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Location: Concrete jungle where dreams are made of.
8,900 posts, read 15,926,305 times
Reputation: 1819
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My fiance and i are REALLY torn. We love this house in East Meadow that's a short sale. It's such a good deal and we make 110,000 together. We're both teachers, so our salaries will go up quite a bit. Probably about 130,000 in about 3 years or so. We tried to figure out what our total payments would be monthly, with the mortgage, taxes, bills, food, and we figured it would be about $4600 the most. I have my Masters to get (which will be 13k), plus about 5k left of student loans. He has maybe 20k left, I'm not totally sure about that number though.
Do you think this is possible? I don't think we'll find this good of a deal anytime soon. We're getting married this July, by the way.
Use the old rule of thumb ratios of household income to home price of either a very conservative 1:2.5 or 1:3. That is based on putting 20% down. So your numbers look good.
Your taxes will be about $500/month and add another $100/month for home owners insurance. Monthly note on $220,000 at 6% will be about $1200. So total monthly satement of $1800-$2000/month. Of course that number goes up if you put down less.
However, remember if you don't put down 20% you may have to pay for mortgage insurance. Also, bet on closing costs of up to $10,000 which you will need on hand at closing.
Another thing. If you plan on exiting the job market for a few years to raise kids after marriage, will you be able to get by on just his income?
Location: Concrete jungle where dreams are made of.
8,900 posts, read 15,926,305 times
Reputation: 1819
We qualify for an FHA loan, so that's only 3% down payment. Because of that, we would also be able to put the closing costs into the mortgage. I also heard from Wamu that teachers get cheaper closing costs. Don't know if this is true with other banks, since we won't be going through Wamu now.
Your income is sufficient to afford this house (assuming that you are putting at least 10% down). Don't forget that you are in the 25% tax bracket. Your 'real' payment for the house will be Principal+ (0.75)*(Interest+Taxes). With job losses accelerating in the NY/Long Island area, I suspect you will see many such attractive prices in a year or so. My advice is to wait at least a year and you may get similar house for $225k or less. Just my thoughts.
Location: Concrete jungle where dreams are made of.
8,900 posts, read 15,926,305 times
Reputation: 1819
Yeah, but we'd need a much much higher down payment, and that's money we don't have now. The 3% down payment helps a lot. Wouldn't it be better to go with the FHA loan?
Also, I find it just a little risky to wait longer. I don't particularly want to rent for another year and throw all that money away.
With only 3% down? I'm shocked the banks are still giving out sub-prime loans. That banks have no intention of tightening up as long as Uncle Sam is willing to bail them out with billions of tax payer dollars.
3% of $280,000 is roughly $9,000. You will owe about $271,000 and at 6% your payments will be $1626 + $500 in property taxes + home owners insurance + PMI. Expect a total monthly payment of around $2300 to $2400/month.
What do you do if you buy this home and it drops in value below what you owe on it?
Location: Concrete jungle where dreams are made of.
8,900 posts, read 15,926,305 times
Reputation: 1819
Do you think that would happen? I assume that in the next 5-6 years (when we would trade up, hopefully) it would go a lot higher.
My mom used to be a real estate agent. She's really the only one who says we should rent for a year or 2. This is between asking people on this board, his parents, and mine. We're just so afraid we won't get this good of a deal. It's a tiny house, but 9 rooms, 2 bathrooms, a 80x100 lot, with taxes at 6k and the current bid at 260k (by a builder).
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