I want this! But where do I start?

Question

My wife and I have been renters for 14 years, despite above average income. We want to get our first house together. What can we do to get started? We both work 2 jobs, just to keep in the same place, not moving forward.

I've spent the past 2 years slowly increasing my credit score from high 500s to low 700. Paying off CC's, no money saved for down payment at this time.

Jeremiah Mon · Answer

@Randy Thibodeaux

Whats your end goal? Financial freedom?

- Then you need to either increase the income from your assets (passive income) or decrease your liability/expenses.

- the goal is to have that monthly passive income be greater than your monthly expenses

What kind of lifestyle do you want to live?

- do you want a big house, nice car, take a ton of vacations? If so, you set the bar pretty high to get that passive income to fund your lifestyle/purpose.

- do you want a simple lifestyle, with minimal expenses? Then it will probably be much quicker to obtain that purpose and freedom!

What do you choose?

- i highly recommend reading this book: “Secrets of the Millionaire Mind” by T. Harv Eker

- i can go on and on, but by spending $20 something dollars on this fantastic book, you’ll learn so much more than what I can post in here.

Good luck, and feel free to contact me if you have any questions or concerns or just chat!

Kristin Caras · Answer

@Randy Thibodeaux I would consider house hacking (buy and live in a multifamily property, rent out the other units to live for either free or a highly discounted rate with the other tenants paying the mortgage for you). As others have said, you can use an FHA loan to put just 3.5% down.  Also - this website is a huge resource for education. Listen to all of the BiggerPockets Real Estate and the Money podcast and read some of the books: The Book on Investing in Real Estate with No and Low Money Down, and the two Rental Property books by Brandon Turner. If you can spend a few months diving in with books and podcasts you'll get a great education which will help you as you begin your real estate journey. Good luck!

Craig Jeppesen · Answer

I wouldn’t spend more than 25% of your income on rent or a mortgage pmt. math is still math. It doesn’t matter if you spend all your money on rent vs other things.  You still are not saving. You have to save part of your income every month for investing and a home down payment. If you don’t do this you will never build wealth. don’t use rent as an excuse. Also when you go full time don’t change your standard of living. This might be the extra boost you need. Good luck.

Randy Thibodeaux · Answer

I'm in the process of completing a teaching credential and will have FT work soon, was thinking maybe I could get help with first time mortgage being a teacher?

Randy Thibodeaux · Answer

I'm a substitute teacher and a part time bell boy at a hotel. My rent is $1,785. If I have a spending problem, its cause I'm spending too much on rent.

Wife teaches college FT, salary $58k and side hustles an extra $20k

Jonathan Bombaci · Answer

You don’t need much for a down payment as a first time home buyer. You could do FHA for 3.5% down and try to get the seller to pay your closing costs. Ideally you’ll find a house where your monthly payment will be less than what your rent is.

But I agree with @Craig Jeppesen you seem to have a spending problem. I recommend tracking your spending for a few months. You’ll be surprised to find out where all your money is going. Use Mint or personal capital to easily add all your accounts and track your spending all on one app.

Craig Jeppesen · Answer

Sounds like you are spending all your income. You need to set a budget to live within your means so you can save money for a house and investing.

CJ M. · Answer

@Randy Thibodeaux

First house as a rental? Or your personal residence?

Either way, talk to whatever bank you have your accounts with and share what your vision is. They will gather all your information and give you some guidance from a lending standpoint.