Thanks everyone for your input. I edited my original post to address some of your questions. I really appreciate your thoughts.

Re: Can we REALLY afford this home?

I think you best bet is to take my suggetion and add everything up

you might be happy spending $20 a week or $200 a week- only you will know that for yourself

for what you are telling us- it shouldn't be an issue- but everyones's idea of comfortable is different

Re: Can we REALLY afford this home?

I think Beth's advice is on the money. Also, and you don't need to answer this one publicly, but, do you have an additional 8-10 months of living expenses? By my calculations that 15-20k would *probably* be about 4-5 months of living expenses with the mortgage and normal daily living. What would happen if one of you lost your jobs? Could you afford it then?

Re: Can we REALLY afford this home?

Re: Can we REALLY afford this home?

also - you said this house needs work

have you figured out how much you are going to need to spend to fix it?

what needs to be done right away, what can wait

$15-$20K after a new roof- bathroom, kitchen etc is going to be negative $50K

I would figure out how much you are going to need to put into the house and make sure you really leave yourself a cushion

maybe even have a contractor walk ou thru the house to get you an estimate on the repairs needed

Message edited 1/20/2009 10:34:38 PM.

Re: Can we REALLY afford this home?

I think you could very easily/ comfortable afford this home

Re: Can we REALLY afford this home?

if it needs a roof right away and there are non useable kitchen appliances and bathroom fixtures then no way.

If you can live with it for a year without making major renovations then yes.

You might want to look for a house that doesn't have so many issues.

Re: Can we REALLY afford this home?

i think you are in a lot better shape then most.. you should be buying ahome!

Re: Can we REALLY afford this home?

i think you can definately afford the home...DH and I make less than that although not too far behind. However, i have $700/mo in student loans and spend close to $4K a year in gas and tolls to work. We have about 10K less in the bank...we are looking into a house for about $360K which dosnt need much work...i think if we can do it...you can definately do it!

I think if you cut back on spending and save as much as you can for the first few years you can get a fair amount of repairs done. I would think things like the roof are more important to do right away...and maybe you can do the kitchen and bathrooms little by little. It's really scary buying a first home, so i can certainly see why you would feel nervous.

Re: Can we REALLY afford this home?

Posted by rkoenke

Posted by LSP2005

I think Beth's advice is on the money. Also, and you don't need to answer this one publicly, but, do you have an additional 8-10 months of living expenses? By my calculations that 15-20k would *probably* be about 4-5 months of living expenses with the mortgage and normal daily living. What would happen if one of you lost your jobs? Could you afford it then?

crap, if this is criteria on buying a house, i could never have afforded to buy one. thankfully DH is unionized labor!!

Message edited 1/21/2009 8:12:27 AM.

Re: Can we REALLY afford this home?

FM...

Re: Can we REALLY afford this home?

i would say you could probably afford it. Dh and i are in almost the exact same situation- our house was about $360.. our taxes are about $8K,we only have a one car payment, and we make combined the same as you guys. we are having no problems affording the house, and are still able to save some money, and go out to dinner a couple times a week, buy some "toys" we want,etc. (we don't have kids yet, so this might all change then!)
our house also needs some work BUT DH is able to do all of the work himself, which saves us a ton of money! if you are able to do that, that would help- or think about spacing out the work you want done:
like: is the kitchen functional, just not what you would really like? or is it a case where the appliances don't work well and stuff is falling apart? if everything works ok, you could probably wait a little while and save up soem money again to make it what you want. lol i'll tell you my one bathroom is SO ugly, but it works and so i'm just dealing with it while we do some other more important projects.
so, i don't know you personally, but based on what you said, and being in a similar situation- i would think you would be able to afford it... its just a matter of how much work the house really needs, and how much "extra" money you want to have for shopping, dinners out, etc...

Re: Can we REALLY afford this home?

Message edited 1/21/2009 9:48:17 AM.

Re: Can we REALLY afford this home?

Based on what you said, I'd go for it.

I'd be concerned with the repairs though. Does it all need to be done at once to be inhabitable or can you take your time and do them one at a time? I wouldn't deplete your savings by doing them all at once, just because in this economic climate, you can't be too sure what lies ahead.