g222leav

Hello guys, here's my story, i'm currently a student and i figured that instead of paying rent, i might as well try to secure a loan to purchase some real estate so that my monthly payments actually go towards something that i'd eventually own.

I'm wondering how feasible it would be for someone in my situation to secure a loan? I live in Chicago and probably would want to buy a condo since a "house" would be way too expensive.

Here is my financial situation:

Income
23,000 (for 04)
+ 22,000 (for 04 from girlfriend)
+ ~ 12,000 from school loans that can be used towards rent/expenses
--------
~$62,000 combined household income...

I currently pay ~$800 a month for rent/utilities

My question(s):

-Would a financial institution find my situation too risky to offer me a loan to buy a condo?
-What price range condo should I shop for?
-Should I try to secure a loan first then shop for a condo or vice versa?
-I'd be able to afford a monthy mortgate of ~600-800 is this even possible?
-I'd probably need a co-signer wouldn't I?

Basically, i'm just trying to get information/opinions to see if it would even be possible to do this...what do you think?

__________________


"it's more fun than it looks" - Red Foreman
"trying is the first step in failing" - Homer J. Simpson
"the world needs more dumb people...dumb people can't start wars" - mike lam

Hoser

Is the income before or after taxes? Will you always be able to count on your girlfriend's income?

g222leav

income before taxes (school loans untaxed)
and yes

zippyjuan

I would talk to someone about a loan first- find out just how much you can afford to borrow. In your budgeting, be sure to include any homeowners fees (more common on a condo but can also sometimes be found on houses). Once you know how much you can afford, then you can start to look for something. If you do, I would go for a fixed rate loan unless you will only keep the place for a few years at most. Rates are at a historically low point now and their probable direction is up. Either way, see what you can afford.

attgig

you can just walk into your bank, explain to them your situation, and ask how much of a loan you can be pre-approved for.

btw, condo = condo fees. take that monthly amt into consideration.

__________________

ialsohaveadream

When they tell you how much the mortgage payment would be, ask them how much property taxes, mortgage insurance, homeowner's association, and homeowner's insurance will add on to that. Then, pretend to get very mad at them, just for kicks.

__________________
Web log

g222leav

*what...that's total BS....i get it...the MAN just wants to keep us down...can't let no CHINESE people up in here go and get a house now can he? well screw the MAN!!!!...*

ramazank2

You could probably get a stated income loan. In this type a loan you state what you make and they dont check, But the rate will be higher. I got one when I bought my house.

InfiniteNothing

There's a good chance you'll want to be somewhere else in the next 5 years. You don't build that much equity (it's mostly interest) in the first 5 years anyways so by the time you pay homeowners insurance or HOA fees, lender fees, and taxes, you're losing money.

__________________
As for our common defense, we reject as false the choice between our safety and our ideals.

VTGreg

I agree. Unless you are absolutely 100% sure that you will be staying in the area after graduation, meaning you would not consider a job elsewhere, I would just stick to renting. Condos are very expensive in the Chicago area for the amount of property you get and you would be lucky to recoup your closing costs with equity if you only plan on being there a few years.

In addition, unless you are engaged to your girlfriend, I would not count on that income even if you live together. It would leave you in a very tough spot if something happened and you were left with only your income to pay the mortgage.

__________________
It only ends once... Anything that happens before that is just progress.

Courage is not the absence of fear but rather the judgment that something else is more important than fear.

ramazank2

I bought a townhouse when I started graduate school. It was good because I bought a 4 bedroom. So I rented out the other 3 rooms so i ended up paying only 200 a month. NOw the house prices have doubled, so I made out.

g222leav

-i do plan on staying in chicago, not just after graduation but also for the rest of my life (lord knows how that will pan out)...but i'm not fore-seeing any moving that far away.
-i'm garunteed a job after graduation with at least ~80k/year so most of the financial burden would be the next 3-4 years
-i do plan on marrying this "girl-friend"...but i totally see your point and understand the risks....

*however, i just wanted to thank all those who've responded, you've given me much to think about and realize. i was just trying to get information/advice/opinions on the best course of action. i figured that if i was already paying $X amount of dollars on rent, that could go towards something i'd own...but i'm beginning to understand that i should just wait a few more years instead of adding this huge financial burden to my already crowded shoulders...

thanx guys!

ChIcKeN_HaWk

I would go ahead and buy. First off there is no perfect time to purchase a home, but knowing that a home is the single best investment you can make so waiting and paying rent for the next however long is stupid.

The only problem that I see is how to prove your income. You can't use your girlfriends income unless she's going to be on the loan. It's possible to do a stated program but you have to be employed and can justify the job vs. the income.

Try to avoid a bank if you are looking for a loan like this. You would need to talk with a mortgage company that has programs for someone in your situation. Also if you have a great credit score (725+) You can do quite a bit more than the average bear. For Instance they have Fico driven programs that you don't need to verify any income or assets.

If you have any other questions I would be more than happy to help. I'm in the mortgage industry just so ya know.

__________________
"Don't nobody go in the bathroom for about 35, 45 minutes. Somebody open a window."

g222leav

the last time i checked (mar '05), my experian fico score was 775....how would i go about investigating thiese "fico driven programs"?


also, i don't specifically mean that i'm looking only at condos...i just know that off the top of my head i know that houses IN chicago are really expensive, and although the real estate value may be worth it, i could get a larger newer house brand new in the surrounding burbs...i totally forgot about townhouses, and that's probably what i'd end up looking at...

ChIcKeN_HaWk

If you are serious then I would talk with a Mortgage company and see what you qualify for. A 775 you would be able to do pretty much anything you want but keep in mind there are going to be bumps in the interest rates because of the lack of sourcing your funds...

I can turn you on to someone in Chicago if your interested in pursuing this...

sizemic1

If you plan on borrowing money from someone to put towards a down payment, do it nnow and keep it in your bank for 3 months before applying for a loan. Otherwise you have to prove where the money came from and if it's a loan or not from whoever you borrowed the money from etc.. long story short, it's a hassle you would be better off avoiding if at all possible.

__________________
[___]
(O lllllll O)
[]==O=[]

welfareloser

here's what i know from doing exactly what you're describing...

your gf would need to be a co-owner for the loaner to "count" her income... don't do that unless you've reeeeeeeeally thought about it.

my husband was making $22,000/yr when we bought our house. (this was "real" income, not loans/grants/etc.) i believe that qualified us for about an $80,000 loan. we qualified for an FHA loan because it was his first time buying, and wound up with a $106,000 house, $3,000 down payment, mandatory escrow making monthy payments of $981 the first year, now $1006 (because home value/property taxes increased). my parents had to co-sign.

they will not count loan money as "income" for the purpose of lending.

buy only if you are really sure you can handle repairs yourself (ie, you have the time, the spare money in case of disaster, and either the know-how or parents/friends with the know-how.) it is cheaper to own than rent, but only if you're not paying out the butt for others to come take care of all the small stuff.

and condos have a lot of problems. cheaply made to look good and deteriorate quickly. prm's ex-gf bought a brand new condo for more than we paid for our 35-y-o house. in the 4 years she lived there, she had to replace the roof, re-insulate, deal with water damage, replace the world's cheapest carpet... and i don't know what else, but she wound up selling it for exactly the amount she paid + amount she put into it in repairs. that + the headaches was not worth it. our house, we'll be able to sell for $140,000 or more 4 years later, having put under $15,000 into it. older condos may not be as bad, but just be really, really careful if you go with a condo.

__________________
Find the person who will love you because of your differences and not in spite of them and you have found a lover for life. ~ Leo Buscaglia
http://www.welfareloser.com
http://gotapexblogs.net/users/welfareloser/

Kim

Look into first time home buyers programs. I just took a saturday class and got a $5000 grant, since this will be the first house I'm buying alone.

__________________
Before you criticize someone, walk a mile in their shoes. That way, you'll be a mile from them, and you'll have their shoes.
--Jack Handey Deep Thoughts

mcs328

I thought the condo took care of repairing the roof and any seeping water damage? I bought a condo and it was all I could afford. In 6 months I can almost afford a townhouse.

Watch out for condo fees because they can range from 100-600 bucks a month. When first starting out, I didn't know how much money you need before even the first payment was made. You definitely need 6% of the sale price and to avoid Private Mortgage Insurance you need to drop another 20% of the sale price or split your loan up into parts.

I'm still learning.

__________________

attgig

with a score of 775, most would be able to get the 80-10-10 loan. but don't always assume that 80-10-10 is the best way to go. the inflated interest rate on the 10% might be more than the pmi on the 80. i made that mistake. wish i could've just gone with a normal 90-10 & paid the pmi.

g222leav

yea, thanx all for the advice...i decided to go against a condo because of all of the fees associated with it...i was saying condo but more thinking townhouse or something like that. some things have changed, like i got rear ended and i've decided to give my car ('96 civic) to my parents so that they can trade it in to get a new/old car for my sister that just turned 16.

so in the meantime i'm going to try to save up as much as i can (totally forgot about down payment) and see how my financial situation is next summer. plus i was able to resolve some of the problems i had with my apartment.