Ideal/Affordable Mortgage (Sandy Springs, Dunwoody, Powder Springs: apartment, foreclosure, rent)
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First of all, I want to thank you so much for your comments on my earlier thread. I have decided my areas of search and now am having trouble with what I can afford and how much should I be setting away for a mortgage payment. Here are some of the details ...
1) I make about 95K-100K/yr (Contract position. Take home is 6K+/month after taxes/insurance).
2) Wife makes about 60K/yr (This is her first job. Does not have high credit score. May not work for ever).
3) Willing to put 20% down ( Upto 50K-55K).
4) We are from India. We do not have green card. I have been here for last 8 ys and my wife for 2+ yrs.
5) Location in order of preference for SFH. Both take marta to work ( Dunwoody, Sandy Springs, Brookhaven, Vinings, Smryna, Powder Springs, Area behind georgia tech - not sure what it is called)
6) No kids but planning for near term and so are not much worried about school district ( atleast for the next 6 years).
With the above in mind ...
1) Can I aim for a 300K house?
2) How easy/difficult it is for a person like me to get approved for a loan of 300K magnitude?
3) I have read pros/cons going with big banks. With the above in mind, which ones (big banks or small community banks) should I shop with?
4) Ideally I want lesser interest rate. But with a total income of 10K per month, how much should we put aside for mortgage?
5) I figured since my wife wont be working for ever ( planning kids) so it is better to go for a long term loan (30 yr). We can make larger payments as long as she is working. Is this a correct approach?
I am gonna add another final twist to all of this. We plan to be here in United states for the next 5-6 years and leave the country for good. So I would most probably be selling the house before I completly pay it off. We live in a modest condos (rent. 2 bd, 2 bath - 1020 sft) and we saw yesterday a condo in our complex selling for only 65K (foreclosure), We know that 2 yrs before they were sold for 130K. Should I jump on it?
IMO, if you plan to leave in 5-6 years, I'd just find a house you like and rent it. With the market still in a state of flux, there's no telling what's going to happen in the next 5 years- even if things start to turn around, it's possible that you'd end up selling the house for only slightly more than you paid for it, and you'd have to pay commissions/closing costs out of any profits. Add in the costs of maintenance, repairs, etc., that would be taken care of by your landlord rather than coming out of your pocket, and you're probably further ahead by renting, plus your $50k remains liquid and can earn you money in an investment.
Now, the $65k condo might be worth looking at, but again, if the market doesn't correct in a big way, you may still not do all that well on the sale- it's impossible to say.
As a mortgage broker, I would suggest getting recommendations from people you know as far as which banks to pursue. There's nothing wrong with either a big bank (I prefer Wells Fargo for retail) or a small brokerage like myself. You just have to find someone who knows what they are doing (a little tougher to find at a big bank since they don't get paid that much) and willing to work hard on your file.
I agree with Bob- if you aren't planning on being here in 5-6 years then you have to think about your ability to sell the home. The location of the house becomes most critical in my opinion. Don't buy for your convenience...buy for your ability to sell it when the time comes.
IMO, if you plan to leave in 5-6 years, I'd just find a house you like and rent it. With the market still in a state of flux, there's no telling what's going to happen in the next 5 years.
There is always some risk in buying a house when you know you will only be in it for a limited time, but I think 5-6 years is sufficient to time where it pays to consider buying. Sure, the market could remain in the dumps it is in now. But it is just as possible that the OP could get a bargain price right now in this depressed market and then end up getting some nice appreciation in a couple of years after we emerge (hopefully) from the stagnant housing market. Furthermore, since the OP seems to contemplate a fixed rate loan and paying down principal, this should further insulate them from having financial hardships when the time comes to sell.
As for whether the OP can afford a $300k house on that income, I think $300k would be a prudent amount to spend on a house. The people who get into trouble are those who get mortgages (with interest only loans) at 5 or 6 times their gross income.
This is exactly what I am hoping for. Now that the prices are so low, this is the only time we can afford to purchase a home. With kids later on and single income it will become difficult for later years. With 20% downpay and two incomes we are hoping to sail through easily atleast for the next 2 years. Anyways, I am not hoping for a huge appreciation. Also all the locations I mentioned are some what established locations. I dont want high square footage. When I get a realtor, I would make sure that ease of selling is the number one factor.
Furthermore, since the OP seems to contemplate a fixed rate loan and paying down principal, this should further insulate them from having financial hardships when the time comes to sell.
Pardon my ignorance here, when you say prinicipal are you referring to 20% downpay? If that is the case, how would it affect in selling a home? I dont understand that statement.
Quote:
Originally Posted by goozer
There is always some risk in buying a house when you know you will only be in it for a limited time, but I think 5-6 years is sufficient to time where it pays to consider buying. Sure, the market could remain in the dumps it is in now. But it is just as possible that the OP could get a bargain price right now in this depressed market and then end up getting some nice appreciation in a couple of years after we emerge (hopefully) from the stagnant housing market. Furthermore, since the OP seems to contemplate a fixed rate loan and paying down principal, this should further insulate them from having financial hardships when the time comes to sell.
As for whether the OP can afford a $300k house on that income, I think $300k would be a prudent amount to spend on a house. The people who get into trouble are those who get mortgages (with interest only loans) at 5 or 6 times their gross income.
In terms of what you should spend on a home- it really depends on your lifestyle and expenses. Do you like to go out to eat? Do you fly back to India often or take other nice vacations? Do you have high car payments or student loans? etc etc
The answers to these questions should guide you on how much to spend. Some people are willing to have a smaller house so they can spend more on vacations, cars, etc. Others would rather have a more luxurious house, and be willing to sacrifice on other things.
I would recommend you sit down with your wife and create a budget. Think about your monthly expenses and all your future large expenses. Then you'll be in a better situation to formulate your housing allowance budget. My wife and I did this before purchasing our first townhouse a few months ago.
65K condo is very appealing because right now I am paying $900/mo on rent. Even if I add rent for 5 years ( 12* 5* 900) it would be very close to 65K. HOA fee is also $179/mo and it is only 1.5 miles from MARTA station.
That said it is like a apartment, it has even the same floor plan as what we are in now. Also we would never be able to afford a indepent house back home(In India). We would never be able to enjoy that feeling. May be renting a home is a solution here. I have read there are calculators that would determine which is more economical (rent or purchase).
Again great points.
Quote:
Originally Posted by BobKovacs
IMO, if you plan to leave in 5-6 years, I'd just find a house you like and rent it. With the market still in a state of flux, there's no telling what's going to happen in the next 5 years- even if things start to turn around, it's possible that you'd end up selling the house for only slightly more than you paid for it, and you'd have to pay commissions/closing costs out of any profits. Add in the costs of maintenance, repairs, etc., that would be taken care of by your landlord rather than coming out of your pocket, and you're probably further ahead by renting, plus your $50k remains liquid and can earn you money in an investment.
Now, the $65k condo might be worth looking at, but again, if the market doesn't correct in a big way, you may still not do all that well on the sale- it's impossible to say.
We dont have a expensive lifestyle. We come from a middle class family. We hardly eat outside ( once per week and that too indian stuff). We go to india once in 1.5 years. Me and my wife being consultants , we cant afford to take vacations (loss of pay). We dont have student loans or car payments. Our monthly expenses including everything now is between $1500- $2000 including our rent. its my wife's dream to own a independent house.
Quote:
Originally Posted by Go Blue 99
In terms of what you should spend on a home- it really depends on your lifestyle and expenses. Do you like to go out to eat? Do you fly back to India often or take other nice vacations? Do you have high car payments or student loans? etc etc
The answers to these questions should guide you on how much to spend. Some people are willing to have a smaller house so they can spend more on vacations, cars, etc. Others would rather have a more luxurious house, and be willing to sacrifice on other things.
I would recommend you sit down with your wife and create a budget. Think about your monthly expenses and all your future large expenses. Then you'll be in a better situation to formulate your housing allowance budget. My wife and I did this before purchasing our first townhouse a few months ago.
Mainly for family. Apart from couple of cousins neither me nor my wife have any family here. Our parents will be older and would need our support then. Not sure if you know this but sons/daughters are supposed to live with parents after marraige in our customs. For example my mom who has worked hard all these years need to reap the benefits. New bride (my wife) should take over all the responsibilities and serve the elders.
I have lived outside home for the past 14 years and missed all those weddings, ceremonies, happiness, sorrow over all these years. Sorry I sound sentimental when I think about going back home.
Quote:
Originally Posted by ramblinwreck17
Just curious pellur- why are you guys going back to India?
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