I am new to this forum, spent several hours on it, and cannot go to bed because I am so addicted to it. I have been trying to rebuild my credit by myself since Fall of last year. I think I am doing pretty okay since it was in the high 500s and now it is in the mid 600s. Credit Sesame put me at 700 today if that means anything at all.
Actually these were today's scores (I'm working on FICO):
Equifax - 656
Experian - 693
Equifax - 650
TransUnion - 672
Experian - 700
Anyway, here is my situation:
1) I am on disability and have been since 2010. I have an income of 39k per year on disability. Half comes from SSDI. Half comes from Long Term which expires in September 2013. I believe by that time I would be back at work (or work and school) full time. The Long Term is temporary disability.
2) My rent is really cheap right now because I live in transitional housing.
3) I have 180k in student loans deferred due to disability hardship. Not in repayment. In good standing. Should not be accruing interest since they are hardship deferred.
4) I have two low limit secured credit cards (Orchard Bank and Capital One)
5) I am to move out soon of transitional housing to my own apartment. I have been looking at apartments.
I cannot decide whether to attempt to buy something like a condo or rent. I have been looking at apartments and the rent is like 600-1000 per month. I just keep thinking: why do I want to pay someone else 600-1000 per month, when I can buy a condo for like 60k? I know that then I would be responsible for repairs, etc., I am just wondering if it is worth renting or if it is better to buy. I am also wondering if, with my credit and large student loan debt, and the fact that my income is solely from disability, if it is even to buy. I really have no idea. I don't have family so I don't even know who to ask about these things so I am grateful to have stumbled across this site.
I am also not sure if I want to stay in this area, but I am pretty sure I want to stay here for a little while. I just hate the thought of "throwing away" money to renting. But then I do not know if it is even possible for me to buy.
I was looking into buying FHA which is how I came upon this site. I do not know much about FHA or HUD housing. I know some people that bought their first home as a HUD home but I do not know much else.
I do not have that much of a down payment and I understand that with HUD you do not need that much of a down payment. But then I do not know if I qualify for a mortgage. If I go to see if I qualify for a mortgage, would that hurt my credit, etc. etc. I do not even want to apply for an apartment fearing the inquiry on my credit report. However, yes I did read the many threads about apartments pulling credit, etc. :-)
Anyway, this has been on my mind for a couple of months now and I just keep researching online but I would really like any input that anyone has at all about this.
In order to use your income to purchase a home, you have to prove that it will continue for at least 3 more years. It sounds like that may not be possible. Renting is likely your best option until you're back to work.
Since your income is only guaranteed through 2013, I doubt you'll qualify for a mortgage. You would need to prove continuance of your income, and since the disability will only continue for another year, you wouldn't be able to meet the requirement.
IMO, the stigma of renting as "throwing away money" is partially responsible for the housing crisis. So many people who weren't ready to buy homes, bought, simply because they were told that they were wasting money by not buying. There's nothing wrong with renting if your financial position doesn't allow you to take on a mortgage. Also, renting isn't throwing away money- you do get something in return, which is a roof over your head. Now, the condos in your area may be $60K, but it's likely that your monthly HOA fee will be as much, or more than, your PITI. Also, if the HOA was to impose a special assessment to take care of repairs, boost reserves, etc, would you be able to pay?
You will have a much better shot at buying if you wait until you return to work, save some $ and then apply. I know that's probably not what you wanted to hear, but buying in your current situation doesn't seem realistic.
Actually your responses are extremely helpful. I have just been looking for an answer and basically had no one to ask. So I REALLY appreciate it. I am new to rebuilding my credit and trying to establish financial security after being sick for many years. It feels good to get my feet on the ground. I just wanted to know my options instead of being all over the place! So my apartment search resumes! :-)
I think you are wise: work and save money and then buy when I am more settled. I REALLY REALLY appreciate it.