renting vs buying

[budylove68]

Thank you very much for the clarification. I thought that making 100,000 would get you more than a 300,000 home.

[wamommy1]

making 100,00 could get you more. It all depends on your credit score and your debt and down payment. If you have more than 20% you don't have to pay mortgage ins. If you don;t have 20% to put down you'll either pay it or do and 80/20 or something like that. Also, if you've never owned a home before it's not the mortgage that gets you it's everything else. Don't forget there's an HOA, sewer,gas, electric, phone, gable, garbage, and that's before any home maitenance or fertilizers for yard, water bill and A/c.

[MicheleVanDetti]

I've sold $300K homes to people making less than 100K, for sure. You need to contact a reliable lender in the area though. I can tell you that there are a lot of bad ones out there, make sure that they can give you references of people they've worked with in the past. The worst thing is to get a broker who lies and then find out a day or 2 before closing that they couldn't get you into the first loan program you wanted and your payment is going to be about 500 dollars more a month than they told you. Make sure you get a good loan officer, that's important. There are so many loan programs out there, and while lenders are tightening regulations, they're still in business to make money.

It's irresponsible for anyone to tell you what your payment would be without seeing your credit and other circumstances, but the ballparks I've seen on this thread are pretty close to what most people could expect, depending on loan programs and interest rates. Make sure you understand the loan program completely before you move forward.

I think that it's always best to buy if you're in a position to do so and you think you'll be in the same place for 3 or more years. You should qualify for a tax deduction for the interest you'll pay, plus you should enjoy some appreciation.

[foma]

There are plenty of information on the Internet that can help you estimtate about how much home you can afford. Here's one: http://www.1stprioritymortgage.com/index_calc.cfm (broken link). We're going to be first time home buyers so I can imagine how you feel. If you are planning to stay for the long term, buying a home can be beneficial but the way you have described your situation, I suggest you do research first. Good Luck!

[AZ_singlemother]

I used the "how much can I afford" method. For $100,000, it is less than a $300,000 home because there are other costs associated with purchasing and maintaining a home. Otherwise, you use the "high risk" loans which gets people in trouble regardless of how much money they earn.


Here are some estimates of what you qualify for:


We must use the 28 % amount of $ 2333.33 for PITI
REASON: This is because this value is lower than the amount ($ 2750.00) calculated using the 36 % monthly debt value
Your interest rate of 8.25 % over 30 years means every dollar you pay each month buys you $ 133.11 of loan
You stated Tax and Insurance would total 1.50 % the home value
And with $ 10000.00 to cover your down payment

House value: $ 274854
Loan value: $ 264854
Monthly Principal+Interest: $ 1989.76
Monthly Prop Tax+Insurance: $ 343.57
Down Payment: 3.64 %
Loan To Value(LTV): 96.36 %

Your down payment is less than 20%! You pay PMI
That's an extra 0.50 % of your loan each year
House value: $ 262378
Loan value: $ 252378
Monthly Principal+Interest: $ 1896.04
Monthly Prop Tax+Insurance: $ 327.97
Monthly PMI: $ 109.32
Down Payment: 3.81 %

Do not forget closing costs and points.

[Ponderosa]

Originally Posted by AZ_singlemother

I used the "how much can I afford" method. For $100,000, it is less than a $300,000 home because there are other costs associated with purchasing and maintaining a home. Otherwise, you use the "high risk" loans which gets people in trouble regardless of how much money they earn.


Here are some estimates of what you qualify for:


We must use the 28 % amount of $ 2333.33 for PITI
REASON: This is because this value is lower than the amount ($ 2750.00) calculated using the 36 % monthly debt value
Your interest rate of 8.25 % over 30 years means every dollar you pay each month buys you $ 133.11 of loan
You stated Tax and Insurance would total 1.50 % the home value
And with $ 10000.00 to cover your down payment

House value: $ 274854
Loan value: $ 264854
Monthly Principal+Interest: $ 1989.76
Monthly Prop Tax+Insurance: $ 343.57
Down Payment: 3.64 %
Loan To Value(LTV): 96.36 %

Your down payment is less than 20%! You pay PMI
That's an extra 0.50 % of your loan each year
House value: $ 262378
Loan value: $ 252378
Monthly Principal+Interest: $ 1896.04
Monthly Prop Tax+Insurance: $ 327.97
Monthly PMI: $ 109.32
Down Payment: 3.81 %

Do not forget closing costs and points.

Looks like you are quoting this from a bank web calculator. The 28%/36% are guideline ratios widely used. And they are useful for someone trying to get an idea of what they might qualify for.

According to the ratios your payment for mortgage, taxes, and insurance (PITI) should not exceed 28% of your gross montly income (before any taxes or deductions) and your total debt, house, cars, loans, etc should not be over 36% of gross. The values can go up with good credit or higher income.

I disagree with the knock on some sub-prime loans (low/no down, 40-50 year terms, interest only). They can be a very effective tool to help people get into the homeownership ranks. In a market like Phoenix, there is little risk that the property won't appreciate OVER TIME. I would never be a home owner myself had these products not been available. They opened the door for me many years ago when I was just starting out in my profession. Just understand what you are signing up for and be reaslitic about gains you expect both in salary and in appreciation of your property.

[sablebaby]

Originally Posted by Ponderosa

I disagree with the knock on some sub-prime loans (low/no down, 40-50 year terms, interest only). They can be a very effective tool to help people get into the homeownership ranks. In a market like Phoenix, there is little risk that the property won't appreciate OVER TIME. I would never be a home owner myself had these products not been available. They opened the door for me many years ago when I was just starting out in my profession. Just understand what you are signing up for and be reaslitic about gains you expect both in salary and in appreciation of your property.

Well stated! I agree that some loans are great for some people. I was able to get into a more expensive home (due to the market going crazy!), with a no doc (high credit scores), interest only loan (at least for the 80% loan). I only did this as I know I won't be living here forever (plus, I have $100k in student loans -not repaying yet!). Otherwise, we'd be living in gettoland. I know that I will be making much more money in the future to be able to get into something more traditional down the road. Fortunately it's not an adjustable rate for another 10 years.