Buying a house if you have debt?

Avatar for colomom99
iVillage Member
Registered: 03-28-2003
Buying a house if you have debt?
5
Sun, 11-02-2008 - 3:22pm

Good afternoon: OK I know this may be premature but I can't get it out of my mind. My husband is up for a job in California. We now live outside of Denver in a very nice house that we bought when we both were working. It was at the top of our budget back when houses were really high ($481K) but we also had made a big profit from our other house so it was doable since we put the full 20 percent down. After I got laid off we have racked up some very substantial debt. We are making it but mostly by living off unemployment, savings, and the little bit of freelace income I make in addition to my husband's salary. He makes around 75K. I probably make around 18K to 22K but it is self employment and therefore not really easily documented. Houses in our neighborhood have held their value somewhat but they aren't climbing like they were. If we put the house on the market we would probably ask between $510 and $525 and hope to get $500.

This job thing came out of the blue. My question is how in the world would we be able to buy a house? How does anyone who is on the edge? I know requirements are much, much tighter these days and he would probably be able to make a bit more but it is still more expensive in California (even with all the houses bank owned and in foreclosure). For the first time in our married life I don't know we would even qualify for a mortgage because of our debt. I am supposed to get about $23K in inheritance in about a month. I had planned on paying off all of the smaller credit cards and banking the rest. Do I use all of it to pay down debt or keep some in case we need it for a move?

I know I'm getting ahead of myself but I can't help worrying. Thanks, jenny

iVillage Member
Registered: 11-17-2007
Sun, 11-02-2008 - 5:13pm

The old guide line was that your debt payments should not be more then 10% of your net income for credit cards. With 20% down Of course that may have change. Maybe what you should do is contact the mortgage department of your bank and just ask them to run you through their computer and see what they say you can get for your money and use that to go by.


I don't know if you know my story BUT for GOD"S sake don't sign a contract with a buyer that you will be out the day of the closing. Make them give you 7 to 10 days after the closing before you need

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Sun, 11-02-2008 - 8:38pm

Hi Jenny - how exciting about the job prospect in CA - I hope that it all works out!


Given that you put $$ down on the CO house, and that it has appreciated a bit since you bought it, will you have enough from the sale of that house to pay off your debt and start fresh in CA?


It's *so* much easier to save money when you're not paying out to creditors every month.

All my best,
Danni

Avatar for londonrose2001
iVillage Member
Registered: 04-09-2003
Mon, 11-03-2008 - 1:13pm

Renting is not the end of the world. In fact, when moving to a new state, it's usually smarter to rent for awhile to be sure your dh likes the job and they like him -- don't forget about probationary periods where sometimes people "just don't work out." Also, if you watch the market in CA and figure out the lay of the land first, you'll be able to make sure you don't overpay and snatch up a

 

iVillage Member
Registered: 03-17-2003
Mon, 11-03-2008 - 2:50pm
I suggest you look at renting until the lending industry stabilizes more than
iVillage Member
Registered: 01-01-2004
Tue, 11-04-2008 - 9:20pm
ITA with the other posts.


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