Should I Buy A Home

by Heather from North Carolina USA

Hi Kate, Should I buy a home without significant income? My husband and I are hoping to be able to relocate soon. We both have good credit. Our concern is that he is currently unemployed, but enrolled in college. I do not make a lot of money at my job. However, we have decent savings. We have enough savings we could pay off a new home, but obviously we do not want to do that.


Heather continues... Is it possible that we could get approved for a mortgage based on our savings rather than our income? We plan to put down a 25 to 30 percent downpayment. Thanks, Heather

Kate Answers: Should I Buy A Home

***zz-portrait-left.shtml*** Dear Heather, I recommend not asking how can I get a mortgage but should I buy a home.

Conventional wisdom says buy a home before prices escalate and keep 6 months living expenses in reserve.

But taking into consideration a recession, it is realistic to doubt that real estate values are going up anytime soon. This takes the panic out of buying a house today.

When your husband graduates from college, what if there are no available jobs? How long would the remainder of your savings last with monthly house payments and no income?

Reserving two years living expenses would be prudent.

Think about this! The two of you are good savers. You've demonstrated that. But even a comfortable savings evaporates quickly for new graduates in search of jobs and simultaneously responsible for mortgage payments.

Once your husband is out of college and employed, buy a home. By keeping your savings available for living expenses until a job is secured, you won't risk over-extending yourself or becoming cash-poor.

Preserving good credit and avoiding bad credit should always be number one priority.

Click here to comment on this page. Or, if you still have questions about home buying, write me at Ask Kate where every question is a good question.

Best wishes,


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Comments for Should I Buy A Home.

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Retired and want to relocate
by: Anonymous

Would it be too risky to put a large amount of our savings down to purchase a home in hopes of selling ours? Retired and living comfortable on a limited income. $5900.

We own a home that is close to the same value ($440,000)as the new one we would like to buy.
We would be okay for a couple of years with a mortgage payment of around $1400. Thanks.

Hi, Kate here. Affordability should be your main consideration, even if the bank gives you the thumbs up for carrying 2 mortgages.

Study the real estate market where your current home is located. Is it robust or sluggish? Are you willing to lower the price of your home if you do not receive any offers the first month?

I'd also consider that by using a large amount of your savings for the down payment, it is not readily available in the event of an emergency until your home sells.

Best wishes, Kate

Continue to Save Additional Funds
by: Vikki

Dear Heather,

In today's market environment there are many things to consider before purchasing a new home. Although many potential buyers have the funds available in either savings or the equity they have in their present home, the home values today can be detrimental in the future of home prices.

I also agree with what Kate was trying to convey. Continue to place any additional funds into savings and when your husband graduates college and has obtained a steady job, only then would I recommend that you take any savings out to purchase a home.

Even at that point I would suggest that you do your homework in the area of your future home and any neighborhoods that are potential prospects. Such as the quantity of foreclosures, both past and present, this drives the home values down. The types of mortgages that are the best for you, since some appear to be a bargain on the front-end and are actually very costly to the homeowner over time.

Finally, if you are deadest about making a purchase in today's market, you can never have too much information. I would guard the savings account at all costs. That would be the last choice to use, in a purchase, even if you could find a lender willing to offer a mortgage before your spouse is gainfully employed.

Additionally, the interest you are earning on the savings account, more than likely is less than the savings and tax benefits you would be achieving in the purchase of a home.

However, I caution you to be very aware of all of the issues involved with homeownership and as Kate mentioned in her response your credit score and income are paramount in your purchasing ability, both now and in the future. One wrong step and you could be ruined for a very long time.

Remember, you don't know, what you don't know in today's real estate market. By all indications it will be several more years before the market turns, both in the housing market and with employment numbers.

Wishing You the Best of Luck!

Mortgage Approval Based on Savings Rather Than Income
by: Valerie Robinson,I.A.C.F.B.

The decision to buy a home and get a reputable mortgage is crucial and demanding. First, to address whether or not you should buy a home and use your savings instead of income -- typically your savings will be listed on your loan application anyway!

Second, a 25 to 30 percent down payment is in your favor and should help in the reduction of your mortgage payments. Such a large down payment can speed up the loan process, depending on both credit scores.

Third, if either spouse has part-time employment, that income can be used. If it's consistent for 2 or more years, then a lender might consider the savings and still grant the loan.

Fourth, do not be surprised if the lender asks for a greater down payment.

Finally, ask questions. Example: How much will your mortgage payment be if using your savings to qualify? Would doing so increase your down payment? Don't stop looking for answers. That's what your lender is there for! Take care and best success!
Valerie P. Robinson, I.A.C.F.B. 800-816-1046
U.S.Goldust International - 1020 Stratford Drive East, Bourbonnais, Illinois 60914

Want to contact Valerie Robinson? Call her or go to the directory for more information.

Savings In Place of Income
by: Virginia

I had this same situation come up in the past. Except one spouse was going back to school. So, the only way to do it was to set up a payment from the savings for three years for the amount needed to reach the proper DTI. Just an idea :)

Housing Payment Question
by: Charles Clark

How much are you paying for rent? Is that payment coming from only your income, or from family members helping you? If you can find a home where, with the down payment, your payments will be about the same, then I would suggest that you go for it. This won't be getting a loan with out income, but getting one where you can afford the payments from your current income. Then when your husband graduates and gets a job, you can have payments that are easily affordable, or if your home can be sold for what you paid for it, sell it and move up.
Charles Clark
Best Mortgage - 8453 South Rua Branco Drive, Sandy, UT 84093

Looking for Charles Clark? Call him or go to the directory for more information: List of Mortgage Companies in Utah

Should I Buy A Home
by: Akali Dennie

Hello Heather. My name is Akali Dennie and I am a Branch Manager of Freedom Mortgage. Kate's answer to you is very sound and should be followed. IF, you still would like to pursue a house once you relocate, AND your husband is still in college, I would suggest buying a basic, low cost starter home. Not your dream home but rather a smaller, more practical home until your husband finishes school and you can buy a much more suitable home. My suggestion would be a home under a $100,000 and go with an FHA adjustable where the rates are under 4 percent. Thanks for your question!
Akali Dennie 305-974-0330
North Star Lending - 17011 N Bay Road, Sunny Isles Beach, FL 33160

Want to contact Akali Dennie? Call or go to the directory for more information: List of Mortgage Companies in Florida

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