Expert: Jessica Bryan - 4/12/2004

Question
Jessica,

What advice do you have for a soon to be college graduate who is going to work full-time with a company he has worked for as an Intern for almost a year.  I cringe at the idea of having to rent and virtually throw money away.  I would like to buy a house, my research suggests an FHA loan (especially since like most students I will be low on cash in hand leaving school, although I will have very little debt).  If it makes a difference in your response, my monthly debt payments per month would only be between $50 - $100 considering I receive a company vehicle.  Please give me insight into what options I may have that you are aware of as a first time buyer with limited down payment availibility, and if my goal of purchasing a house out of college can become a reality.

Thank you,
Jeremy Reisinger

Answer
Dear Jeremy;
I agree that renting is just throwing money away and one should only do it under the most dire circumstances.  The first thing you should do is visit a mortgage lender and find out  what kind of mortgage you can afford.  This is based on your income and debt ratio.  It also depends upon the interest rate that you can get.  The higher the loan ratio (such as 97%) the higher the interest rate.  Also, if your credit rating is a good one you will get a better loan.  This is something you can talk to a lender about and explore the possibilities. The lender will then calculate the highest price to pay for a home and still qualify for a loan.  My advice to you is to find a REALTOR and begin to look for a home once you obtain this information. However, try to look below the maximum you can afford to allow for a small cushion and unexpected expenses.  This will undoubtedly not be your last home so the most important things to focus on are affordability and resale potential.  Buy a home that will appreciate in value and sell quickly.  (Your agent will help advise you on this.)
Good luck and happy home hunting.
Sincerely,
Jessica Bryan
House to Home Realty Services