Advice for Single Mom Exploring Home Buying Options

[SpaceFlower]

Hi Everyone,

I'm a 41 year old single mom (with one 12 year old daughter) and a perpetual renter.  I've a secure job for the past 7 years in government with steady income, currently making $60k a year - and that's here to stay with yearly merit increases. I have absolutely zero debt and an emergency savings that would last me approximately 4 months. I've been renting small apartments or private homes for years. We just got a dog and I'm feeling more of a push to get some space with a backyard. I'm overwhelmed with the idea of just starting to explore home buying. I have a realtor that helped me find my current rental who seemed eager to help me with exploring home buying, but I'm just not sure. I don't have money for a down payment - this is an absolute given. I know there are local programs I would potentially qualify for to assist me as a first time homebuyer with a down payment, and being aware that nothing good comes for free, I understand that they charge a higher interest rate on this down payment loan that's tacked onto a mortgage, so there's that. I'm aware of PMI without having a down payment, and I'd like to avoid that, hence only wanting to consider buying a home if I can get in on a down payment assistance program. I'm aware of the long process, and that there are a zillion fees for a variety of things, but I don't really have money for a lot of these start up fees, aside from maybe the mortgage application itself. From what I sort of understand, the broker rolls many start-up fees right into the mortgage. As a buyer, I'm aware that a home seller would be paying my realtor's commission - but this particular realtor I mentioned seems expensive. Would I potentially turn off home sellers because of my high priced realtor? How do I pick a realtor that's right for little 'ol me? Should I use the broker this realtor suggested to me or explore and apply for mortgage pre-approvals on my own? I'm willing to pay someone to tutor me through this whole process - it really boils down to not being sure who or what to trust.  This is all brand new. Any advice is appreciated.   - Single Mom in Vegas

[BikeFanatic]

With that income you qualify for an FHA loan and around here the buyer can offer say 8 k over asking price and then ask seller to  pay 8 k closing costs, that way you have a larger down payment percentage wise.
Also the loan to down payment ratio can be very high even 96.5 percent ( I heard this from real estate agents I spoke with). That does not make you maybe the best candidate in a competitive market but anyway these are some options to get you started. With the low interest rates it may be equally expensive to rent vs buy. But with a home there are alway surprise expenses like the sewer pipe breaks or the radiator leaks.
Anyway I am not an expert, just recently conversing with a lot of real estate people lately.

[researcher1]

I don't have money for a down payment
I don't really have money for a lot of these start up fees

Please don't buy a home right now.  You are not ready.

If you are serious about home ownership, you need to start saving for all of the numerous expenses that go along with buying a house.
How much can you put away each month for this purpose?

[rothwem]

With that income you qualify for an FHA loan and around here the buyer can offer say 8 k over asking price and then ask seller to  pay 8 k closing costs, that way you have a larger down payment percentage wise.

Err it doesn’t work that way. Unless the house appraises for that extra 8k, you’re not going to get a loan for that amount.

I don't have money for a down payment
I don't really have money for a lot of these start up fees

Please don't buy a home right now.  You are not ready.

If you are serious about home ownership, you need to start saving for all of the numerous expenses that go along with buying a house.
How much can you put away each month for this purpose?

Holy shit this. Don’t buy a home if you have no money. Even if you get someone else to pay your downpayment, your house needs money to maintain it every year. If you don’t have the funds to do this you’re going to have problem.

[Sibley]

You need to save up a down payment. Then you need to save up a larger emergency fund, because houses cost money to maintain, and it isn't optional.

Renting isn't a terrible thing. It's paying for a place to live that doesn't have a lot of surprises attached. You are not ready to buy a house. Don't mess up your finances jumping in too early.

[socaso]

Considering the exact nature of your situation you are in a great position to start saving and start educating yourself about loans and grants that are available. We qualified for a grant in our home state and I can tell you the learning curve was steep, mainly because a lot of loan officers we talked to didn't know anything about getting the grant. A friend of ours who did mortgage loans basically taught herself how to do it for us and then taught everyone in her office. There was a lot of paperwork and we had to take an online class to qualify. It was worth it.

Don't rush into anything. Set a goal for your down payment savings and start doing some research. I found out about the grants available in our state by Googling "state name first time buyer's grants"

[LadyMaWhiskers]

Fellow 41 year old single mom here - hello.

What is keeping you from renting a house with a yard?

From your financial picture, it doesn’t look like it’s time to buy. You’ll start with no equity, build it slowly for years down incur a variety of risks in the process. Meanwhile, if all you want is a different home, you could rent a different home.

[neophyte]

I'm a single woman who bought my first house 3 years ago. Please don't buy a house without a financial buffer. There are a lot of additional costs to homeownership, and they're not always predictable. A quick repair last week that was supposed to cost a couple hundred turned into a major project that's gonna run me about $15k after we discovered rotting beams in my porch roof. I'm not happy to be over budget because I was planning to invest that money, but I would be a nervous wreck if I didn't have the cash to cover it.

[former player]

You've had a secure job for 7 years and your only non-pension savings is a 4 month emergency fund?  You are basically spending everything you earn, even without the costs of home ownership.  And you've just added a dog to the household, so your expenses have just gone up over that.

Perhaps you could post a case study on your spending?  There are a lot of threads here, and people with good advice, about cutting expenses, whether it is car costs, mobile costs or grocery costs, so they may be able to find some room in your budget for you to save for a deposit: if you can save for a deposit that's a good indicator that you can also save for the costs of home ownership.

[SavinMaven]

Would I potentially turn off home sellers because of my high priced realtor? How do I pick a realtor that's right for little 'ol me? Should I use the broker this realtor suggested to me or explore and apply for mortgage pre-approvals on my own?

Please don't focus on how to purchase a home - focus on IF you should. You've gotten great advice above, and your future self will thank you for continuing to rent. Rent is not throwing away money (by not building equity) any more than eating is throwing away money on food. The food ket you going, the rent keeps you warm, safe, and dry. You would be in financial peril buying.

You have new space needs - ok. Look to rent a place that meets your needs now, and appreciate the flexibility to change residences when your needs change again, the freedom from property taxes, maintenance and repairs, and the liquidity your meager savings currently has vs locking it into a hard-to-liquidate asset.

[Rylito]

The housing market is hot, hot, hot right now in Las Vegas, especially for properties on the lower end of the price scale.  We are also looking to buy in Las Vegas right now and the last two homes that piqued our interest both sold in 1 day after listing, before we even had a chance to view them.  You would have a hard time competing, particularly against all-cash offers which are pretty common.

I do feel there will be more homes on the market next year when more Vegas homeowners start feeling some of the deferred economic pain from the pandemic.  I agree with the other posters who advised you to continue renting while you save up for a down payment.  You'll be in a much stronger position get an offer accepted that way once you are ready to buy.