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Thread: Home Buying

  1. #1
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    Default Home Buying

    Hey guys! I danced for a little less than a year (9 months) and almost made 90k. Now that I am going to have a baby, I want to have a nice house by the time I am 30, that's in ten years. I'd like to get something around 500k. My boyfriend (baby daddy) has a good job for his age and with experience, he will be making more money in his career. I will be going back to dancing after baby is here by the time I'm 22 at the latest and I am currently in school so I will hopefully have a career once I hit my 30's and become a home owner. My question is, what can I start doing NOW that will make the process easier in 10 years when we are ready to purchase? Worst case scenario, I become a single mother so I lose my boyfriends income but I know I still want a big house for me and my family. I would like to put a fat down payment or pay the house in full but I've heard I can get audited if I do that. Also, I have credit but it's very poor, although I'm working on it. How much should I be saving? How much should I be reporting as far as taxes go so I don't get audited? How much should I deposit in the bank and how often? Should I have a cash stack at home? Thank you guys!

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  3. #2
    God/dess Gia2608's Avatar
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    Default Re: Home Buying

    It's your life and decision but I think you should not wait 10 years. If you buy the house in your 20's by the time you are in your 30's you will have equity and be 1/4 to 1/3 of the way paying off a mortgage (should you get one). While buying a house cash is a good idea, mortgage rates are pretty low (high 3%-low 4's on traditional products) and your money can work better with other types of investments. To purchase FHA you only need a 620 credit score, 3 trade-lines and 3% down. You likely can not get a 500K house with an FHA mortgage; depending on where you live as there is a loan limit. Another option is a conventional loan which, for first time home buyers can require as little as 3-5% down. If you put less than 20 percent down you will have to pay mortgage insurance but on a conventional loan you can cancel it once you reach 78% loan to value (or have over 20 percent equity stake). The credit score requirement is the same, but to be safe you want 640. Also, conventional loans will take into consideration any late payments or blemishes a lot more than FHA. Also, you will likely have to stay at a max loan amount of 417,000 unless you live in a handful of counties that allow higher loan limits.

    As far as what to save and what to declare- this is very tough to say because I do not know how much debt you have or how much you are earning. You should definitely save a bare, bare minimum of 10%; I would say 20% plus to be safe. You will need 2 years of tax returns and verifiable work history for most standard mortgage products.

    If you have questions specifically related to your ability to obtain a mortgage or your credit, PM me. As someone with a little more life experience; I think you should move up the time line. I bought my house when I was 28 and wish I had done it sooner!! I have convinced my 22 year old sister to buy this year and am helping her get ready; she will probably have no mortgage by the time she is 38-40 and making great money; meaning she can invest, save for retirement and travel instead of work, pay bills and die.
    XoXo Gia
    Danielle Fishell (the Dish): "If the Super-Star thing doesn't work out, Gia makes a great stripper name"

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    Default Re: Home Buying

    First of all, Congratulations! That is a great amount in savings. I think you need to put ALL of it in the bank. What you can do is take the 90K and put it in a safety deposit box and then deposit it into your savings account weekly, say 5G at a time. You should report all of it unless you want to keep a small amount weekly for cash purchases such as groceries. You should become a home owner within 5 years. I think 10 is too much time.

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    Senior Member Camillauk's Avatar
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    Default Re: Home Buying

    Wow you have done well to make near to £70k for 9 months work that is amazing! and I love it how all of you have your head screwed on for buying properties! xx

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    Default Re: Home Buying

    Buy a starter home ... so you have your foot in the door for 200k or so ... pay your mortgage then sell and get them home you really want when you have even more stability. Getting a first time mortgage for 500k is of course possible people do it all the time, but showing a bank you're capable of paying off a mortgage prior will no doubt get you a better rate.

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    God/dess Zofia's Avatar
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    Default Re: Home Buying

    First, declare it all as income.

    Second, put your money in the bank, in your business account, every night after your shift. (At the latest in the morning when the banks open if your bank doesn't take cash deposits at their ATMs.)

    Third, pay your taxes based on your full income. By that I mean the money you walk out of the club with. Don't count tip outs and the like as income and expense. Income equals what you deposit after every shift.

    Fourth, pay all your stripper related ordinary and necessary expenses from the business bank account. If you need a credit card to pay ordinary and necessary expenses, get one for the business and pay only business expenses with that card. (Personal expenses pay from your personal money.)

    Fifth, do your quarterly estimates and annual tax returns on time and pay your quarterly estimates from the business account.

    Sixth, each week or every other week transfer out of your business account to your personal account a sum that you will treat like a salary. I prefer a set amount every other week that makes budgeting at home easier. Always budget for your own saving and vacation in addition to the usual home expenses.

    Seventh, at the end of the year, give yourself a big draw taking your business account down to a safe number to work from for business expense. This is your annual bonus.

    Eighth, use your bonus money to save or invest for your new home. The general rule is you pay 20% down and borrow 80%. The more you can pay down, the better. At the rate you are saving, you might be able to pay cash for a starter home in a few years. Never pay more in mortgage, property taxes, homeowners insurance and HOA dues than 30% of your take home pay. The lower your mortgage payment, the better, so save a bigger down payment, or buy less house. Currently, BF and I live in a 2600 sq. ft. house that is less than five years from being paid off and we collectively pay a little less than 10% of our combined take home pay for our mortgage, insurance, and taxes. (No HOA for us. YMMV on that issue.) The extra we have by not buying too much house lets us do lots of things that other couples our age cannot do because they are paying for way more house than they need, right up to the limit of what they can afford. Don't do it, just don't.

    Ninth, save for an emergency. The general rule of thumb is have six months of expenses saved in your emergency fund. This fund should be easy to access and super safe. Thus, it will be low interest.

    Tenth, once you have your down payment saved up and your emergency fund fully funded, then you can start thinking investments.

    Remember the key to wealth in the U.S. - ONE SPOUSE, ONE HOUSE.

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  13. #7
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    Default Re: Home Buying

    Zofia- that is all really good advice. However, I will argue that it is not necessary to put 20% down if you are not overextending yourself.

    The median home price for the US is approx. 250K. On average with taxes and insurance the mortgage payment is about 1,000 (less or more dependant on escrow and whether or not there is an HOA). Not only is the generally cheaper than rent for anything 2 bed + in most areas buying a home also has the benefit of building equity.

    I think buying a home (even if a starter home) is a good and solid goal for 20 somethings. Especially single 20- something women (they make up less than 10% of home buyers in the US). If you buy it, maintain it and pay it down you are setting yourself up for a solid financial future. As others have pointed out this first home can be sold down the road. In my case; I am putting the finishing touches to make mine a rental and move to a nicer property.

    As Zofia stated and also I referred to earlier; spending less money on paying down your own mortgage as opposed to "rent" AKA paying someone else's mortgage frees up your money for investing, saving and traveling or buying yourself a nice thing from time to time. Being born, working to pay bills and dying is not the way to go.
    XoXo Gia
    Danielle Fishell (the Dish): "If the Super-Star thing doesn't work out, Gia makes a great stripper name"

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