Can we afford our first home?

My fiancee and I would love to buy a starter home for $180,000. I am currently working as a teacher, bringing home $2700/mth. My fiancee will graduate from grad school in March and will then begin working in the public school system as a substitute teacher until the fall, when he will work full time. Our income will jump to about $5,000 in the spring and $5,400 in the fall. Currently, neither of us have much to speak of in savings, but my fiancee has about $30,000 in stocks that we're thinking we can liquidate for a down payment on a home. Right now, we are spending about $1900/mth., including rent and utilities. Neither of us have any credit card debt or student loans. We are planning to help my parents by spending about $5,000 on our wedding in July. We'd like to move to a new home in the spring, before the wedding. ANy advice you can offer would be so helpful! Thanks!

That sounds like a lot of home for the amount of income you mention. You can figure on about $1800/month mortgage (with taxes and home insurance included), not to mention utilities/upkeep. That sounds like over 25% of your combined takehome pay, not to mention the not-so good mention of liquidating stocks in today's market. That $30k could very well be worth $40k+ should the bulls come back to town.

The no debt factor is good, but the no savings factor is not.

My vote is to wait until you can afford a down payment without taking the stock loss and you and your fiancee have a higher and more stable income. Start saving now and that goal could come sooner than you think. Plus, the credit market could bounce back in that timeframe. Bonus!

Best of luck!

Dingo

My first piece of advice is to NOT buy a house until you are actually married. A lot can happen between now and then. There are legal protections for spouses that do not exist for fiances.

The second bit of advice is to casually (don't let them pull your credit!) talk to a mortgage lender about the down payment requirements. A lot of lenders have raised the down payment to 20% and 30%, in which case that $30k in stocks won't do. I'd also check the balance on that stock account and make sure it's STILL $30k!

The last bit of advice is to consider the market in your area. Is $180k actually a starter home in your area? If not, consider a smaller -- and cheaper -- home. No one needs to start out right away with the granite countertops and jacuzzi. If $180k truly is the acceptable bottom in your area, then you will simply need to save more. Also, pull your own credit reports and make sure there are no surprises there -- and if there are, work on clearing them up.