[alpiner]

I'm 23, been married for a year and a distant family member has offered to sell there property to me for very cheap since they are no longer able to stay there and it's 125 acre farm with a beautiful home for 120,000 and I'm thinking it's appraised for around 350,000.

My credit score is 752, wifes is 665.
income is 750 a week, wifes is 300.
I have 200$ in credit card dept I hold for credit building purposes, wife has 8,000 in student loan dept.
I have around 1,000 saved up, wife has around 300.

Questions are:
What interest % should I aim for and what length?
Do you think I'm financially stable enough with little savings?
Would the property stand good without a down payment?
I don't want to put up the 350,000 farm for 125,000 loan so how would it be divided?
Could the house and a few acres stand good for the loan amount and just own the rest of the property without it being attached?

Any other advice/tips would be greatly appreciated!

 

[Nomad 2nd]

I'm 23, been married for a year and a distant family member has offered to sell there property to me for very cheap since they are no longer able to stay there and it's 125 acre farm with a beautiful home for 120,000 and I'm thinking it's appraised for around 350,000.

My credit score is 752, wifes is 665.
income is 750 a week, wifes is 300.
I have 200$ in credit card dept I hold for credit building purposes, wife has 8,000 in student loan dept.
I have around 1,000 saved up, wife has around 300.

Questions are:
What interest % should I aim for and what length?
Do you think I'm financially stable enough with little savings?
Would the property stand good without a down payment?
I don't want to put up the 350,000 farm for 125,000 loan so how would it be divided?
Could the house and a few acres stand good for the loan amount and just own the rest of the property without it being attached?

Any other advice/tips would be greatly appreciated!

You have NO savings and under ANY OTHER circumstances I'd say DO NOT try to buy a home now. You are not ready.

HOWEVER:
In this case I'd look for what your missing.
If you said a parent was selling you a property for less than 1/2 of what it was worth... I might buy it.

But a "distand relation"

Is the house condemned? Is there a toxic dump site on the property?
Is the title in question? Et .


IF this "too good to be true" story is... You have enough equidity to get the place without a down payment.


Length if mortgage depends on factors you have t told us.
(income/expense ratio, security of job etc)
I would do a 30 year and pay it off sooner, but you might be able to afford the 15 year and might not have the discipline to pay a 30 off sooner.


You'll probably have to mortgage the whole thing.
Surveys are expensive. If there's a recent survey... That could be used.

 

[Kringle]

If you think it was appraised for 350,000, I would recommend checking the assessment on record with the town for tax purposes. I would also put the address into Google and see if your family member already has the property on the market and what it is listed for.

I hate to be so negative, but with only 1000 in savings and assuming that you were not putting any money down on the property - what would you do if you needed to replace the [roof, septic, well, etc]?

 

[altheman2]

I would look into in carefully but from what do describe it is a very good deal.
When me and the wife got together and bought out first house it wasn't much just a 75k mortgage my score was around 720 and hers was 650, nothing negative she just didn't have much credit history. With 5k down we had a 30 year mortgage at 6.5%, not great but got us into the house. We did a lot of work to the house added a story to it and refinanced it 6 months ago and sitting at 4% on a 30 year mortgage.
To answer you questions
What interest % should I aim for and what length?
4.3% for a 30 year is the going rate I think

Do you think I'm financially stable enough with little savings?
As long as you can continue to save some dollars with the added mortgage+escrow payments and both feel stable in your career fields, sure


Would the property stand good without a down payment? Yeah if you really think its worth that much. An appraisal will tell and I would think your lender will want an appraisal done on the property, and maybe an inspection etc.

I don't want to put up the 350,000 farm for 125,000 loan so how would it be divided? No idea, as far as I know you get a mortgage on it all but I am no where near an expert on this

Could the house and a few acres stand good for the loan amount and just own the rest of the property without it being attached? Wish I could help you out on that question but just like the last answer its above my knowledge level on mortgages

If you feel comfortable and financially stable I would go for it. Your first home feels like your diving off a cliff praying the parachute opens, wish you the best of luck, just be careful and question anything that seems odd.

 

[maat]

The best circumstance at which to buy a house is with at least 10-20% down on a 15-20 year note where the payment(principle, interest, insurance and taxes) does not exceed 25% of your take home income. And, that you have at least 3 months expenses in savings.

Interest rates are better on 15 year notes. You pay far less interest on 15 year notes.

 

[queenof3]

Get crystal clear on what your taxes would cost, too. In Texas, we don't have income tax but property taxes STINK. In my area, a $350k tax assessment could translate into $500 or $600/mo just for taxes.

I am pretty jumpy about debt and having a large emergency fund, so I would personally wait until I had enough savings to have a decent cushion even after moving into the new house, like 4-6mos of expenses. The minute you get cozy, catastrophe comes looking. We're big believers in trading up as your finances allow, and we're on our 3rd owned home in 12 years. Patience, smart/lucky real estate investing, and a lot of elbow grease allowed us to finally buy a house on a little land.

I also second the idea of paying off a house in 15 years. You end up paying roughly HALF of what you'd pay over 30 years. It's criminal. Paying off a 30 yr loan in 15 yrs gives almost as good of savings and gives you a little breathing room if you lose your job or need smaller payments for a while.

 

[Fortress]

Make a deal with the relative and keep the bank out of it.

 

[dcporlando]

A $120k mortgage is going to stretch you.

Two things I would do, are have a homeowners inspection to see what is wrong with it and then see an attorney about the deal.

 

[woowoo2]

You have NO savings and under ANY OTHER circumstances I'd say DO NOT try to buy a home now. You are not ready.

Needs to be said again......

Start saving if you want to buy a home.

 

[law.74]

income is 750 a week, wifes is 300.
I have 200$ in credit card [debt], wife has 8,000 in student loan dept.
I have around 1,000 saved up, wife has around 300.

1. Too little information: Is $1050 a week gross or net? What is your monthly take home?
2. I agree with those that preach the 15y fixed-rate mortgage that does not exceed 25% of take home pay. You might consider the 30y now, and refi to the 15y ASAP. The 15y always pays off in 15y. Imagine that.
3. NEVER (especially when rates are low) agree to an adjustable rate mortgage (ARM).
4. One of the best things you can do for your marriage is be one with finances. None of this "my income and her income" or "my debt and her debt". It should read "our income" and "our debt". The only time its is really relevant is if one of the parties is going to change jobs, or stop working entirely. Then "our income" will change from X to Y. Thus, in order to answer your questions are either of you going to increase or decrease your income in the future? Is she going to get pregnant and stay at home? Et cetera.
5. Purchasing a home is too big a jump to do so without a safety net. I.e. emergency fund.
6. No down payment is doable but not desirable. Interest rates will be higher. Private mortgage insurance is required until you have >20% equity in most cases. VA loans are an exception to both rules. Are you a veteran?
7. Avoid contracts for deed or land contracts. They rarely ever end up with the "buyer" actually owning the property mostly because they couldn't qualify for a loan in the first place (i.e. too risky).

My recommendations for your situation with minimal info:
8. Rent until you can save the down payment plus an emergency fund.
9. Get out of debt and stay out of debt (except for the home). This includes vehicles and toys.
10. Increase your income. Bigger shovels move more dirt.
11. Be careful with real estate agents assessments of what you can afford. They like to get you into as much house as they can. This increases their commission. They don't care if you're house poor.

best of luck

 

[OliverR.]

Be very careful dealing with family. Do a title search, get it inspected and appraised. Check with the county for records.

Is this farm close to your work?

Do you assume the wife will get pregnant and can't work?

I'm sort of the same boat as you. Living in a cheap apartment, will be soon married (October), and my fiancée really had the bug to buy a house a month or so ago. We are saving for our wedding and honeymoon ($1200 a month).

But after the wedding we will save at least 30k before we buy anything. That money gives alot more buying power for a better deal.


In short I'd be really suspicious about your relatives property, and save more money than you have been.

 

[MattB4]

It is very difficult to get loans on rural property. Based on what you report about you and your wife's situation you would not qualify for financing. About the best you could hope for is this relative was willing to take a contract. Or a closer family relative that might lend you the money.

Does not look all that doable, sorry.

 

[rriley]

First of all, it doesn't look like you have the financial ability to make any sort of down payment, make the monthly payments, pay the real estate taxes or pay for insurance and maintenance on the house.

Beyond that, if your family member could sell the house for $120,000 they would do that, therefore a realistic appraisal would not be $350,000.

And then, you say that you would not want to "put up the $350,000 farm for a $125,000 loan, so how would it be devided"; to divide a property requires a survey and any property division must be in compliance with zoning, have you checked the zoning? Furthermore, a lot split would have to be done before the mortgage was finalized so that would be something the present owner would have to deal with and then there is the issue of value, if you split the lot, the appraisal value may not be enough to secure the mortgage.

But, as mentioned, you don't have the financial ability yet to handle the purchase and upkeep of a house. It would be better to wait until you are in better financial shape before taking this plunge.

 

[Harmless Drudge]

I'm 23, been married for a year and a distant family member has offered to sell there property to me for very cheap since they are no longer able to stay there and it's 125 acre farm with a beautiful home for 120,000 and I'm thinking it's appraised for around 350,000.

My credit score is 752, wifes is 665.
income is 750 a week, wifes is 300.
I have 200$ in credit card dept I hold for credit building purposes, wife has 8,000 in student loan dept.
I have around 1,000 saved up, wife has around 300.

Questions are:
What interest % should I aim for and what length?
Do you think I'm financially stable enough with little savings?
Would the property stand good without a down payment?
I don't want to put up the 350,000 farm for 125,000 loan so how would it be divided?
Could the house and a few acres stand good for the loan amount and just own the rest of the property without it being attached?

Any other advice/tips would be greatly appreciated!

There are many ways to avoid a bank mortgage:

- Seller financing

- Lease with purchase option

- Delayed closing with lease terms

All of these are preferable to applying to a bank for a mortgage.

 

[m47dragon]

If the home and property are sound, that sounds like a good price. What size home? How old? How old is the roof, well, heating/cooling system? Does the basement leak? What about water and mineral rights? Are there any liens against it? What are the neighbors like? How far away from your place(s) of employment? What are the utility rates each month? How is it heated? Does it come with appliances? Are there any out buildings? What other large expenses might you foresee (new vehicles, additional education, medical problems, children, etc.)

My wife and I are a little above your income levels and have about 1/2 your mortgage. It's not a stretch for us, but I'll be glad when it's paid for. Remember that your family, and its needs, will change over the next 5-10 years. You have a lot of research to do and you need to establish a written budget.

Save your money, get 20% down or greater, and build an emergency fund. I've regretted not buying certain properties, but I have also regretted rushing into some of the debt I currently have because I did not prepare.

 

[Packermudgeon]

Queenof3 already mentioned property taxes, but I just want to add something to that.

What the owner pays now for property taxes is irrelevant. It may not be anything like you will pay. The property taxes are based on the assessed value and the mill rate. If the property hasn't been assessed in a while, you may have a rude awakening when they reassess the property when you buy it. You need to have an idea what the property will assess at, and the mill rate to estimate what you will pay.

 

[Lbox88]

First home loans(FHA) typically get you locked into lower fixed interest rates with lower down payment as long as the house is assessed as being livable with no problems/major repairs expected for at least 2 years.

There's also Rural Development(RD) loans which are made for backwoods low interest/low down payment.

Just thought I'd toss that in there since i just got my house 2 years ago.

The student loans won't count against you in a credit check for the size of a loan but a good banker will give you a reasonable expectation of what you should really take out since you will be paying on it though.

 

[Deadmeat99]

A $120k mortgage is going to stretch you.

Not really. The payment on a 30 year $120k mortgage would only be around $750 per month, which is only one week of his income. It's difficult to find rentals in the price range, so a mortgage would probably be a good deal.

 

[dcporlando]

Not really. The payment on a 30 year $120k mortgage would only be around $750 per month, which is only one week of his income. It's difficult to find rentals in the price range, so a mortgage would probably be a good deal.

That may be one week for the mortgage, but I bet the taxes, homeowners insurance, etc. are going to take it over $1k a month. Especially when there is no down payment. I am going to bet that it will be quite a bit more. Throw the student debt on top and no savings, I imagine it will be tight. Young married couples also tend to have kids at some point which will increase costs and take out part of her income for a while.

Just being honest, when I bought my house at roughly that price, I was making more than twice that and found sometimes that it was a stretch for us.

 

[patdaly]

First off, I don't think you are ready for this step, your income won't support that thing if one of any things happen, for instance, you are young, what happens when the blessed event comes? Kids get expensive fast, and she might not have income for quite a while, and even if she did, what will child care costs bring out of that 300 a week? You are talking about a 125 acre farm, which sounds like a dream, but let me tell you, that 125 acre farm starts costing the second you purchase it, fences, gravel, paint, mowing ( and no cheap MTD garden tractor, commercial stuff ).............

Answer a bunch of these good folks questions and we might be able to refine our answers a bit, but it don't look good to me.

One last thing, and this is a personal code of conduct, but one that was very important to me, I ONLY deal with a Banker that holds my note, not one that offers a lower interest rate and then sells my Mortgage to who knows where or how many times. Sorry, if I can't look the guy who I owe money to from across the desk, I don't borrow it. Yea, it costs me a tick more, but I drop that check off myself and get the receipt every month, and if there would ever be a problem, it is much harder for that guy to not work with you to straighten out the issues. I also have a backup bank that is local to refinance me if the original banker or bank defaults and sells the note.

Just something to think about.