How do I go about trying to buy a house?

Question

I need to move out of my apartment. I currently live in Porter, IN and I am wanting to get a house in Elkhart, IN to be near my b/f. I just can’t afford it here anymore and my 3 year old daughter deserves so much better. She needs a yard to play in and a place to call our own.

Thing is, I don’t know the first thing about getting a house. I am a 23 year old, single mother with a disability. I am unable to walk, so I use an electric scooter to get around. I can’t work, so my only source of income is my SSI, which isn’t much. I need something that I would be able to make low monthly payments on. When you calculate a fixed interest rate over a certain amount of years and it comes up with a monthly payment, is that the amount you pay towards the house for a month or just the interest? My credit is terrible, so I don’t know if I’d be able to get a loan or not. I just don’t know where to start. Please help me!

Answer 1

Hmm, unfortunately you paint a bleak picture as a potential homebuyer...if your credit is bad, you're probably correct in that you may not be able to secure the necessary loan to get the house you need.  I DO know, however, that you need to have a good credit rating to get a fixed interest rate, so you can probably count that out.  Lesser credit scores can be offered adjustible rates, although given the current economic crisis the loan companies are more careful about that now.  You need to have at least 20% of the price saved just to put the down payment on a place, plus 5% more of that price to cover closing costs, and with just an SSI check and a kid to raise I'm guessing you don't have that much saved.  With a credit rating like yours, even more would likely be required.

I suggest you do two things.  First, get the book  Home Buying For Dummies:

http://www.amazon.com/Home-Buying-Dummie...

This will give you lots of useful information about hiring the right person, what mortgage best suits you, and how to budget for home ownership, which is a lot different from renting...you have to remember that many costs which may be automatically covered in your rent payment (particularly water, trash pickup, property tax, required homeowners insurance, and perhaps other utilities) are NOT going to be part of your calculated monthly house payment.  A good guideline would be to do a mortgage payment calculator online and then multiply that figure times 1.5 to find out what the true payment would be to cover all those extras.  And you will also have to put aside money for periodic repairs on your home...things, unfortunately, do break sometimes and there will not be a landlord to call to fix that leaky faucet, broken window, or conked out furnace.  And there are all sorts of other hidden costs as well that you'll need to deal with...since you are disabled, you will also need to pay for periodic gardening and landscaping, and cleaning of the area around your house.

Second, once you document all your information, you will be ready to visit realtors for some consultations.  Don't go with the first one, and listen to what all of them say.

Oh...and keep in mind one more thing...don't expect to be leaving your apartment and moving into your new house within a few weeks after you start hunting.  True house hunting takes an average of about six months and may take as long as a year or even more, and you'll encounter many frustrations along the way.  So if you want to do this, be sure you really have the drive as well as the funds.  Good luck.

Answer 2

Ignore any payment amount you get from an online mortgage calculator. They don’t take into account taxes and insurance.

The first thing you need to do is talk to a lender to see if you can get a loan. Credit scores & income are pretty big factors in getting a loan so please go into this realizing that if both of yours are limited you may not qualify.

If you do get qualified for a loan, you’ll want to find a buyers agent who can help you locate a home within your budget and that meets your needs.

The two professionals will walk you through the rest of the process.

Answer 3

To be honest, based on the information you provided, it is going to be extremely difficult for you to qualify for a loan, based on your income and credit, but it is not totally impossible.  It may take some time to get you in the right program.



First, you should start by talking to a realtor and/or lender in your neighborhood.  They may be able to recommend a program designed for people with disabilities, and with the right assistance, will help put you on the road to home ownership.