Author Topic: Mortgage options for new grads  (Read 4010 times)

cosmie

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Mortgage options for new grads
« on: November 29, 2013, 06:50:57 PM »
I'll be graduating in May, and have an accepted and signed job offer to start in June. I've been looking at the possibility of buying a home instead of renting, and have run into a slight process issue. I've been told that getting pre-qualified with my offer letter won't be a problem at all. However, approval would require at least my first paystub. This leads to a catch-22 where I need to move in before starting my job, yet I can't get final approval and close on a house until a few weeks after I start my job.

I've seen several people post this issue online, but haven't found much in the way of solutions. The most common solution I've seen mentioned was to live in a hotel for a few weeks, get the first paystub, and then close on a house. This doesn't work too well with my relocation package, which wouldn't cover the cost of intermediate storage, temporary housing, or the extra leg of the trip (storage -> new home). I've also seen offer letter approvals mentioned, but no mentions of anyone actually receiving one.

Does anyone here have any experience or knowledge of options in this scenario?

Another Reader

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Re: Mortgage options for new grads
« Reply #1 on: November 29, 2013, 08:05:13 PM »
First job out of school and a move to a new city?  In your shoes, I'm renting.  Something inexpensive that's month to month or on a short term lease and close to work.  When I have been on the job a couple of years and think things are stable for the long term, then I would look at buying.

ender

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Re: Mortgage options for new grads
« Reply #2 on: November 29, 2013, 08:38:36 PM »
First job out of school and a move to a new city?  In your shoes, I'm renting.  Something inexpensive that's month to month or on a short term lease and close to work.  When I have been on the job a couple of years and think things are stable for the long term, then I would look at buying.

I'm probably renting for a year, period.

Lots of major life changes all at once can be really stressful. A new city/moving and a new job (after a lifestyle of school) are pretty big items already. Not sure I'd want to add buying a house to it.

Especially since you aren't guaranteed to love your job. There's just a lot of factors which mean buying a house now might not be the best idea.


GrayGhost

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Re: Mortgage options for new grads
« Reply #3 on: November 29, 2013, 10:40:30 PM »
I too would be hesitant to buy in a new, unfamiliar city at a new job. You probably don't know how much you'll like your job, or how stable your employment prospects there are...

In some big cities, it's possibly to find rental opportunities that don't need you to sign on for a year. You might consider searching for some of those; craigslist is great for these kinds of things.

cosmie

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Re: Mortgage options for new grads
« Reply #4 on: November 29, 2013, 11:37:57 PM »
Quote
First job out of school and a move to a new city?  In your shoes, I'm renting.  Something inexpensive that's month to month or on a short term lease and close to work.  When I have been on the job a couple of years and think things are stable for the long term, then I would look at buying.
The problem is that there aren't any rentals available like that. From what I've been told and have seen, the rental market is very supply constrained. All of the rental homes have stable tenants and never come available, and few apartment complexes are available. The apartments that are available are going for $1,000 - $1,200 and available a few exits down the interstate. For comparison, there are homes selling for $80,000-$100,000 that fit my needs (and then some) within a 5 minute walk to work. As well, the homes for sale are in the middle of town within walking and biking distance of anything I'd need, whereas the apartments are deliberately located away from everything, outside of town in a "planned community" setting.

If I could get a yard and live in an area I liked while renting, I'd scoop it up in an instant and forego the headache of buying/owning. But buying appears to be the only way to make that happen, so is the way I'm leaning towards. As well, if I buy during my relocation instead of waiting a year then housing hunting expenses and closing costs will get reimbursed as part of my relocation package.

Lots of major life changes all at once can be really stressful. A new city/moving and a new job (after a lifestyle of school) are pretty big items already. Not sure I'd want to add buying a house to it.
While it can be stressful, delaying it doesn't necessarily diminish that stress. House hunting, buying a house, packing up, moving, unpacking, and settling in to a new home is significantly less stressful when done during the few weeks of downtime between graduating and starting my job verses if I were to try to do it all while working a year or so later. Not to mention waiting is more expensive, since I'd be footing the cost of the second move.

I too would be hesitant to buy in a new, unfamiliar city at a new job. You probably don't know how much you'll like your job, or how stable your employment prospects there are...

In some big cities, it's possibly to find rental opportunities that don't need you to sign on for a year. You might consider searching for some of those; craigslist is great for these kinds of things.
While I don't know how much I'll like my job and can't vouch for certain regarding stability, neither of those are top concerns for me. The company is fairly tenured and is trying very hard to attract younger talent, part of which is encouraging internal moves every 18-24 months until you find the niche you like the most. So even if I don't like my initial role it's not only acceptable but encouraged to look internally for something I may like more, providing stable employment and negating potential issues regarding job dissatisfaction. Out of the college hires within my group over the past 10 years, all but one are still with the company (so I was told).

It's also not a bigger city, but rather a mid-size (~50,000 person) city in the Midwestern US. Combined with the constricted rental market, the only leases I've seen available are for 12 and 15 month terms.
« Last Edit: November 29, 2013, 11:46:24 PM by cosmie »

escolegrove

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Re: Mortgage options for new grads
« Reply #5 on: November 30, 2013, 12:33:12 AM »
What state are trying to buy a house? I have contacts in a few states, I can hook you up if you want. Have you found a realtor? I recommend using the realtors preferred mortgage broker. It is possible to buy a house out of college. FYI it will be a pain and a lot of work but do able. We own 4 houses all with mortgages at 25. So like I said, painful but doable :)

In the mortgage world you need 2 years of experience. College counts as experience if you are working in your area of expertise. You will need an offer letter from the company. Definitely look at the conventional loan with 3.5-5% down.

Again not easy but doable. Good luck and I applaud you effort. If I can be of any help let me know. My husband is active duty military and we buy at every duty station that it makes sense. So I definitely know where you are coming from.

cosmie

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Re: Mortgage options for new grads
« Reply #6 on: December 01, 2013, 07:24:04 PM »
What state are trying to buy a house? I have contacts in a few states, I can hook you up if you want. Have you found a realtor? I recommend using the realtors preferred mortgage broker. It is possible to buy a house out of college. FYI it will be a pain and a lot of work but do able. We own 4 houses all with mortgages at 25. So like I said, painful but doable :)
Hey escolegrove! Indiana is the state I'm looking in. I don't have a specific realtor, but was told by HR that when the relocation company contacts me in March they would have a list of realtors to use. It wasn't clear if that list was just a recommendation or if I would be required to use one from it.

In the mortgage world you need 2 years of experience. College counts as experience if you are working in your area of expertise. You will need an offer letter from the company. Definitely look at the conventional loan with 3.5-5% down.
That's interesting to hear! When asking around, I was led to believe otherwise.

Congrats on the houses, btw! Do you rent them out when you move to a new station?

escolegrove

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Re: Mortgage options for new grads
« Reply #7 on: December 02, 2013, 10:21:45 AM »


Hey escolegrove! Indiana is the state I'm looking in. I don't have a specific realtor, but was told by HR that when the relocation company contacts me in March they would have a list of realtors to use. It wasn't clear if that list was just a recommendation or if I would be required to use one from it.

Word to the wise about relocation companies. Be careful because the companies usually take a cut of the commission. Some agents who are amazing wont work with relocation companies. Not saying that "all" relocation agents are bad. Just keep you eyes open and be smart about it. If it doesn't make sense it probably isn't a good idea :)
That's interesting to hear! When asking around, I was led to believe otherwise.

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Yes every time we move to a new duty station we rent out the previous house. Every house whether bought as a "pure investment" or as a personal property turned investment is bought as a rental! We strive to put as little down as possible while clearing $200-$300 after taxes, insurance, fees (HOA...) and mortgage. This works well as long as the house isn't so old that every system (siding, windows, room, appliance, water heater, havac, and total interior) needs to be redone. We have found that there are a lot of areas where rent is a premium over a mortgage.

We buy where it makes sense and than I manage the houses myself. All of my properties appeal to other profesionals who simply don't want to buy but treat their house as a primary. Therefore if they have an issue they call/txt me. Than I call the repair man and they meet them. It has worked out great for us so far. Yes there is a little stress during turnover. Otherwise, it is pretty easy.

the fixer

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Re: Mortgage options for new grads
« Reply #8 on: December 02, 2013, 11:56:37 AM »
If banks won't lend you money, that doesn't mean the seller won't. You could try an arrangement where you get seller financing, even if it's just for a short term until you can refinance through a bank. This strategy would require a more desperate than average seller, though.

Mlkmn

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Re: Mortgage options for new grads
« Reply #9 on: December 23, 2013, 03:09:43 AM »
I am trying to figure out which city in Indiana could have multiple Interstate exits and still have only 50k people that doesn't have apartment housing available. Most cities with that many people and multiple exits have a college in them, so they have apartments and houses for rent. Maybe Columbus or Elkhart I guess.

1000-1200 is what you pay for a 1-2 BR apartment downtown Indianapolis. You can rent a 2500 sq ft house for $1500 in Indy or Fishers. Where are you looking for rentals that expensive in Indiana? Carmel?

Hotstreak

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Re: Mortgage options for new grads
« Reply #10 on: December 24, 2013, 11:32:10 PM »
Two things.

First, if they are recruiting lots of out of college talent, you can't be the first person to run in to this.  What have other people there done?  You might find out more on this when the relocation company contacts you.

Second, are you sure you can't complete your move a few weeks after you get in to town?  I mean, can't you use PODS (they store your stuff for you until you request delivery), a cheep weekly rate hotel, a wardrobe box packed with work stuff... it shouldn't be that hard.  A strange experience for a few weeks, sure, but also a very easy solution to your problem.