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Thread: Saving Up For a Condo- Need Some Advice Please!

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    Default Saving Up For a Condo- Need Some Advice Please!

    Ok I am 21 about to turn 22 this fall and one of my goals that I would like to reach is to buy a condo by the time I am say 28. The place where I want to buy a condo is a small city in the Carolinas and a good condo cost about 160-200k give or take. I make about 80k a year right now and was wondering how much money should I put away per week or month in order to save up for this condo over the next 3 years? Also if anyone here owns a condo please share how you saved up for it and how you like it. Thanks so much.

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    Default Re: Saving Up For a Condo- Need Some Advice Please!

    If your only documented source of income comes from being a self-employed 'adult industry' worker, the only safe answer these days is ~$180,000 / ( 28-22 ) = ~$30,000 per year or ~$600 per week !

    Not wanting to 'throw cold water' on anyone's dreams, but for a fact mortgage lenders are now under new regulations which require them to both verify income as well as calculate 'ability to repay' over the life of the loan. Mortgage lenders are intelligent enough to realize that exotic dancers etc., like professional athletes, have a comparatively short window of opportunity to earn comparatively large amounts of money. But once that window closes, earnings opportunities drop off quickly. Or put another way, no 'prime' mortgage lender is going to write a 30 year mortgage for someone whose high earnings are unlikely to extend beyond 10-15 years at most, because there is a huge unanswered question as to how the last 15-20 years worth of mortgage payments can be afforded.

    Also, 'prime' mortgage lenders are unlikely to write a mortgage of any term for a self-employed person working in a business where the passage of one new law could render them unemployed, where an injury or illness leaves them totally without a source of income, etc. Also, recently enacted 'consumer protection' regulations now prevents lenders from increasing interest rates if a loan goes into default, from assessing additional fees relative to late payments, foreclosures, etc. - which has in turn led to low interest rate 'prime' mortgage lenders ( as well as Fannie and Freddie, the main gov't mortgage guarantee agencies ) shying away from approving high risk applicants.

    Obviously there are 'subprime' mortgage lenders who specialize in serving high risk borrowers ... with dancers and camgirls being triple high risk due to their self-employment, plus working in a high risk business sector ( the FDIC has defined all adult businesses to be high risk ), plus being first time buyers with limited credit history. But 'subprime' mortgages come at a heavy price ...

    (snip)"subprime mortgages are once again being offered to borrowers who pose a higher credit risk, typically those with credit scores that fall below 640. But this time around, the loans are much more costly. During the housing bubble, lenders were handing out subprime loans with cheap teaser rates and little or no down payments. Now, lenders are charging interest rates of as high as 8% to 10% and requiring borrowers to make down payments of as much as 25%-35%. (snip) from

    The kicker here is that the total cost of a typical 'subprime' 30 year mortgage with $30,000 down and $150,000 financed these days results in a $1200+ per month mortgage payment * 360 months = $432,000 plus the $ 30,000 down payment or $462,000 versus an actual property price of $180,000. In essence, 'subprime' borrowers as a group are now being 'overcharged' to sufficiently cover the costs / losses to the 'subprime' mortgage lenders given that ~15% of all 'subprime' mortgage borrowers will very probably default. In this scenario, you're far better off simply saving up the money and buying the property with cash ... which will probably result in a lower price as well !!!
    Last edited by Melonie; 07-31-2014 at 12:25 PM.

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    Default Re: Saving Up For a Condo- Need Some Advice Please!

    +1 - Pretty much what Melonie said. If you can be disciplined, focus on your goal, put the money safely away and just pay cash. You'll get a better deal and likely get the seller's full attention over other buyers when you say "I can give you cash today!"
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    Default Re: Saving Up For a Condo- Need Some Advice Please!

    ^^^ Indeed. And with the recent changes in mortgage lending regulations, as well as the FDIC's recent declaration that 'adult' business be added to the list of businesses which, by definition, involve high risk ( along with gun dealers, payday loan companies, etc. ), dancers and camgirls now stand to save LARGE amounts in 'subprime' interest charges if they have the discipline to save and then buy in cash !!!

    IMHO the FDIC's across the board declaration that ALL dancers and camgirls should be met with the assumption that they personally represent an elevated loss risk is unfair. However, in the same manner that all male drivers under age 25 are charged high auto insurance premiums ( based on the high risk actually created by a comparative handful of bad drivers ), all US dancers and camgirls now have very few options other than being forced to pay high 'subprime' interest rates.

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    Default Re: Saving Up For a Condo- Need Some Advice Please!

    Every lending decision comes down to the three C's - collateral, character, and capacity.

    Collateral - that is, what's the property worth and does the borrower have something in it. Given you are looking at a $160,000-$200,000 condo, you better have a down payment in verifiable funds of $40,000. That means you will need to save roughly $1,100/month for the next three years. Given you expect to make $80,000/year dancing that means your take home will be around $56,000/year. You will have to save 25% of your take home pay to have your down payment. Not impossible, but you will have to live frugally. Next, you will have to buy a condo that appraises close to your purchase price. I have assumed that as a given. Miss the appraisal and the deal is dead.

    Character - in this market, credit score is everything. Get your credit reports from annualcreditreport.com. Pull one reporting agency every four months and look for errors. If there are errors, dispute them. Pay all your bills on time. Pay down your credit card balances. Ideal is less than 30% of your available credit. Some credit cards have a credit score function. This close, but not a prize for what you need. When you are pulling your first report from annualcreditreport.com, go ahead and pay the fee for the credit score. This one is from Fair Isaac. If you have a friendly banker, have him or her pull your credit score. Find out what it really is. There are some things you can do to increase your score, but they take time.

    Capacity - simply, this is the ability to service the loan over the life of the loan. In reality, bankers are really looking five years down the road. If you are dancing as your source of income, that's going to be tough. A W-2 job is much better. I just went through a refi with my credit union. I am a business owner with a 800+ credit score, bricks and mortar and a large payroll account. They still gave me a serious run-around before approving the loan. A single employee business is even tougher. Think about a W-2 job that will pay you monthly, three times your mortgage, taxes and insurance. If you can find that kind of work, then you won't have the sole proprietor/sub-prime/high risk issue hanging over your head. If you cannot, think about the traditional alternative - a co-signer.

    HTH and good luck saving!

    Z

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    Default Re: Saving Up For a Condo- Need Some Advice Please!

    Do you have any credit cards? You should try to use credit cards as much as you can to build up your credit. Just make sure you don't spend any more than you would normally spend, and pay off the balance at the end of the month. Also, if you have any plans to buy a car in the near future, take out a loan for it, even if you don't need to, and make sure you make your payments on time. This will also help build up your credit, and you'll get an idea of how easy or difficult it is for you to get a big loan.

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    Default Re: Saving Up For a Condo- Need Some Advice Please!

    I agree with everything said in this thread, though I wanted to add that if you are planning to exit the industry and have a vanilla job with verifiable income, you would be much more able to get a mortgage. That might take some of the burden off you as far as saving a liquid $180k. Personally, that is what I am doing; saving while I'm in school and dancing, and then purchasing when I graduate and have a vanilla income with pay stubs and W-2s.

    I looked into purchasing a condo a few years ago actually, when I had a 30% down payment saved, and was told by the banks that since I was waiting tables at the time they required 2 years of tax returns because it was unpredictable tipped income... they needed SOMETHING to prove that it could remain reasonably steady income... and that no way could I get a mortgage without that. So keep that in mind when you do your taxes; I know many dancers are not honest about their true income, but that could prove detrimental to you if you need to prove your ability to pay on a condo.
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    Default Re: Saving Up For a Condo- Need Some Advice Please!

    I can only talk from my experiences. I own two homes. I had 3 sold one. I never had an issue getting a loan. MY second house I picked the model and they built it. i just started dancing and they ( the builder financed me). I put 20% down. My rate was insane 11%( if I recall correct) but that was in 90 and rates were like 8-10 then. My second home I had to get a construction loan since I built it from the ground up( even bought my own land/lot) that was a little more extensive but again I put down 20%. My credit was around 700 ( low credit off all 3) and I never had an issue. I showed 2 years tax returns and 6 month bank statements. If your looking at new condos and you have good credit and money to put down the builder may offer you financing. I'm in a state where , we had like 1 in 4 houses in foreclosure a few years back so you don't need a huge down payment here maybe 2-3 percent. do you research and good luck!

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    Default Re: Saving Up For a Condo- Need Some Advice Please!

    Oh and I do like homeownership but remember if anything goes wrong you have to fix it. If you buy new you shouldn't have any problems for years but if appliances go, you fix, trees( thry cost me around 600 a year to keep back off my house) I live in hurricane ville. I"m single now and I"m not going to lie it gets over whelming. last year my A.C. went out twice costing me close to 2000 each time. Had I known it would do it again so quick I'd have just bought another unit since mine is 10 and here anymore they don't last much more than that. They use to last 20-30 years. Nothing lasts anymore. Just make sure you put money aside for things that can go wrong. I do like it as I"m kind of a hermit and don't like living in close proximity to lots of people.

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