- Current Rent: 710/mo or roughly 20% of my 3700 salary take-home pay.
- Wife is currently in school and will graduate in two years, at which point she will likely be making a teacher's salary. Currently does babysitting and other jobs to contribute, which I don't take into account as "guaranteed monthly income" to be on the safe side.
- Current lease is up in 4 months (mid-February).
- I'm not planning on moving for at least 5 years.
More on the new house:
We found a home that is recently renovated (attempted flip) that we love. This would be our first home purchase. The house is listed at $85,000. We currently have enough for a 10% down payment (we could put more, but don't want to use ALL our savings (unless that's for some reason a good idea).
For a 15 year mortgage and 10% down payment, zillow.com gives these options:
30 Year Fixed: 4.24% $376 /mo
15 Year Fixed 3.76% $557 /mo
5/1 ARM: 3.07% $325 /mo
It seems we're qualified for an FHA loan, but I'm not sure what these give us, as I haven't researched them.
My question is: Is it a financially sound move to become homeowners at this point given our background? I'm worried about not having a 20% down payment, and would rather save it up. However, on the plus side, the monthly payment would likely be $200 less/mo with this house vs our current rent. On a 30 year mortgage it would be almost $3-400 less. This makes me think that I could use the difference to pay directly toward the principal each month. Is my logic sound? Smart move, even with the risk of breaking/paying out a lease (which we could do)? or should we continute to spend money on rent while trying to save money for the 20% down payment?