We Want to Buy a House

That's the reason I haven't yet paid off the car. I've wondering if the money is better served going back to our down payment account. Paying off the car won't help my credit score; it'll just save me money in interest.

M and I have talked about this extensively, and I've done my research (Miss M's posts on first time homebuyers have also been really helpful :)).

My thought is that I shouldn't be on the mortgage, unless circumstances change. As it is, I will maybe have a good credit score (when the credit reporting agencies take into account that my cards have been paid off, and when Macy's/Capital One removes the negative marks-- but that's a long shot), but my income is pathetic (8k/yr). I've read that unmarried couples' applications are treated differently than married couples, in that each application is run separately. I'm pretty sure my lack of income will drag us down. On his own, M can qualify for a 600k mortgage. I'm sure that, later down the line, I can be added to the title.

Of course, if I go back to working full-time in the next couple months, then things can be different. And that is the goal (or at least a well-paid part-time position). I think I've recovered from my burn-out and am ready to tackle full-time work/school again. But if we find something too good to pass up before then, we'll go for it.

We're looking in the 400-550k range. I know that seems like a lot, but it's very much on the low side around here. It's a very nice area (well, for LA :p), and within walking distance of M's job. 400k would be ideal, because the mortgage (including property tax) would be $100 less per month then what we're paying now.

M's job is very stable (untouchable even; and he has another job offer waiting on the table, one that will remain open for the next year) and he has a large amount of money already saved up (and he's going to continue saving over the next 6 months, which is when we're going to kick the search into high gear). I'm going to focus on saving for the closing costs (at least half - 3k-6k). He's going to supply the down payment (20%), and I will eventually give him back half of that. (But in the meantime, I'll draw up paperwork stating that he owns more of the house -- I use the term "house" loosely; we can't get more than a condo for the price we want to pay)

I have a friend who bought a place a few years ago, and she's given me the name of her mortgage broker and realtor. I'm not sure whether we'll go through a traditional realtor or Redfin; I have to read up on Redfin a bit more.

I think I've covered all the bases there... I feel a bit weird using the term "we" when it's really M who's supplying all the up-front money. I will of course be paying half of the mortgage every month. And I only have a little over a year left until graduation; I'm looking to get my money's worth out of the J.D. (And yes, a year and 8 months until I start paying back my loans. But since all my consumer debt will be paid off by then, I can handle it)

Our lease expires in June, so we're thinking about looking for a 6 month lease. If that fails, a year; either way, the cheapest we can get (to help with the savings). Maybe we can negotiate a sublease provision. What are other ways to safely, quickly, and cheaply get out of a lease (in the event we find a house before the lease is up)?


Miss M said...

Thanks for the compliment. Definitely don't rush yourselves, it is such a big commitment that you need time to find the right place. Do you have to sign a lease? I thought LA leases automatically convert to month to month after the 1st year, at least mine did. I don't know what areas you are considering, westside you can wait a bit longer for prices to come down. They haven't been hit as hard as my neighborhood but history shows that eventually all areas fall a similar percentage. Email me if you want to talk houses or have a question. I don't have any experience with redfin, the concept is cool but I hope they also perform. My agent was coldwell banker and in hindsight she sucked.

Sallie's Niece said...

Ooh very exciting! My fiance and I just went through this process. He paid the downpayment and as soon as I get rid of my apartment lease and move in officially I will be contributing to the mortgage. Definitely take this time to familiarize yourself with the market in your area and what you want out of a home. Good luck!

Shtinkykat said...

Exciting, indeed. I think it's great that you are willing to enter into a promissory note or some other agreement re: the ownership of the home. But it's still disheartening to see that $400-$500k can still only get you a condo in a decent are in L.A.

Sunflowers said...

I'm going to start the apartment hunting at the end of this month. I think if we found a place for a couple hundred less per month, it would be worth it to move. That means we can funnel more savings into the down payment/closing costs fund. :)

I'm pretty sure we have at least a year of prices dropping around here... so I'm going to keep a watchful eye on Redfin, but we're not going to make any serious moves for a while.

M really wants to buy a house... I highly doubt that houses around here will EVER come down to 400-550k, but I guess we'll see.

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