Smackre

I want to buy a house in about 2.5 years. Right now i only have about 200$ saved up. As i have been making double payments on my two loans. Right now the only thing i owe is a truck loan which should be paid off in 1.5yrs if i keep paying double payments and a second personal loan i took out to get credit. Which should also be paid off in around 2 years.

Here is my question. I want to save up 10k in the next 2.5 years. to use as my down payments. What is the best way to do this? is there a better way than just puting it in a saving account? right now i have it stuck in my cabinet.

Also am i going to have enough credit to be able to get a home loan? I will probly look for a small place around 50-60k. I have a good work history. Been working in the family business for 8 years. And my credit is good as far as i know. Ive been paying on my truck for 2 years and never missed a payment.

What do you guys think?
I tried to buy a house about a year ago and all of the banks told me if i had not paid off 2 loans prior they would not even consider it.

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Anexkahn

while there are tons of people on here who know more about investing, than me, savings account is not the way to go... Even a CD would net better interest, and since it sounds like you wont need access to the money for 2 years, it would work out well.

there are tons of programs for first time home buyers, even with non-established, or questionable credit. Ask and apply with more than just the banks. Private morgage brokers are often able to work with companies and programs that the banks are not able to. When you start working with a relator, they will be able to give you resources for getting financing, and often times, the bank is not the way to go in todays market.

Since you have 2 years to plan for this, i'd strongly suggest getting a copy of your credit report and review it. There are quite a few changes you can make in 24 months to drastically improve your fico score. You might find you have open accounts you no longer even use, which can add to your available debt ratio, until you close them. for 30 bucks over at equifax or any of the other credit reporting agencies, you can get a quite detailed report with lots of suggestions on what is counting against you and what you got going for you. Use this as a guide for the next 24 months, get with a private financing company or broker, and you should have no problem securing financing.

jimk

this is a way down the road for you, but....

if you have good credit and little or no debt going into the loan process, a home loan officer will throw waaaaay more money at you than it is wise to accept from him. right now the housing market is softening a bit, and these companies that have had people lined up around the block to get a new mortgage or refinance are suddenly starting to seem a little desperate.

just be conservative. don't let them talk you into assuming a mortgage for the maximum you're approved for, or worse yet, plug into a variable rate & assume the maximum of THAT. once you buy, things WILL go wrong with your property, so you will need some financial cushion to pay for them. and you really don't want interest rate swings adding risk that the payment you're used to is going up next month because bernanke thinks the economy's still too hot.......

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Lady Sage

Hello, I have worked in banking for over 5 years, perhaps I may be of assistance. Every bank/mortgage broker is different, shop around! Credit is what makes or breaks you as most places have a plan that will match your down payment up to X dollar amount. Here are some questions to ask that are very important. What is my pre payment penalty? What are my ap fees? What are my title search fees and fees in general? How much will my closing costs be? Will i have to deal with PMI? What is the best plan for me? (fixed/variable/ARM) I personally suggest a fixed rate as rates are on the rise and arms also deal with periodic variable rates. I hope this helped you some.

wolf

Hey, pretty much I would suggest what has already been suggested. My wife and I recently bought a house, so we know some of the pit falls. Here are a couple of things to watch for.

1. Right now is a great time to buy a house because it is a buyers market. This means house prices are relatively low. Unfortunately interest rates are on the rise. No one ever knows how long this will stay like it is. However the buyers market has just begun so hopefully when you are looking to buy it will still be.

2. Watch out for crook mortgage brokers who want to make a buck and get you into a horrible loan. Don't take a variable rate mortgage unless you absolutely have to. Get into a fixed rate mortgage. Try to find one without a prepayment penalty. Also we just closed a loan with a broker who paid all of our closing costs - 100%. The only things we had to pay for was the appraisal (which they credited back to us) and the money to establish our escrows. So, try to find a bank or mortgage company who will pay for the closing costs.

3. See lots of houses. We did and we were very happy we did. It can become overwhelming, but trust me it is worth it. We saw lots of houses we really liked and we saw lots of crap. Take your time and be picky. Also insist on a home inspection. If the sellers refuse, somethings up.

Good luck and let us know how it goes.

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NoSoup

I'll elaborate on this.

I wouldn't say avoid a variable rate mortgage at all costs - base the type of loan that you chose on how long you are going to stay in the property.

For instance, if you are absolutely certain you'll be out of the property in four years, getting a 5 year ARM wouldn't be a bad idea.

As far brokers go - I agree - watch out for those that are greedy.

However, if you are planning on staying in the property for an extended period of time, I'd recommend paying the costs yourself.

Although it may seem like a great deal for the broker to pay them, they basically can do so by increasing the rate a bit. It would be much better long term to pay your costs up front and have .25% lower rate for the next thirty years than it would be to have the costs worked in at the higher rate.

However, if you are only planning on staying in the property a short time, feel free to have the costs worked in.

If' you're unsure what do to, ask the mortgage broker how much your rate would be with as well as without the costs paid for by them. See what the difference in payments would be, and calculate how long it would take to break even. If you're going to be in the property longer than the break even point, pay them up front. If not, have the broker pay them.

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