Should my fiance and I buy a home?

[clenz]

So heres the deal. We just rented our first home in January. We can move in May 23, but won't move until early June some time. The guy we are renting from went to UNI, lived in that house with some of his buddies. He joined the National Guard, went to Iraq for a year and a half. His buddies kept living there until this May. They have lived there since probably 2001. Since they have lived there that long, there hasn't been any of the "end of lease landlord cleaning" stuff. The place is in good shape, minus the carpets needing to get cleaned, walls needing a new paint job, and new window screens.

Anyway, he and his wife bought a house by Des Moines, IA. We have been in an Apartment since last my. It was a 4 bedroom apartment a block off campus for $710 a month. It came with free cable and high speed internet. However, the landlord decided to raise our rent to $1090 if we resigned our lease. We said no thanks, and went out look for a place to live. We came across this nice ranch house with a "finished basement". It isn't completely finished. There is a spot for a 1/2 bath to get put in. It has 2 main floor bedrooms and a bedroom downstairs along with a good size "living" area...which will be my man cave. There is also a 2 stall garage, and a nice front and back yard, and he won't charge extra for our dog. He has said that he is willing to let us paint/do anything to the interior of the house we want. He is also letting us keep the couch, love seat, a full bed, 2 end tables and a coffee table, a 36 in TV with TV stand and DVD player. They are ours to do with what we want. We are getting a 47-52 in TV and a nice furniture set for our wedding, so everything that we get to keep is going in my man cave. He also just redid the upstairs bathroom.


Long story short, he is looking to sell the house, and would be willing to sell it to us. We are renting this first year, and really want him to pay for some of the upgrades, since that is what the landlord is for. Anyway, we don't want to put a ton of work into this house if we aren't going to be buying it. We are going to be in Cedar Falls for at least 4 or 5 more years. The rent is $1000 a month, but if we bought it I don't know what we would do for payment that way.



Anyway, what are your thoughts?

[HI54UNI]

Where in CF is it? How close to campus? How would your payment compare to rent? The stimulus gives you $8,000 I believe as a first time home buyer. The Iowa Finance Authority has programs to help first time home buyers.

[mass fan]

So heres the deal. We just rented our first home in January. We can move in May 23, but won't move until early June some time. The guy we are renting from went to UNI, lived in that house with some of his buddies. He joined the National Guard, went to Iraq for a year and a half. His buddies kept living there until this May. They have lived there since probably 2001. Since they have lived there that long, there hasn't been any of the "end of lease landlord cleaning" stuff. The place is in good shape, minus the carpets needing to get cleaned, walls needing a new paint job, and new window screens.

Anyway, he and his wife bought a house by Des Moines, IA. We have been in an Apartment since last my. It was a 4 bedroom apartment a block off campus for $710 a month. It came with free cable and high speed internet. However, the landlord decided to raise our rent to $1090 if we resigned our lease. We said no thanks, and went out look for a place to live. We came across this nice ranch house with a "finished basement". It isn't completely finished. There is a spot for a 1/2 bath to get put in. It has 2 main floor bedrooms and a bedroom downstairs along with a good size "living" area...which will be my man cave. There is also a 2 stall garage, and a nice front and back yard, and he won't charge extra for our dog. He has said that he is willing to let us paint/do anything to the interior of the house we want. He is also letting us keep the couch, love seat, a full bed, 2 end tables and a coffee table, a 36 in TV with TV stand and DVD player. They are ours to do with what we want. We are getting a 47-52 in TV and a nice furniture set for our wedding, so everything that we get to keep is going in my man cave. He also just redid the upstairs bathroom.


Long story short, he is looking to sell the house, and would be willing to sell it to us. We are renting this first year, and really want him to pay for some of the upgrades, since that is what the landlord is for. Anyway, we don't want to put a ton of work into this house if we aren't going to be buying it. We are going to be in Cedar Falls for at least 4 or 5 more years. The rent is $1000 a month, but if we bought it I don't know what we would do for payment that way.



Anyway, what are your thoughts?

In this economy you should be able to buy the house for a song, that said, are your jobs recession proof?

[clenz]

The home at the intersection of 8th St. and College St., right across from St. John's Lutheran Church.



No, our jobs aren't recession proof. The thing that would stop us is that we don't know how long we will be around here, and we are both still students...she is a grad student and I will be graduating in May 2010.

[HI54UNI]

If you're going to be there for another 4 or 5 years and the payment is close to the rent I would buy. Rates are cheap right now and values in Cedar Falls should remain steady to increasing. The Iowa Finance Authority's first time home buyer program could be a good option for you.

[travelinman67]

Look for foreclosures. I saw a 3/2 two story with pool on a corner lot that had been appraised at $298k a little over a year ago, go into foreclosure, and the bank just sold it for $107k...

...in a nice suburb in Sacto. That's unheard of...

[blueballs]

If you're going to be there for another 4 or 5 years and the payment is close to the rent I would buy. Rates are cheap right now and values in Cedar Falls should remain steady to increasing. The Iowa Finance Authority's first time home buyer program could be a good option for you.

Not only that but you could do a FHA 203k loan, which is a rehab loan, and finance repairs (such as paint, carpet, applicance, roof, etc- can't move any walls or add on) into the mortgage up to $35,000 as long as the loan amount is within the FHA county limits in your area. The seller can pay up to 6% of YOUR closing costs and the minimum down payment is 3.5%.

You should be able to get an interest rate of no more than 5.5% for a 30 year fixed and taxes and insurance as well as MIP (.55% of the loan amount/12) are required in the monthly payment. The minimum cash investment can be from your savings, a loan, a gift from an employer or family member, or a gift from a non profit. You will be eligible for the $8k tax credit that Hi5 mentioned as long as you haven't owned a home in the past three years and your income as an individual doesn't exceed $75 or $150k as a couple.

[clenz]

If you're going to be there for another 4 or 5 years and the payment is close to the rent I would buy. Rates are cheap right now and values in Cedar Falls should remain steady to increasing. The Iowa Finance Authority's first time home buyer program could be a good option for you.

Not only that but you could do a FHA 203k loan, which is a rehab loan, and finance repairs (such as paint, carpet, applicance, roof, etc- can't move any walls or add on) into the mortgage up to $35,000 as long as the loan amount is within the FHA county limits in your area. The seller can pay up to 6% of YOUR closing costs and the minimum down payment is 3.5%.

You should be able to get an interest rate of no more than 5.5% for a 30 year fixed and taxes and insurance as well as MIP (.55% of the loan amount/12) are required in the monthly payment. The minimum cash investment can be from your savings, a loan, a gift from an employer or family member, or a gift from a non profit. You will be eligible for the $8k tax credit that Hi5 mentioned as long as you haven't owned a home in the past three years and your income as an individual doesn't exceed $75 or $150k as a couple.

I'm 21 she's 23...we have spent our entire college lives in a dorm or apartment complex....we don't come close to $75K as a couple, which is what would worry us. But, if it is close to rent we are thinking about doing it. We are going to rent for this year since we already signed the lease, have the land lord do as much to fix it up as we can get him too so we don't have to pay for it if we buy it (he is looking to sell it as well so it would only help him to fix it up incase we don't buy it).


All great advice and something we need to think about. Thanks.