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Old 07-23-2014, 12:32 PM
 
385 posts, read 485,471 times
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I'm 25 and my partner and I make $100K combined.

We have not started the full process yet but we have been looking at a few homes.

The homes we like are in the 185-200K range (top choice was listed at $199K). We have about $80K in savings but would only be putting 20% down.

Our idea is that one person would be paying the mortgage, while the other would pay utilities. Our only debt is student loan payments of $500 combined, and one car payment + insurance of 480 total.

After putting everything into a mortgage calculator, we can afford about $215K. But then again, this is just an estimate.

Last edited by J800; 07-23-2014 at 12:58 PM..
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Old 07-23-2014, 12:41 PM
 
Location: Frisco, TX
1,399 posts, read 2,153,119 times
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Just curious, but why aren't you both applying for the loan together? That's fine if you don't want to share that.

Also, is the car payment in your name or your partner's? If it is in yours, and combined with the student loan debt (who's is more substantial?), you might not qualify for a loan that will get you in the house you want.

Have you tried looking up a mortgage calculator to see how much you might qualify for? Obviously it won't give you an exact number since lenders take other factors into consideration, but you will get a ballpark number.

Do you make considerably more money than your partner? A lot of the answers to these questions will affect how much you can qualify for if you want to apply for the loan by yourself.
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Old 07-23-2014, 12:47 PM
 
385 posts, read 485,471 times
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Quote:
Originally Posted by stephwin View Post
Just curious, but why aren't you both applying for the loan together? That's fine if you don't want to share that.

Also, is the car payment in your name or your partner's? If it is in yours, and combined with the student loan debt (who's is more substantial?), you might not qualify for a loan that will get you in the house you want.

Have you tried looking up a mortgage calculator to see how much you might qualify for? Obviously it won't give you an exact number since lenders take other factors into consideration, but you will get a ballpark number.

Do you make considerably more money than your partner? A lot of the answers to these questions will affect how much you can qualify for if you want to apply for the loan by yourself.
We are not married yet. Does this affect the application? I'm sure it's better to both apply, correct?

After some more searching I figured we will both apply.
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Old 07-23-2014, 02:58 PM
 
1,212 posts, read 2,283,124 times
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I think you can afford the house and I like that you are putting down 20% but saving basically six months of expenses as a reserve fund. Please consider the following factors though:

1) types of jobs. Are the jobs stable? Should you expect yearly raises?

2) Kids. Do you expect kids? If so, child care can ruin a budget.

3) Safety net. Can you count on family members to help if someone gets sick or loses a job?

4) Does your budget allow for retirement contributions?

5) is there anyway to retire the debt I have before buying the house? If you went without a house for one year, for example, could you retire the debt?

6) Relationship? How stable is the relationship? Do you feel comfortable that you will be together for at least 5 years?
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Old 07-23-2014, 03:39 PM
 
45 posts, read 69,810 times
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Quote:
Originally Posted by HockDad View Post
I think you can afford the house and I like that you are putting down 20% but saving basically six months of expenses as a reserve fund. Please consider the following factors though:

1) types of jobs. Are the jobs stable? Should you expect yearly raises?

2) Kids. Do you expect kids? If so, child care can ruin a budget.

3) Safety net. Can you count on family members to help if someone gets sick or loses a job?

4) Does your budget allow for retirement contributions?

5) is there anyway to retire the debt I have before buying the house? If you went without a house for one year, for example, could you retire the debt?

6) Relationship? How stable is the relationship? Do you feel comfortable that you will be together for at least 5 years?
All good questions, a super basic rule of thumb is loan amount (so more you put down in cash more you can afford) should not be much more than 2x annual income, but people often get approved and buy much more than this. But there are so many factors I hesitate to even give that sort of number to you. In your case I would subtract my yearly student loan payments ($6k) from my annual income but probably not car insurance/payments.
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Old 07-23-2014, 03:47 PM
 
3,478 posts, read 6,518,450 times
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Make sure the mortgage calculator is including tax and insurance. Many don't, and those two items add 30-40% more to your monthly payment.

Honestly, the most helpful thing for us was to get prequalified and use the monthly numbers that gave us.

Getting some quotes for home insurance specifically for the area we were looking was helpful too...the range was very wide.
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Old 07-23-2014, 04:24 PM
 
19,489 posts, read 17,709,775 times
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Quote:
Originally Posted by J800 View Post
I'm 25 and my partner and I make $100K combined.

We have not started the full process yet but we have been looking at a few homes.

The homes we like are in the 185-200K range (top choice was listed at $199K). We have about $80K in savings but would only be putting 20% down.

Our idea is that one person would be paying the mortgage, while the other would pay utilities. Our only debt is student loan payments of $500 combined, and one car payment + insurance of 480 total.

After putting everything into a mortgage calculator, we can afford about $215K. But then again, this is just an estimate.
I'm one guy and something of a contrarian thinker about finances so keep that in mind.

1. In your situation I'd put down the minimum amount that avoids PMI insurance - although in the past I've seen 80+20 loans that were very tempting.

2. If there will be a time over the next number of years to stretch the budget a bit vis a vis a house/mortgage/related costs that that time is now as mortgage rates will likely rise over the next few years and maybe more.

3. If either or both of you are at all able take a second job - apply all of the net earnings toards wiping out your student loan debt and when that is gone jump on a, self defined as in don't pay anyone for it, biweekly or 13/14 or more payments per year method to reduce your aggregate mortgage payback amount - clearly label any extra payments or early payments such that overage go toward principal.


ETA - cash is a wonderful thing. Avoid PMI but conserve cash as well.
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Old 07-23-2014, 05:21 PM
 
385 posts, read 485,471 times
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^ The usual down payment percentage to avoid PMI is 20%, correct?

Our loans should be paid off in about 2.5 more years. We didn't have much, but we are paying a bit more than the minimum to pay them off faster.
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Old 07-23-2014, 05:35 PM
 
45 posts, read 69,810 times
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Quote:
Originally Posted by J800 View Post
^ The usual down payment percentage to avoid PMI is 20%, correct?

Our loans should be paid off in about 2.5 more years. We didn't have much, but we are paying a bit more than the minimum to pay them off faster.
Yes 20% You definitely don't want to pay PMI

Also if you are using an online mortgage calculator they usually have property tax pretty low in the 1.5% range. Since we don't pay income tax we pay much more property tax that most states so makes sure you look up the city property tax rate were your interested (usually 2-2.8% around dfw) otherwise you will think your going to be paying less a month than you will. The insurance rates they estimate are probably pretty average and can be undercut if you go with a private seller.
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Old 07-23-2014, 05:39 PM
 
247 posts, read 377,182 times
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in a very similar situation to you...be interested to know what you are trying to buy for that range. We have been priced out of what we want in the past 6 months. Make sure you are including taxes in your calculations it will make a huge difference in your total monthly payment
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