A year or so ago I wrote about the fact that the husband and I were finally looking into buying a house. We discovered that new construction homes don’t have their own mailboxes. Gated communities were something we didn’t want to be a part of. We need a home that doesn’t have back neighbors and we want to be part of a community that has a fitness center and a pool at its clubhouse.
But then we started looking at the financials and the hard truth was that with a lack of a sizable down payment, our lower credit scores, our student loan debt, and our credit card debt, even if we did get approved for a mortgage it would put the actual house payment well out of our budget. Current regulations state that if you can’t put down a 20% down payment, you have to pay for private mortgage insurance, which is a set price and expensive with an FHA loan, which we didn’t qualify for because of our student loan debt, and would be expensive on a conventional loan because the amount would be based on our credit scores.
We were embarrassed and wounded and took a step back. We accepted help from the husband’s parents and paid off a huge chunk of our credit card debt and saw our credit scores zoom in a positive direction. It turns out that we could probably afford a conventional loan if we (a) paid off ALL of our credit card debt and (b) saved up a HUGE down payment to avoid the mortgage insurance. I’ve been chipping away at the remaining credit card debt since then, and at the end of March we get our bonuses based on our teacher evaluation scores from last year, so I can wipe out almost all of the rest.
By this summer both of our credit scores should be in a good place. The next step will be saving up enough of a down payment to put the kind of house that we want within our reach. This isn’t going to be a starter home for us – this is THE house that we’ll be living in for the foreseeable future. If we’re going to do this, we’re going to do it once and we’re going to do it right.
This is also the time where our current lease is up and we had to decide whether we would renew or move. The husband and I talked about moving into an apartment at a lower rent amount to save money faster, but ultimately we decided to renew to stay where we are, and I was able to negotiate a lower rent than what was quoted to us. We’ll be here for the next two years.
I ran the budget and with this new lease amount and the credit card debt paid off we should be able to save up almost a 20% down payment by the end of two years. This is where family help, a realtor negotiating the price, or buyer incentives will come into play, but no matter the method, I believe that when we move out of this rental house, we will be moving into our forever home.
**KNOCKS ON EVERYTHING WOODEN AROUND ME**
As with every upward movement I look back and think “if you had told me things would finally start to feel better and more stable now I would have thought you were crazy.” So much of all this happens by accident, because of luck or timing, and then the lessons I learn from that guides how I move forward. I’m just thankful that maybe, just maybe things are falling into a stable and safe financial place.
Keep your fingers and toes crossed for no hurricanes this year and for house prices or interest rates to come down. Every little bit counts!
Have a great weekend!