For 24 years we have been renting homes. Apartments, houses, a bungalow in the center of Africa. If we'd bought a house early in marriage we'd have it paid in complete by now. We had a different course than most, though. We planned to live in Africa as missionaries so buying a house wasn't in the picture. We did go to Africa, but it was only for a year. So, at ages 31 and 39 we started over with a new baby and no idea what we'd be doing. That was 17 years ago.
We're in a situation now which will likely force us to move. The house we are renting is being renovated to sell. We will be offered the option to buy the house or he could possibly allow us to lease, but the rent will be higher. Most likely we won't be able to afford to buy this one, so we are looking at other houses and learning a lot about loans.
Due to financial issues, we cannot get a conventional loan until October of 2014. Also we don't have money for a 20% down payment. We can likely qualify for an FHA loan, but it has to be manually underwritten so we can't get prequalified. That requires 3.5% down, which we've been offered as a gift.
We've always heard mortgage is cheaper than rent. That's true. However, mortgage isn't the only monthly payment with a loan. There's interest, homeowner's insurance, and taxes. Then 1.75% up front, then 1.25% monthly. That adds up fast when you're talking about over $100,000. In fact, it can add up to $200 a month. That is the catch for us right now.
We just learned today that with a USDA loan (for which we should also qualify) there is no MIP/PMI. There's also nothing down with a USDA. There will be some expenses at closing, but not much. The only thing with a USDA is it has to be in certain areas & NOT in city limits. So, we'd have to find something in our price range/size that is outside of city limits but not TOO far for driving to work/churh/homeschool stuff we do with others. We could get more house without that MIP to contend with and taxes outside of city limits are lower.
If the house we are in was low enough, we could buy this. Because it is owned by an investment company, we wouldn't even need to get a loan, but could do in house financing. I am just not sure how that would work as far as the APR.
A program we'd like to use for a loan is NACA (www.naca.com). They provide a 0 down, 1% below standard APR loan with no MIP/PMI. They are "character based" not "credit based" so they don't care if your credit score is low. They walk you through the process. You have to show that you can pay your bills on time, pay your rent on time, and keep your bank account above 0 for 12 months, or 24 months if you've filed bankruptcy before they will loan you money. They want you to be successful at owning a home & not get into something you can't pay. As the contractor told me today, with the investment company, if you can't pay your loan, they just kick you out & they resell the house. It's not about the people. Neither is FHA or USDA. Well, USDA is probably more so b/c they want to build up rural areas. Since we did file bankruptcy several years ago and are only one year out, we aren't able to do the NACA right now. If we do buy a house we could possibly consider refinancing through them.
Of course, the last option is to find another house to lease. Then we are back to square one: Rent usually costs more than mortgage.
We've lived in a bungalow in the center of Africa. We've lived in apartments, in old homes, and in small homes. We aren't looking for a big house to feel like we've "made it" or to feel pretentious. We do want space for Phil to have a computer work area so he can work on other computers at home and an area for me to sew, especially to quilt, so that I can earn money to help with expenses but still homeschool. We'd like a kitchen with a good space for me to cook since we have special dietary needs. We'd like kitchen storage for my Pampered Chef products that I use for us and for shows. We'd like the girls to each have a room of their own so we can move things that we have in the living room (and craft room) into their rooms. I'd love for Bethany to develop her artsy skills and have a space to work with that. Natalie would just like a quiet space of her own. Of course, a room of your own isn't a necessity in life. It would just be nice after spending almost 15 years in the same tiny spaces. If we stay in this house I will lose my sewing room, but with the girls taking their things into their rooms and getting rid of a LOT of unneeded items, I think we could make it work. Eventually I would want to close in part of the garage or put a little shed in the backyard that I could use for sewing (with an air conditioner).
Ultimately, we know that God will put us where He wants us. We know He will provide the finances we need. We don't want to presume He will provide for us to have a house that costs more than we can afford, though, and want to be good stewards. He has promised to provide for our needs. He has not promised me a 4 bedroom home with a pool in the backyard and a jacuzzi tub!
So, there you have it. After a year full of cancer and surgeries, we now get to figure out where to live. Life is never dull! Pray that we will make wise decisions and not get overwhelmed in looking at homes and figuring out costs. Thank you!