Can we afford this house?
My partner is looking to buy a house. He wants to put an offer in for $ 55,000 on a particular house, and is willing to pay up to $ 65,000. (house listed at $ 70,000. Bank owned, Michigan.)
He makes about $ 30,000 a year after taxes ($ 2,500 a month). He pays $ 150 a month for car insurance and cell phone bill. Other then that, no debt, and he currently lives with his parents. He has $ 19,000 saved up solely for purchasing a home (about $ 8,000 otherwise, 23 yrs old), and has a good credit score. He has been approved for a $ 100,000 mortgage. He wants to put down 20% (11k-13k), and he wants a 15 year mortgage, and hopes to secure an interest rate around 5.0%. This particular home’s taxes are about $ 2,500 a year (=$ 210 month). Neither of us have owned a home, but we are guessing we will pay around an additional $ 300 a month in utilities(?). Not to mention home insurances. We both live fairly frugally.
I am still in college, owe $ 3,000 in student loans ($ 50 a month min payment). I expect to accumulate another $ 10,000 : / of student debt in two years time. I make about $ 700 a month. I pull my own weight as far as personal expenses. I’m kind of unsure about my career, (business, but idk what) so I’m not going to bet on making much more than minimum wage for a couple years. I currently have little sayings due to college expenses (about $ 2,000), but live with my parents now and have no other bills.
His name will be on the title, with his parent’s co-signing. If they accept the offer, we hope to spend a few months painting and such. Eventually I will move in. (I know, not married, not engaged, but we have been together 6 years and are committed, and just want to wait till we are older to get married.) He is buying the home, and probably wouldn’t be in so enthusiastic and intent on doing so if the markets weren’t as buyer-friendly as they are now. He will pay the mortgage, taxes, etc, and I am hoping to help out on groceries and some furnishings, maybe a utility bill. The house was built in 1986, and has a new roof, water heater, AC,and furnace, and is updated with the exception of the kitchen. The windows are in good shape, and there is nothing we determined would need immediate repair per our inspection. We would hope to eventually remodel the kitchen, when we are financially stable. Also, we want to paint. As neither of us have furniture, we will need to eventually furnish the whole house, but will need to buy the basics to move in, as well as household items and appliances. So much to buy! We won’t be having kids any time soon.
Wow that was long. Do you think we can afford the house, the whole thing? If not, why, and what do you think we could afford? Thank you