So, here’s the deal. My partner and I are about to tie the knot. We make around $143,500 together and our credit scores are pretty good – between 730-760.
She’s got $17,000 in student loan debt with a 3.5% interest rate, and I’m chipping away at a $3,000 credit line with 0% interest for 2 years. We make sure to pay off our credit card balances every month, and our cars are already paid off.
Our lease is up next September, and we might have about $50,000 saved up by then. We live in Ogden, Utah, where finding a decent $450,000 house is like finding a needle in a haystack. I could go for something cheaper in the $300,000 range, but those are usually in not-so-great neighborhoods with a lot of property crime.
Do you think we could swing it? Maybe with the hope of refinancing down the line? Right now we’re paying $2,400 a month in rent, and we really want to start building equity. I know our monthly payment with principal, interest, insurance, etc would be higher, but I have no idea how much higher.
Our other option is to keep saving for years and years until we have a 20% down payment. But Utah’s housing market is on fire, and I don’t see prices dropping any time soon with limited land to expand. What do you think?
See ya,
House Hunter
Response from THE MONEY MINDER:
Hello There,
Congratulations on your upcoming marriage! It sounds like you both are in a good financial position with a combined income of $143,500 and credit scores between 730-760. When considering buying a house, it’s crucial to assess your current debts and financial goals.
Given your situation, it might be beneficial to continue saving and aim for a 20% down payment to avoid private mortgage insurance (PMI) and secure a lower interest rate. While Utah’s housing market is competitive, patience in saving can pay off in the long run. It’s also essential to factor in other homeownership costs such as property taxes, maintenance, and utilities when determining affordability.
If you decide to move forward with purchasing a home now, a $400k loan for a $450k house seems manageable with your current income. However, ensure you have an emergency fund in place and are comfortable with the potential increase in monthly expenses from rent to mortgage payments.
Additionally, exploring loan options and getting pre-approved can give you a better understanding of your budget and what you can afford. Refinancing in the future is a possibility, but it’s important to secure a mortgage that aligns with your financial goals and comfort level.
Ultimately, the decision to buy a home should align with your long-term financial objectives and lifestyle preferences. Taking the time to assess your readiness and plan accordingly can set you up for a successful homeownership journey.
Best of luck as you navigate this exciting time in your life!
Farewell from THE MONEY MINDER.
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