Would the both of you be willing to rent a house for a while? That’ll give you the advantages of renting without being in an apartment.
I hate to be this blunt to an engaged couple but some things you are saying are setting off alarm bells for me. First, when you two get married, your debt is his debt. You two need to be on the same page and work together in your finances or you are headed for a heap of fights. I have been there, but in my case it was my husband with all the debt. We BOTH had to work on a plan to get it paid off.
Second, what you 2 do with your money as a married couple is none of your in-laws’ business. If they have a hissy fit that your husband is paying off your debt too bad for them. Actually they never need to know about it, and if your husband is making financial decisions based on what his parents will think, that is not a good sign of things to come. You two need to make decisions based on what is best for you.
Third, please do not give in to the idea that renting is throwing money away. If you buy a house you will find plenty of things to throw money at, and if you buy too much house you are going to be in for a rough few years, something you do not need as newlyweds. Money fights are the biggest cause of divorce, and guess what is another big cause…in-laws. It sounds like you potentially have both of them staring at you. Please reconsider jumping into a house unless you know you can afford it. Also look at adding taxes and insurance and maintenance to your monthly payment. I would say 1/3 of take home is a little too high, 1/4 is safer. Houses can be money pits as well. At least pay off your credit cards first and the car, with only a student loan for debt you will be in a better position to buy a better house if you only wait even one year. A house can be a blessing and a source of pride but it can also be a curse if you can’t afford it.
Good luck to you. You and your fiance need to sit down and have a real talk about what you both want.
This is all most excellent advice.
I have a quite hefty income, no debts, and I recently bought a house - and I am finding it a bit of a larger financial committment than I bargained for.
Not so much the mortgage–that is easy to plan for. It is all the other expenses which you never guessed would be so high.
One important thing to consider is your expectations of the future. Do you see your income rising much? Where are you in your career? Do you want to start a family soon (perhaps diminishing your earning power while raising expenses)?
If you see your income rising fairly quickly, then it makes sense to buy as much house as you can. If not, you need to consider something more affordable. I am on the side of those who say to wait a while, consolidate your debt & save.
Owning is expensive. With your combined takehome, I’m not suprised that they qualified you for 150K, but I wouldn’t buy for more than 135K if I were you. I was approved for my mortgage, I qualified for 125K and bought for 115K. In the meantime, I got a better job with a slightly higher paycheck. 6 months into homeownership, in retrospect, I would have had little to no ‘fun money’ if not for the new job. Here’s my advise: Take your takehome pay for the year, subtract the student loan payment12, subtract the car payment12, subtract the cell phone bill*12, subtract the utility bill (ask current homeowners in the area what they pay and round up)*12, subtract property taxes, Call you insurance company for an insurance estimate, etc. Always round up before you multiply to build in a little flexability. See what you have left, consider how much money you want to spend on hobbies, vacations, and eating. You and your future husband’s food bill should be about the same as you and your mom’s, so ask Mom what she is paying. Finally, you should always have at least 5k on hand and some additional credit for emergency home repair. Another thing to consider is future expenditures, like a second car or repairing/replacing a car that is older. A new lawn mower, or snowblower.
I looked at the numbers and decided that I could squeeze it out and may have to sacrafice some hobbies or get a part time job if things get out of hand. Nobody here can tell you what you are willing to risk and what you are willing to sacrafice, but it sounds to me like you may be better off to rent a small place for a year or two and get your spending under control. If your SO won’t go for that, try thinking condos, that was the route I went. It helps control some of the costs of utilities, lawn care, leaking roofs, etc. and still gets you equity in a home.
If you really mean this, you are moving way too fast with the most expensive and most complicated monetary life decision you will ever make. You haven’t done your homework, your ducks are all not in a row and you’ve been that close to making an offer?
Ding! Ding! Ding!
Stop your house-hunting and get your financial lives in order. Nitty gritty specifics about your debts, your incomes, what you can honestly afford, what sort of loans you can pre-qualify, yadda, yadda. The both of you need need to be on the same wavelength.
Is it really? If you don’t have your financial lives figured out, DoperGuy is going on something that doesn’t hold water. Yes, if you’ve done the math and have your financial lives already in order, paying rent can be crap. But you already admit you are both not even there yet.
Slow down and do your homework. And listen to your fellow Dopers.
I suggest that you run, do not walk, to get a copy of All Your Worth, and read it cover to cover before you make an offer on anything. Make your fiance read it, too.
Renting is not pouring money down a rathole. You didn’t get “nothing” for it, you got a place to live. In most parts of the country nowadays, your rent is substantially cheaper than the mortgage would be on the same place, and you have not locked yourself into a commitment that you can’t get out of easily. Rent for a year or two, and take the difference between your rent and what you would have paid on a mortgage to add to your savings. And do pay off that credit card bill. If you don’t want to use “his” money to do it before you get married, that’s OK, but do it as soon as your finances are mingled.
Work up a budget for yourself. That’s the only way to be sure that you have enough money to get by. These percentages are good rules of thumb, but they do not take into account your individual circumstance.
I use a spreadsheet to do this, so I can update on the fly. Just list your monthly income on the top, your fixed expenses one by one underneath and see what’s left over. Add to that more variable expenses that you WILL spend money on, and see if there’s anything left over at all. There are many personal finance books out there that can help you categorize your expenses. Make sure to have a few hundred each month for house specific expenses.
I’d also say you need more saved up. You’ll pay thousands in closing costs and you need money to move, buy furniture, who knows what else?
Just bought my first house last week so I thought I would toss in my two cents. Not that I disagree entirely with some of the advice here (i.e. paying off credit card debt, etc.) but there seems to be a lot of doom-n-gloom.
My first thought was - get a GOOD agent. A good agent should talk you through all the process, they should MANAGE that process for you, helping you get through the many, many steps in the buying process. My agent provided me a timeline when we got into contract with exact dates (based upon contract terms) that specific events must be complete by. He managed that process, keeping me moving forward on items by scheduling inspections, contractor appointments, etc., and helping me keep track of everything’s due dates. He met with me during inspections and with contractors to get estimates for work, etc. when I could not be there. This was my first house and I was confused, terrified, nervous, and absolutely clueless on what needed to happen to buy a home. My agent held my hand, was my emotional counselor at times when I freaked out over things, and in the end got me my dream house!
Your mortgage officer should be able to assist with making you comfortable with the loan process and what the expected costs are. Be honest with them, tell them when you don’t understand something and make them explain it again if you didn’t understand. This is a HUGE purchase, make the loan officer work until you are comfortable. Don’t be intimidated out of asking what you think is a “dumb question”. Back to your agent here, if they are experienced then they have sold tons of homes with many different lenders and should be able to help guide you and work WITH your mortgage officer to make this as painless as possible. If your agent isn’t talking to your mortgage officer and vice-versa - you need a better agent. They should be a team, working for YOU.
As for costs of buying, this I think also goes to a good agent and is going to depend upon the housing market. Obviously an over-heated market in your area makes some of this more difficult but this is where a good agent is criticial. My own personal experience was that I bought with no out of pocket expenses. My agent negotiated in the contract that the seller pays up to $X,XXX.XX dollars towards closing costs, inspection fees, structural engineer report, application fees, etc., etc., etc. So I got closing costs paid and all the sundry inspections, etc., reimbursed to me at closing. That alone saved me at least $3,000.00. I also negotiated, through my agent, for the seller to fix and/or pay cash for items out of the home inspection that I felt were important. Obviously some give & take here, especially when buying a 100 year old home. My point is, there are a lot of little expenses to deal with just to get to closing but it is far easier to put that money out knowing you’re getting it back when you close.
Last bit of advice, go for a standard 30-year fixed mortgage. The ARMs, etc., that have been so popular are now starting to really hurt people. One the rates aren’t all that great anymore. More importantly, so many bought McMansions with “creative financing” and the forclosure rate is jumping now as a result. Early buyers on those programs are starting to hit the the now higher interest rate part of their mortgage and finding they just can’t afford what they bought.
Relax and try to enjoy the process. It is hard b/c it is stressful, it is emotional, it is frustrating, it is intimidating, it can happen very fast, and the thought of taking on that much debt can be very frightening and overwhelming. Try to keep an even keel as much as possible, especially during the inspection. The inspector may find something but don’t freak until you get a professional estimate on what it costs - not all problems are as BIG problems as they seem when first discovered.
Best of luck and… repeat after me… get a good agent!. 
All I can say is that the housing market where you were purchasing simply cannot have been all that hot - when I bought my place (sadly at the very height of a seller’s market late last year), there was no way I would have had the luxury of demanding terms, getting all of the ducks in a row, etc. Not when houses were being sold by offer-presentation auction in bidding wars, with all of the dirty dealings and adrenaline-fueled insanity that implies.
Malthus - I agree which is why I pointed out a factor in the ability to do so is how hot the market in that particular area is. Around here it can fluctuate depending upon the area of town. If I tried that in some of the more established / exclusive “older” neighborhoods I would not have had the same success. I specifically bought in an old neighborhood that is still in transition, definitely becoming more in demand with the trend towards urban living, but warming up vs. hot. Interestingly enough, the seller positioned themselves very much as if they were selling in an over-heated market in a more exclusive neighborhood. Had to shake them up with a little reality - they didn’t have multiple bidders and they were NOT going to sell “as is” so let’s deal.
Regardless of the market, the point still stands about a GOOD agent. The buyer needs someone working for them, not a glorified tour-director of available houses. Anyone can do that.
Michael
Oh, I agree totally on that point. I even have a little story to illustrate the issue.
When we bought, it was in a good area, but the house itself needed work - it wasn’t tarted up for sale much. The sellers had miscalculated and had an initial offer that was too high, and no offers showed up on offer presentation day. So they were forced to bring the price down.
At that point, our agent got us involved. We saw the place that very day; we put our offer in that night. The sellers’ agent said that they would accept offers the next day, because “they were out of town”.
Well, our agent warned us that what the seller’s agent was up to, was phoning everyone who saw the place before and showed interest - in order to drum up other bids.
So we were prepared. We in fact had several offers - to present a higher one, should another bidder show up; and sure enough, one did.
My $.02 :
First, make your fiancee understand that mortgage interest is just as much of a hole as rent is. Because of income tax stuff, you do basically get about 1/4 of the interest back (but probably less, given you’re not itemizing now). But otherwise, you’re not getting the interest back. It’s just like rent: you’re paying money to someone else so you can have a place to live.
You’re also paying principal, which you DO get back when you sell the house, but you could have just as easily invested that money in a good mutual fund or some other way of growing the money.
It’s not only possible but often the case that rents are low enough compared to house prices that renting is cheaper than buying, when you account for how else you could invest the downpayment and principal payments. I bought my place a few years ago, and it was not a completely clear call then. Now, I’d just rent and invest my money somewhere else – housing prices are just too much higher than rents in my neighborhood right now.
Second, pay off the credit card debt as soon as you can. The student loans are probably not real high interest, and you can deduct some of that interest from income taxes, so the effective interest rate is probably around 5%. Not great, and worth paying off, but not critical. The credit card debt on the other hand is financial suicide.
In fact, my blunt advice is to use your savings to pay off the credit card TODAY. ASAP, without letting another cent of interest pile up. Then rent an apartment while ya’ll get the rest of your financial ducks in a row (and save more money for a downpayment. The more downpayment you have, the lower the interest rate you’ll pay and the better off you’ll be).
It is also very important to buy in a good neighborhood. If the worst happens, you want to be able to resell your house without difficulty or loss. So do your homework-don’t buy the best house in the worst neighborhood-you will pay dearly for that decision.