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I was personally approved for a loan of $650k when I really wanted to borrow about half of that. This was my own income and not taking into account my partner. If we were both on the loan, it would have been quite a bit more. Personally, I thought it was a little outrageous, but it did tempt me to look at higher priced properties for about ten seconds.
Did anyone borrow to the limit of what they were approved for? I just wonder how common that is. Maybe I am too conservative!
For my current mortgage, I wouldn't even let them tell me what they'd approve me for. I told them what I wanted to spend, and was approved to that amount. I capped it at about 118% of my annual income. Since I owed about $4K on a car loan and $15K on student loans, I obviously would have been approved for more than double what I asked for.
The first time, in 2008, I made $30K a year and they approved me for $150k I took out $113K, which was fine until I needed major repairs and had used my savings on repairing the house to livable standards (it was a HUD foreclosure). I had to put it on a credit card, and then I was on a cycle of never paying down my credit cards for the next 8 years. That is why I did things a lot differently this time around!
I think it's pretty common for buyers to end up near their limit. Maybe people, like gold fish, grow to fit their environment
Of course, most of the buyers I work with don't have the kind of flexibility you have.
Having a budget that affords you free choice of 95% of the available homes in an area, is a pretty nice luxury.
I think it's pretty common for buyers to end up near their limit. Maybe people, like gold fish, grow to fit their environment
Of course, most of the buyers I work with don't have the kind of flexibility you have. Having a budget that affords you free choice of 95% of the available homes in an area, is a pretty nice luxury.
I wish!
The house I *really* want is 2.2 million, which is not a truly unusual price in my market. But I did not approach that. Maybe in a few years if things go well! Of course by then we will need another million on top of that...
I think it's common for first time buyers to spend at or close to the full amount for which they are approved. We spent all we were approved for on our first house. House 2 and 3--about 20% less than the full amount.
Mine was about 75% but they also pre-approved me based on a 5% down payment when I was actually putting down 20% so I guess the total amount would have been higher esp. because there would have been no PMI to worry about.
But it was kind of irrelevant to me, as it was new construction and I had control over the final purchase price based on what options I chose to include. So I always knew where my personal stopping point was, regardless of the amount of the preapproval. I ended up going about 4K over where I had originally planned to stop, and if anything, I regret not spending a few thousand more on a couple of options that would have been good to have gotten, such as a side door from the garage into the yard. Live and learn, I guess!
No, and haven't been tempted to. I choose a house based on my wish list (which tends to be short but is also clear), my monthly and annual budget, local property taxes, utility costs, what it would cost in order to get something on my list, and if there's still wiggle room in the budget I pay more attention to that inner voice telling me whether the house "feels" right or not. So much of what people seem to demand in a house these days doesn't impress me. Bragging rights and comparing my house to someone else's means very little to nothing. I don't really care what some bank tells me I can spend. Their motives are a lot different than mine.
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I took out $113K, which was fine until I needed major repairs and had used my savings on repairing the house to livable standards (it was a HUD foreclosure). I had to put it on a credit card, and then I was on a cycle of never paying down my credit cards for the next 8 years. That is why I did things a lot differently this time around!
