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Need some financial advice - I want to buy a house!

9 years ago

Hi Everyone,

I'm looking for some advice on my financial situation. I just turned 30 and it’s time for me to really consider the next big purchase in my life, which is my own house.

Here are my facts:

• I just moved to Orange County, CA which is incredibly expensive. A starter house in a safe area would run probably at least $400k. Rents are very high as well ($1,700 a month where I am currently) and I hate spending so much money every month without building any equity. I like the area and I would prefer to stay here but I don’t have any deep roots.

• I make $80k a year

• I contribute 10% to my 401k every pay period in higher risk accounts given my age but I have gotten very little growth and a little loss. Probably about $15k in there so far that I don’t plan on touching.

• I have no debt other than a $5k student loan that I pay $80 a month. I could have paid it off ages ago but I keep the installment to boost my credit score.

• I have about $10k in savings

• My credit score is 782

My biggest problem is that I do not have the $80k required for a down payment, or really anything close to that. I make decent money, have no debt and have the small emergency savings fund built up but that’s it. The cost of living makes it harder to save out here but I do my best.

My question is - I know I have a good credit score and I can easily make the mortgage payments. I know I can get mortgage insurance but it’s a little bit expensive and I’m not sure if that is the best financial decision, especially since I read that the FHA just required that the insurance be paid for the lifetime of the loan instead of just to 22%. I’ve also heard of taking out two mortgages - the main one and then another to cover the down payment. Does anyone have any suggestions on options I might have?

I’m trying to weigh the pros and cons of spending more on insurance and probably a higher interest rate by not having a full down payment vs. continuing to pay high rent and trying to save up for years until I have enough and risk losing out on the lower housing prices and great rates.

I am very new at this so if anyone has any advice I would really appreciate it. I really want to own my own home! Thanks.

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