Sanity check: loans and renting vs buying
January 7, 2013 11:01 AM Subscribe
So I'm looking to move from SF to Seattle (in part to save money) - can I get a loan and buy a place? Would that make sense?
So I'm thinking of moving to Seattle from San Francisco - a big reason is to save money and pay down debt (my salary will remain the same). I'll be able to accomplish that just from lower rent and income taxes... and then I realized that mortgages on decent enough condos would actually cost less than rent at a lot of places I'm looking.
But I have a lot of debt and know nothing about getting a home loan. Before I get to the point of actually applying for loans, I just want a sanity check. I'm looking at FHA loans and it appears I should be eligible, but I have a lot of debt (in absolute terms, but I still come in under their ratios)
Income: $93k (81k base, 12k in annual bonus), will have been at the company for about 2 years
Debt: About $75k in student loans, $25k in credit cards - about $800/mo in payments (my goal for the next 15 months is to pay off the CC portion entirely)
Credit score: 690s or so - zero late payments, missed payments, or any other negative marks (except, as you can see, overall debt load and high usage on the CCs)
I'm seeing places I'd like for $120-150k, or about $800/mo for a 30 year FHA loan with a 3.5% downpayment with taxes and insurance included.
That gives me a mortgage to gross monthly income ratio of about 12% and 24% for total debt (that's ignoring my bonus, just the $6750 in gross income).
So it kinda seems like I should be able to get a loan without too much hassle, but I really have no idea if the total debt load and high utilization of my revolving debt will throw a wrench into it. Any guidance, experience, or resources would be helpful!
Now, assuming it IS possible... are there any major downsides I'm not thinking of? Obviously there would be maintenance and any condo fees, but with tax savings I'm pretty sure I'll at least save a couple hundred a month over renting.