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Oddly enough when I spoke to a loan officer without running our credit I just wanted to know what type of loan the bank would give us at 200% down and 1000 in taxes etc. and the guy said $289,000 loan. That's what confused me because when I looked up homes for 450k our debt to income was at 50%. The math for me was 289+200 is $489,000 home to afford.
We can surely rent locally for 1800 a month. But why rent what we can afford a home and pay $1700 for rent and start a family in a few years and start building equity?
First, a loan officer can quote anything generic, but it depends on specifics. Your specifics. Until they start the underwriting process it's all just a guess. All you got was the equivalent of a pre-pre-approval letter, which you can get on a 1000 sheet roll these days. Worthless.
Even a pre-approval letter just means that they've run the basic ratios and real estate agents will be willing to work with you.
Ultimately it will depend on income and steadiness of it, debt (DTI), credit rating/score and your down payment, combined with the appraised value of the property. Given what you're looking for it will be a Fannie Mae-insured home so underwriting won't be that strict - luckily, because there's no way you'd be approved with the underwriting required for a jumbo.
As to your "why rent when we can afford a home", I'm not convinced you can afford a home. Not yet. You state that you don't work off the books, yet your income isn't factored in? Or is it? Or is it not steady enough to factor? That part is very confusing.
I'm pretty sure you will get approved some way, some how for a mortgage. Again, it'll be sold to Fannie Mae so the person writing the mortgage will charge you an extra .5-.75% and then run laughing for the hills knowing his investment is safe. I'm not so sure you have the funds - especially if you want to start a family - to be a homeowner with all its associated unforeseen expenses.
First, a loan officer can quote anything generic, but it depends on specifics. Your specifics. Until they start the underwriting process it's all just a guess. All you got was the equivalent of a pre-pre-approval letter, which you can get on a 1000 sheet roll these days. Worthless.
Even a pre-approval letter just means that they've run the basic ratios and real estate agents will be willing to work with you.
Ultimately it will depend on income and steadiness of it, debt (DTI), credit rating/score and your down payment, combined with the appraised value of the property. Given what you're looking for it will be a Fannie Mae-insured home so underwriting won't be that strict - luckily, because there's no way you'd be approved with the underwriting required for a jumbo.
As to your "why rent when we can afford a home", I'm not convinced you can afford a home. Not yet. You state that you don't work off the books, yet your income isn't factored in? Or is it? Or is it not steady enough to factor? That part is very confusing.
I'm pretty sure you will get approved some way, some how for a mortgage. Again, it'll be sold to Fannie Mae so the person writing the mortgage will charge you an extra .5-.75% and then run laughing for the hills knowing his investment is safe. I'm not so sure you have the funds - especially if you want to start a family - to be a homeowner with all its associated unforeseen expenses.
Nonetheless, good luck.
I am factoring in my income too. She makes 40k on books with benefits. I make 28k on books with benefits. Both full time 40 hours w week. Paid vacation, time off, etc. we both have steady income.
Our credit is above 750 each, 200k down, DTI range 40-42.
1) You better have all the $$ in the bank for 120 days, the banks will ask for 3-4 months of statements.
2) Having only 10k left is an issue.
Did you calculate in closing costs? they will be 5-7k, you are going to have to escrow probably 2k for your taxes. I would avoid this at your income and your talking 5% interest you probably have no choice.
After taxes and your car payments you have about 49k a year to play with.
Car insurance $1800yr
Home insurnce $1100yr
Cell phone for 2 $1200yr
Elec/oil or gas in home $4800yr
CC/food/entertainment/gas/etc $6000yr
These are very low end expenses totaling 15k you now have 34k left.
Taxes $9kyr (good luck most homes w/ taxes this low will need lots of work) you now have 25k left.
A $1500 a month mortgage would only leave you with 7k a year excess money. That's probably around 235-250k loan.
Things will break you will 110% spend tons of money you didn't expect to spend. You should not be buying a house with a mortgage over $1200 a month, with your down payment that is around a $325k home. You realistically need 50k more for your down or 25k more a year in income.
With earning so low I would be playing the affordable housing lottery sweepstakes in NYC.
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