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I am originally from shoreline CT and want to consider buying there. For a long time I have been a renter in many different cities, and so this would be my first time buying a home. I am trying to identify my price range and down payment for a home somewhere between (and including) Branford and Old Lyme. I will worry about choosing a town and neighborhood once those financial aspects are more defined, but I need the financial insight first. I am single, planning as if I had spouse and kids, with my personal current income of $100-$140k/yr as the sole income. I travel for business, so home location will not depend on proximity to anything.
Thank you for any help -- I know there are some realtors out there, so please speak up! (...or feel free to send a private message)
Last edited by ChildhoodsEnd; 06-14-2010 at 09:56 PM..
I think you are coming at this from the wrong direction. You should first figure out your timeline. When do you want to buy? How much do you have saved and how much can you add to that before you go house shopping? That will be your down payment and closing costs. A lot of banks are looking for 20% down right now, but there are some government programs. I believe FHA loans require 5% but I don't know that much about them. Perhaps someone else can chime in about them. How much you can afford will depend on how much you can put down and how much debt you have as well as how much you make. A general rule of thumb is no more than 33% of your income towards housing and no more than 40% for all debt (housing, car, student loan, credit cards...). Since your income seems to vary you will have to average the past two years together. Banks like to see income going up so you will have a harder time if your income has declined. For more specific info check out the NOLO series of books. Very informative and helpful in figuring out how it all works and what steps you'll need to take to figure out how to get yourself ready to purchase and how much you can afford.
Assuming you are putting 20% down, you can afford a house around $550k. This equates to a $440k mortgage, or about $2500/mo in principal+interest. Add about $800/mo for taxes (equates to $9500/yr). Total outlay would be $3300, or roughly 1 paycheck on $120k. This should be affordable, especially if you don't have a large car or outstanding credit card payment (or other debt like school loans).
Any lower down payment will probably require less of a house price. If you are single, but are engaged or will be soon, then make sure your significant other likes the house you're buying. Otherwise you will probably end up selling after getting married. If you don't have that hanging over your head () then you might be better off buying a much lesser priced home, investing more of your $$ in retirement or investment account, building your equity and saving more of a down payment for the home you will want with your other half + kids. You don't need 4+ bedrooms when you're single - so why pay now for what will be empty space for several years? The housing market will most likely not appreciate nearly as much as investments will, so why put your money into it?
I was searching for a home to purchase around the area where you are looking (Madison or Old Saybrook) on a $60K salary. I was approved for a $220K mortgage with 10% down. If you are in the same boat and don't have any financial problems in your past, you could probably get approved for a mortgage between $400K and $500K in that area with 10% down, probably around the $550K mark as Toddb said if you do 20% down. I applied for an FHA loan and was given the go-ahead only after faxing tons of documents that showed I was never late on a mortgage, utility, or car payment for 12 months. The process is strenuous, but I am sure it will be well worth it once you find your perfect home.
Thank you, everyone, for your helpful advice. I will do the math and determine how much I can save towards a down payment. There is really no timeframe right now, because there is no pressure on me to move. That will just become another part of the formula and another thing to consider.
You can get an FHA loan with as little as 3.5 percent down! The market is in the toilet right now, and interest rates are extremely low. This is an excellent time to buy. Don't waste time saving up a down payment. This is the time to jump on a house. Sellers are getting desperate, and are open to lowball offers. People are getting FHA loans with 3.5 down, and rolling the closing costs into the contract by paying a higher price and having the seller pay the closing costs. You could get into a 400,000 house for as little as 15K down.
Yeah and as expected there was an "unexpected" drop of existing home sales in May and the tax credit hasn't even expired yet. So I wouldn't rush anyone into the market who isn't really ready or needing to buy right now.
Yeah and as expected there was an "unexpected" drop of existing home sales in May and the tax credit hasn't even expired yet. So I wouldn't rush anyone into the market who isn't really ready or needing to buy right now.
The tax credit has indeed expired. You needed to be UNDER CONTRACT by Apr 30th and CLOSE by June30. There is actually a glut with many banks now on closings and many people who were counting on the credit may not be able to get it, many times with no fault of their own. There is a push now to try to get the closing date requirement pushed further back because of this.
LRPct,
Yes I know that. I think you're missing my point.
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) then you might be better off buying a much lesser priced home, investing more of your $$ in retirement or investment account, building your equity and saving more of a down payment for the home you will want with your other half + kids. You don't need 4+ bedrooms when you're single - so why pay now for what will be empty space for several years? The housing market will most likely not appreciate nearly as much as investments will, so why put your money into it?
