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I'd rather ask this question here than go to a realtor and be turned down. I make $20/hr, with the potential to make more if I work overtime or work 2 jobs. My husband makes about the same, but is in so much debt. All he makes goes into debt payment. He's never filed for bankruptcy, nor been late in making payments.
On the other hand, I owe nothing, good credit. Now we're thinking if we should use my name alone in buying a house or should we add him as well to qualify for more money. But on the other hand, we're thinking that adding him will make our debt to income ratio high. We really don't want an expensive home, nothing more than $180K. But can I even afford a house making $20/hr and how much can i probably qualify for.
I appreciate the way questions are answere on this board and thought some experienced people could give me reasonable suggestions.
This may or may not help you out, but bare with me. $20/hr is roughly $41,000 a year. Your totaly debt (which includes car payments, credit card payments, school loan payments, and a mortgage) should NEVER exceed 50% of your gross income. This is a general rule of thumb taught by financial officers.
You should also contribute atleast ~ 12% of your income into a retirement/savings system. This includes your OWN 401k contribution. If you are middleaged then you will need to contribute much more in order to retire comfortable (at your current standard of living). It's also important to have 3-6 months worth of liquid assets (cash) saved up for emergencies, loss of employment ect...
The cost of a house that you can afford will depend on your downpayment, interest rate and the upkeep/utils/taxes.
I'm no finance expert...i'm actually an engineer, but I've read countless financial books and spoken to CFO buddies of mine to make sure i'm on the right track.
Thank you all. I have no debt at the moment. No car payment, no credit card bills and all that. I eliminated credit card bills a few months ago and saved for my car before I bought it. So when I say, I owe nothing, I actually owe nothing and plan to saty that way.
So say I make $3200 before tax and my debt is $50, will this help me qualify for more loan?
Poltracker, pls what does community property state mean?
The last few years had a lot of "bending" of the rules as far as loans go which is why you see record high foreclosures and the credit markets in turmoil. The rule of thumb is you can qualify for a house payment costing 30% of your pay minus debt so for you its (3200-50)/3= 1050 per month payment. In Texas that would get you a 100k-130k house depending on taxes, if your in a flood zone and what interest rate you can get. The only way you could pull off a 310k house is if you did something stupid like get a teaser rate ARM or a negative amortization loan. If you go that route than make sure to enjoy the house as much as you can for the couple years you have it before foreclosure or bankruptcy.
Thank you all. I have no debt at the moment. No car payment, no credit card bills and all that. I eliminated credit card bills a few months ago and saved for my car before I bought it. So when I say, I owe nothing, I actually owe nothing and plan to saty that way.
So say I make $3200 before tax and my debt is $50, will this help me qualify for more loan?
Poltracker, pls what does community property state mean?
Thank you all again.
Community property means that what is yours is his. This includes debts and property. If you are married, your house is considered a marital asset (or debt). If you were to get divorced he could conceivably get the the house. Likewise, if he falls down on his debts or is involved in a law suit of some sort and loses, persons owed could conceivably get a judgement which may include a lien on your house. There is no way you could keep it separate. Banks don't like that. I would consult with a mortage person at your local bank for the possibilities. I am not a lawyer or a pro by any means but have seen this happen. I suggest you get professional advise.
Last edited by Poltracker; 09-16-2007 at 03:51 PM..
Reason: clarify an issue
There is a really good mortgage forum at creditboards.com that I recommend you check out. Many experts on their who can answer your question.
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