The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: dizzy on February 09, 2020, 06:38:08 PM
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Hey y'all-
Am seriously considering to buy a home, and also this would be in NJ. Very big shift of mindset over the last couple yrs- if you asked me 3 years ago I'd be like absolutely no way would I or could I ever buy a home. Rent, geographic arbitrage, thru-hike, and vanlife was what I saw. I moved back to a city I like and do want to put down a sort of homebase. I started educating myself however along with seeing a couple of friends get evicted from their places so the owners could tear them down and build condos- I didn't want that to happen to me, and wanted to be able to have a place for friends to stay (don't in my tiny apt, or in other places I've rented).
I just barely qualified for an IDA savings program/grant- will match up to $2k 2:1. So I'll have $6k minimum ready in a few months from that- but hopefully a good deal more.
I found out about a lot of down payment assistance programs as well- grants and second mortgages. It's been SO hard to get more than basic info but I am finally starting to piece together some stuff. I'm really hoping I can combine some of these programs- any one here have any experiences with these sort of programs in NJ?
Programs:
All the BoA ones (probably not going to do- I wasted several hours trying to get answers out of them and really couldn't find too much out, other than they wanted me to get pre-approved right away. I'm months if not a year or two out from that)
1. NJHMFA (mortgage program, and forgivable DPA loan after 5 yrs)
2. Fed Loan Home Bank of NY (straight up grant; still haven't been able to find out if everyone gets the full amount, or it's just a %
3. County programs (very unclear if this is in addition, or just the same as NJHMFA
4. Other misc stuff which is seeming like no, but who knows.
PA/Philly has programs too but it really seems like I have better options for the areas that I'd consider in NJ.
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What is your overall financial situation? If I'm reading this correctly, you have no actual savings right now, but hope to save up some over the next few months to qualify for a small matching grant program?
Owning a house isn't something you should be doing if you don't at least vaguely have your financial house in order to begin with. If you don't already have $40k in cash, say, let alone a mere $4k, you shouldn't be even thinking about buying a place. If getting evicted and ending up on the street is the concern, you can solve that problem by again... getting your finances in order and saving up an emergency fund.
-W
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Guess I won't own a house for many years according to you. I *could* wait until then, or I could use my brain and resources and get that potential 40k for free (well, a bit of hard work researching all this) now instead of waiting.
I have some actual savings but not massive amounts- couple thousand. That's not including my emergency fund. Not everyone makes a large amount of money. Not everyone is looking to buy a crazy expensive house, either (the properties I'm just getting an idea of, that look ok to me, at are 90-150k, most calculators say I can afford ~$160-180k). I will have a couple more thousand hopefully depending on my side gig season (variable) by the time I'm buying if this summer (earliest), and a good deal more if it's not for another while after (one of the grants expires 5/2022). A lot depends on the market.
I'm not worried about myself really getting evicted- but it's the insecurity of that, you know? Like having to pack everything up at age 65 and find a place (it took my one friend 6 months to find something when it happened to him. I'm definitely in a better financial situation than him, but yeah? And wanting to be able to provide a crash pad for if a loved one needed it)
Anyway- looking for any feedback from people who have used any of these programs, specifically in NJ.
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What are the property taxes? Insurance? Expected maintenance costs? PMI? Those calculators are garbage-in-garbage-out unless you're plugging in actual numbers. NJ has VERY high taxes and I'd bet you'd be on the hook for $300-500 a month just to cover that even on a $100k house.
If you aren't the kind of person who has been stashing money for a while, you are probably going to cause yourself terrible problems saddling yourself with a house. I don't want to be too much of a dick about it, but if you have been living paycheck to paycheck for years, you need to change your behavior (or else earn more money) before digging yourself a financial grave by getting a six-figure loan on a house.
I'm not one of the folks who's a stickler for putting down 20%... but if that entire idea seems impossible, you're probably not homeowner material, even if you can get a few grand in incentives. Rent for a few more years and focus hard on saving money. Then reassess.
-W
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Since you're not currently in danger of being evicted, I would vote for you to concentrate on saving up as much as you can for a few years then look again at buying. Not just for a down payment, but also for closing costs, and a larger emergency fund. When you're renting, you aren't responsible for repairs and maintenance and the difference can be a big shock. I have to replace my roof this year. I'm expecting that will be $10-15k. Can you just pull that amount out of savings?
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What is your overall financial situation? If I'm reading this correctly, you have no actual savings right now, but hope to save up some over the next few months to qualify for a small matching grant program?
Owning a house isn't something you should be doing if you don't at least vaguely have your financial house in order to begin with. If you don't already have $40k in cash, say, let alone a mere $4k, you shouldn't be even thinking about buying a place. If getting evicted and ending up on the street is the concern, you can solve that problem by again... getting your finances in order and saving up an emergency fund.
-W
^^ This
What are the property taxes? Insurance? Expected maintenance costs? PMI? Those calculators are garbage-in-garbage-out unless you're plugging in actual numbers. NJ has VERY high taxes and I'd bet you'd be on the hook for $300-500 a month just to cover that even on a $100k house.
If you aren't the kind of person who has been stashing money for a while, you are probably going to cause yourself terrible problems saddling yourself with a house. I don't want to be too much of a dick about it, but if you have been living paycheck to paycheck for years, you need to change your behavior (or else earn more money) before digging yourself a financial grave by getting a six-figure loan on a house.
I'm not one of the folks who's a stickler for putting down 20%... but if that entire idea seems impossible, you're probably not homeowner material, even if you can get a few grand in incentives. Rent for a few more years and focus hard on saving money. Then reassess.
-W
^^ And This.
Not trying to discourage you, but all these grants, creative financing, 5% down and all those other products are there just to get you in that house.
What happens after is where it counts.
House is a big expense, specially in NJ.
Depending on location your taxes alone like others said can be easily at minimum $500-$600 per month.
Add utilities, improvements, insurance, maintenance etc and you are looking at major expense.