That's what a buddy of mine does. If you play your cards right, there is great money in flipping houses. If you are paying X amount of money to rent at a house, do just like what your thinking, put that money towards your own house and get into something you can afford. Rather than paying rent and paying for someone else to own a house, put that money towards your own house.
You seem like you pretty much know the concepts... 6.9 does sound relatively high for a home loan. If you aren’t going to be there over 5 years, you can get an arm. You can get a 5 year adjustable rate that changes in 5 years, but it is always a lot lower than a fixed rate. (its still stretched out over 30 years) You can get an arm for @ 5% if not lower. Some are as low as 3.75-4.5%. That $100,000 loan is now only $536. That is a lot better than $725 or whatever it was. And if you can’t put 10k down, borrowing all $110,000 you’re still under $600 a month if you can get approved.
Nobody else suggested this but there is a way around pmi. PMI is a monthly insurance you have to pay until you own 20% of your home. Most people just pay the pmi which is $50-$100 a month. But that could be money that could go towards your mortgage payment, or it could be money kept in your pocket.
Say you put 10% down. Your loan to value ratio is 90/10. To avoid pmi you can get an 80% first and a 10% 2nd. That way you will in a way only be borrowing 80% and wont pay pmi on that loan. Do you understand? Your rates may be a little higher on your 2nd loan, the 10% 2nd, but the interest is tax deductible, pmi isn’t.
Lets use $100,000 as an example it’s easier than 110.
$100,000 house
(10%) $10,000 down
(80% first) $80,000
(10% second) $10,000
1st mortgage @ 5% interest = $430
2nd mortgage @6% interest = $55
Total mortgage - $485 (that is a lot smaller than the previous $536 because of the extra 10% you put down in the example)
I am not in real estate, the subject just interests me and I try to learn as much about it as I can. If you have any questions email me. I may not know the answer, but I can ask some people I know who are in real estate. Good luck man. You’re going in the right direction.
Shane

 

closer9,
You say the house in your example is $110,000 but, that is what you plugged into your payment formula, don't you plan to put anything down?

Anyway using the $110,000 figure, interest paid in the first 12 months would be about $7560. If you are in the 28% tax bracket, Uncle Sam would be picking up about $176 of your monthly house payment. In other words you could adjust your withholding tax to help with this much of the payment without pain on April 15th.
I don't know about the Arkansas state tax situation to determine benefit.

I also agree that 6.99 is out of line, you probably won't see that until after the election.

Put 20% down to avoid PMI if at all possible.
Even if you can't put down 20%, put as much down as you can.
Because you can end PMI as soon as:
Appreciation + Equity + percent down = 20% = no more getting raped.

 

Dude you are not better off renting. Save up some cash for a down payment, and have a little in the bank for emergency and you'll be fine. You will only be paying a little more than you are now and you'll be owning the home! Like Raul said after your break on owning the home with taxes, you'll see an extra $100-$175 on your pay check every month. That is money that you will not see if you are renting. So the way I look at it is that's $100 off your mortgage. There are a lot of advantages to owning a home. Tax benefits aren’t the only reason to get into a house. Your home can go up in value and you can build equity real fast. Where as renting won't do much for you. All you're doing is paying this house off for someone else man. I'm lucky I still live at home. I don’t pay rent, but I know I don't want to EVER pay anyone rent to live at a house. I'd much rather buy over rent any day. I know there are times when some people just can’t buy, and renting is best for them... But for the most part if you can, make the move man. Get a starter house, and fix it up. Give it a little TLC and then either refi or sell it and get a nicer house.
Again I am not an expert, I'm just trying to offer some advice.
Good luck man, Shane

 

Well, let me rephrase that. I may not be able to afford as much of a house right now, as I'd like to...

I know I'm better off owning no matter how you look at it. I just need to mull over the things you guys have mentioned, and then go sit down with a loan officer at my bank once I know everything I can...

I appreciate all the help, and if anyone has anymore suggestions, please keep them coming.

My girlfriend just called wanting to know if I'd called to go check out the house. We walked by there last night, but it's appointment only, for sale by owner... I doubt even if I'm approved, and can afford it that this particular house will still be available, but there's always others...

 

I hear ya man. I want to get my own house, but im still living at home. Good luck man.
Shane

 

I don't know what the situation is but, dual incomes usually get qualified for a higher loan amount.
It might be a good idea not to put the cart before the horse.

 

Not only that, but they can also pay the higher amount. I'm not sure where that stands right now. Sometimes I think I want her to be Mrs. Closer9, and other times I really enjoy my freedom, but one of these days I'll have to grow up, and commit... just not sure when...

 

Which is why I mention the cart before the horse.

"...well I would marry you and become Mrs Closer9 but,.... your house sucks"

 

mabee I'm way out in left field or something, but why not save up money and pay cash for the house?

 

Well, if you can tell me how, I'm all ears...

 

That is one of two big projects I have going right now.
The other one is a wooden ladder that goes all the way to the moon.
I don't know which I'll finish first.

 

A guy down the street from us paid cash for his house 4 years ago. About 450,000. He was arrested soon after, something about a Columbian connection, and ties to guys named Raoul, Habibi, or something like that.....
I'm on the Association Board, we are still trying to collect his dues. Mr. Big Bucks has no checking account at the state pen.

 

PhillipSVT,
I thought of a TV commericial about credit cards when I read that post.
Young couple standing on a moonlite pier and the guy promises to caome back to her, "I'll use my frequent flier miles" he says.

They are both real old when he comes back and she pushes him in the water.
He gets in a cab and the cabbie asks "What's in your wallet?"

"Don't ask." he says.

 

LMFAO

 

guess thats how the world thinks. The people that I know have either payed for the house when they built or bought the house or owe an awfull lot on the house. guess it depends on how you were raised and everything.........