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Hello friends, as you're reading this title from a brand new member, you're probably thinking, "Oh this
question again." If you do, I would like to apologize because I understand the frustration and repetitiveness.
I've been a fan of this forum but haven't decided to make an account since I've seen most of my questions
being answered already. For two years, I've been on and off this forum to see all my questions being
answered but now I can finally ask the people with experience the same question..with my own personal
answer, if that makes sense. The ol' how much house can I afford. Take a seat and help a young lad with his future finance, of course, if you don't mind.
Now, before I get straight into the point, I would like you to know a little about myself just for the sheer fact I'm a social person at heart. My wife and I are pretty young, we're 21 years old and we have a young daughter. We got married last year! I wasn't a great kid during my teens, but I was forced into maturity. I started growing with my daughter and my mom got sick. She has stage 4 breast cancer which was so bad it spread to her lungs and now she has lung cancer. I'm the 2nd youngest out of 6 children and for some reason, I'm the only one willing to sacrifice everything just so my mom can live the best possible few years of her life. I moved out of my moms house a few years ago just for my daughter, the place we were living at (my moms house) was filled with roaches and mice, not to mention the neighborhood hoodlums. I currently live with my wife's parents and it's terrible. If anyone has lived with the in-laws, you know my pain. I can only take enough judging and chores for so long. We wanted to move out so many times in the past 3 or so years we've lived here, but we kept reminding ourselves that it's a horrible financial move if we decide to rent. So after everything we've been through, we decide that in 2015, we're going to move out no matter what the outcome is, whether we can't find a house or decide to rent, we're out of here!
Sorry for the chitchat, now that you have a little information on why I decided to ask this topic, let's get into details. My wife and I are full time students and part time workers. We work really hard and sacrifice a lot to save what we have. There's a difference on what we can afford and what we can get approved for. I understand that a lot of people recommend the 3x your annual salary, but I know tons of people who "live above their means" (assuming anything over 3x your annual is above your means) that are doing extremely well. What I would like to know is, what would we get approved for, not what we can afford comfortably because I'm confidence enough that I can make the payments on time if it's not a ridiculous amount.
TL;DR
We gross 55k a year together and have 40k saved up. We have 0 debts. Everything we pay for is cash up front. Ring, two cars, etc. Our credit scores are both in between the range of 750-760. Do you think we can get approved for 250k?
Assuming I did the basic math correctly ; a 250k mortgage loan with a 10% down payment would be roughly $1100 a month with the average 30 year fixed and 4% interest rate. Adding insurance, pmi, taxes, utilities (sewer,garbage,water,gas,heat,cable etc) The total monthly bill would roughly be 1700$ (really depends on taxes) We gross 4500 a month, is it possible to get approved for 250k? I'm 90% sure the payment per month wouldn't be a problem because we saved about 20k alone in 2014. The only reason why we didn't go check what we would get approved for is because we want to keep saving for a few more months.
Thanks in advance and sorry if I bothered you in anyway.
Don't forget closing costs and cash on hand for any improvements needed immediately.
Your first step in preparing to buy would be to get pre-qualified. You will know right away what the bank is willing to lend (which is always more than you should spend).
I would strongly suggest renting and continuing to save. You will get a much better idea of how to budget rent , utilities, savings, etc. While technically you might qualify if everything is perfect, I would absolutely not recommend it at this stage. I'm not even sure a lender would write a loan if you only work part time or if you have no rental history. Depending on the type of work you do and how you get paid (seeing that you gross $55k and saved $20k with a wife and kid) you will also have to provide tax returns and source all funds according to their lending criteria. Underwriters will scrutinize the movement of cash or large checks when they pull your last 3 months bank statements.
Renting will allow you to determine where your money goes every month without taking on such a commitment. It is a horrible financial move to get stuck with a mortgage and find out the hard way you can't pay for it. Consider renting practice without the commitment. I'm 27 and just went through this whole process so let me know if you have any other questions.
That's awesome man! I really appreciate the advice, and yeah I did consider closing cost since I have 40k and only planning to do 10% down payment. I didn't think of the trouble of being a part time worker. I know about the large deposits thing, anything over 5k requires an RTS. My wife works part time as a bank teller, but she gets about full time hours (35-38 hours).
We are considering a large apartment too, but I feel like if we can own, why not? Maybe you're right though since you've recently been through this process. If you don't mind me asking, what were your circumstances? You don't have to give me full details, for example, do you gross more or less than 60k a year and if so, how much did you get approved for? How much did you have for a down payment? How many officers did you go see? Were you considering an FHA loan or a conventional loan? Sorry for the 21 questions friend, I just want to take advantage of the experience you have.
That's awesome man! I really appreciate the advice, and yeah I did consider closing cost since I have 40k and only planning to do 10% down payment. I didn't think of the trouble of being a part time worker. I know about the large deposits thing, anything over 5k requires an RTS. My wife works part time as a bank teller, but she gets about full time hours (35-38 hours).
We are considering a large apartment too, but I feel like if we can own, why not? Maybe you're right though since you've recently been through this process. If you don't mind me asking, what were your circumstances? You don't have to give me full details, for example, do you gross more or less than 60k a year and if so, how much did you get approved for? How much did you have for a down payment? How many officers did you go see? Were you considering an FHA loan or a conventional loan? Sorry for the 21 questions friend, I just want to take advantage of the experience you have.
For me they were even scrutinizing $500 deposits! It was really exhaustive, there are so many hoops to jump through.
For example, was on a lease with 2 other folks for about 3 years, and for the first 2 years I collected rent from everyone and sent in the check to the landlord. Well, the last year I decided to delegate that to one of the other roommates and I got whacked for writing checks every month to my roommate instead of the landlord on the lease. An embarrassing aside to that was I would write things in the memo with the intent of making the teller cringe as he handed the check over. Try awkwardly explaining some of those things to an underwriter with your future in their hands .
My landlord at the time was the kind of person you could only get hold of if you decided to withhold rent, and they made him write a letter of explanation on the rent checks thing (he is Haitian and could barely speak English or write anything). The lenders also vetted me further due to something called "rent shock" as my monthly housing payments were increasing 5x. Just giving you some idea here of what you have to go through, I wish the process on nobody. I went with the first lender I called and got lucky. Conventional 30 year loan, 4.25%.
I make significantly more than 60k/yr, and was approved for up to $550k. I had 20% down and cash for closing, and 5 months reserves (I partially used my 401k balance to meet that requirement). I saw probably 20 properties over the course of 3 months. Most of them I knew before even visiting that I was not interested. Out of those, I saw 3 I liked. Bids placed on all 3, 2 of them I was outbid (one by 50k, the other almost 100k). The last one I visited within hours of it being listed and had placed a bid before sundown. There were some readily apparent issues with it (mostly cosmetic) and trying to counter offer to have them fixed produced a chuckle from the sellers agent. I kept the offer as is and got the place.
For me they were even scrutinizing $500 deposits! It was really exhaustive, there are so many hoops to jump through.
For example, was on a lease with 2 other folks for about 3 years, and for the first 2 years I collected rent from everyone and sent in the check to the landlord. Well, the last year I decided to delegate that to one of the other roommates and I got whacked for writing checks every month to my roommate instead of the landlord on the lease. An embarrassing aside to that was I would write things in the memo with the intent of making the teller cringe as he handed the check over. Try awkwardly explaining some of those things to an underwriter with your future in their hands .
My landlord at the time was the kind of person you could only get hold of if you decided to withhold rent, and they made him write a letter of explanation on the rent checks thing (he is Haitian and could barely speak English or write anything). The lenders also vetted me further due to something called "rent shock" as my monthly housing payments were increasing 5x. Just giving you some idea here of what you have to go through, I wish the process on nobody. I went with the first lender I called and got lucky. Conventional 30 year loan, 4.25%.
I make significantly more than 60k/yr, and was approved for up to $550k. I had 20% down and cash for closing, and 5 months reserves (I partially used my 401k balance to meet that requirement). I saw probably 20 properties over the course of 3 months. Most of them I knew before even visiting that I was not interested. Out of those, I saw 3 I liked. Bids placed on all 3, 2 of them I was outbid (one by 50k, the other almost 100k). The last one I visited within hours of it being listed and had placed a bid before sundown. There were some readily apparent issues with it (mostly cosmetic) and trying to counter offer to have them fixed produced a chuckle from the sellers agent. I kept the offer as is and got the place.
That's so awesome! Congrats on the house. It's amazing to me how people you don't even know on the internet are willing to help you, virtually. It just shows how far we've come along as humans to build this system to talk instantly. Also, love the story , I hope you understand the fact that I truly appreciate your help. I do however, would like other people's input/opinions on my current dilemma.
Hello friends, as you're reading this title from a brand new member, you're probably thinking, "Oh this
question again." If you do, I would like to apologize because I understand the frustration and repetitiveness.
I've been a fan of this forum but haven't decided to make an account since I've seen most of my questions
being answered already. For two years, I've been on and off this forum to see all my questions being
answered but now I can finally ask the people with experience the same question..with my own personal
answer, if that makes sense. The ol' how much house can I afford. Take a seat and help a young lad with his future finance, of course, if you don't mind.
Now, before I get straight into the point, I would like you to know a little about myself just for the sheer fact I'm a social person at heart. My wife and I are pretty young, we're 21 years old and we have a young daughter. We got married last year! I wasn't a great kid during my teens, but I was forced into maturity. I started growing with my daughter and my mom got sick. She has stage 4 breast cancer which was so bad it spread to her lungs and now she has lung cancer. I'm the 2nd youngest out of 6 children and for some reason, I'm the only one willing to sacrifice everything just so my mom can live the best possible few years of her life. I moved out of my moms house a few years ago just for my daughter, the place we were living at (my moms house) was filled with roaches and mice, not to mention the neighborhood hoodlums. I currently live with my wife's parents and it's terrible. If anyone has lived with the in-laws, you know my pain. I can only take enough judging and chores for so long. We wanted to move out so many times in the past 3 or so years we've lived here, but we kept reminding ourselves that it's a horrible financial move if we decide to rent. So after everything we've been through, we decide that in 2015, we're going to move out no matter what the outcome is, whether we can't find a house or decide to rent, we're out of here!
Sorry for the chitchat, now that you have a little information on why I decided to ask this topic, let's get into details. My wife and I are full time students and part time workers. We work really hard and sacrifice a lot to save what we have. There's a difference on what we can afford and what we can get approved for. I understand that a lot of people recommend the 3x your annual salary, but I know tons of people who "live above their means" (assuming anything over 3x your annual is above your means) that are doing extremely well. What I would like to know is, what would we get approved for, not what we can afford comfortably because I'm confidence enough that I can make the payments on time if it's not a ridiculous amount.
TL;DR
We gross 55k a year together and have 40k saved up. We have 0 debts. Everything we pay for is cash up front. Ring, two cars, etc. Our credit scores are both in between the range of 750-760. Do you think we can get approved for 250k?
Assuming I did the basic math correctly ; a 250k mortgage loan with a 10% down payment would be roughly $1100 a month with the average 30 year fixed and 4% interest rate. Adding insurance, pmi, taxes, utilities (sewer,garbage,water,gas,heat,cable etc) The total monthly bill would roughly be 1700$ (really depends on taxes) We gross 4500 a month, is it possible to get approved for 250k? I'm 90% sure the payment per month wouldn't be a problem because we saved about 20k alone in 2014. The only reason why we didn't go check what we would get approved for is because we want to keep saving for a few more months.
Thanks in advance and sorry if I bothered you in anyway.
Hold your noses, stay in your in-laws' place, and continue to save your 20K/year while you finish your schooling. Once the schooling is done, and your nest eggs are bigger (two more years and your cash in hand is at 80K and hopefully you will both be done with school and ready for the full time job market), you can either rent or buy more comfortably then. I agree that buying is better than renting, but most people cannot do so because they have no cash for the down payment up front. But it seems to me that you and your spouse are well focused, so I would suggest that you put up with your in-laws for a little bit more and get your schooling behind you. You can be the one with the last laugh, and suffer a bit now and you will be amply rewarded later, especially because you are both so young. Nothing comes for free.
Even if all the math works out on paper, you have to keep in mind when something breaks (and things will break) it's automatically your problem no matter what it costs. I took out a mortgage for a little more than $250k and taxes alone are about $400 a month (obviously this will vary based on the individual property) and I don't live in a town with a top rated school system. I'd say it probably takes almost $2,500 a month to pay the basic costs of having the house, maybe a little less in months without extreme weather. When something breaks, costs to repair start at $100 and the sky is the limit from there. Maybe if you are very handy and have a good supply of tools and materials on hand you can save a few bucks on repairs but big ticket items like a furnace or hot water heater breaking are big bucks.
Your household income is dangerously low and if just one of you loses your job or has hours cut, you'll be in an exceptionally bad situation, with a young child. IMO, until you have a household income of approximately $100k, you shouldn't even think about buying a house, regardless of what the calculators say.
Even if all the math works out on paper, you have to keep in mind when something breaks (and things will break) it's automatically your problem no matter what it costs. I took out a mortgage for a little more than $250k and taxes alone are about $400 a month (obviously this will vary based on the individual property) and I don't live in a town with a top rated school system. I'd say it probably takes almost $2,500 a month to pay the basic costs of having the house, maybe a little less in months without extreme weather. When something breaks, costs to repair start at $100 and the sky is the limit from there. Maybe if you are very handy and have a good supply of tools and materials on hand you can save a few bucks on repairs but big ticket items like a furnace or hot water heater breaking are big bucks.
Your household income is dangerously low and if just one of you loses your job or has hours cut, you'll be in an exceptionally bad situation, with a young child. IMO, until you have a household income of approximately $100k, you shouldn't even think about buying a house, regardless of what the calculators say.
This.
Particularly since home prices are beginning to flat line and interest rates will likely stay low for quite some time as inflation remains stagnant.
Hold your noses, stay in your in-laws' place, and continue to save your 20K/year while you finish your schooling. Once the schooling is done, and your nest eggs are bigger (two more years and your cash in hand is at 80K and hopefully you will both be done with school and ready for the full time job market), you can either rent or buy more comfortably then. I agree that buying is better than renting, but most people cannot do so because they have no cash for the down payment up front. But it seems to me that you and your spouse are well focused, so I would suggest that you put up with your in-laws for a little bit more and get your schooling behind you. You can be the one with the last laugh, and suffer a bit now and you will be amply rewarded later, especially because you are both so young. Nothing comes for free.
Hey Penny, thank you for the advice. I would most definitely stay at the in-laws for a few more years, but I would rather risk my chances just so my parents can live better. They have sacrifice so much for my siblings and I. She's really sick and I just want her to live better for as long as she can live. I would rather rent a big apartment or something along those lines than stay at the in-laws. I understand if you disagree but regardless, I appreciate your time to help a stranger in need of advice.
Quote:
Originally Posted by Dm84
Even if all the math works out on paper, you have to keep in mind when something breaks (and things will break) it's automatically your problem no matter what it costs. I took out a mortgage for a little more than $250k and taxes alone are about $400 a month (obviously this will vary based on the individual property) and I don't live in a town with a top rated school system. I'd say it probably takes almost $2,500 a month to pay the basic costs of having the house, maybe a little less in months without extreme weather. When something breaks, costs to repair start at $100 and the sky is the limit from there. Maybe if you are very handy and have a good supply of tools and materials on hand you can save a few bucks on repairs but big ticket items like a furnace or hot water heater breaking are big bucks.
Your household income is dangerously low and if just one of you loses your job or has hours cut, you'll be in an exceptionally bad situation, with a young child. IMO, until you have a household income of approximately $100k, you shouldn't even think about buying a house, regardless of what the calculators say.
DM84, a huge thank you for your advice. I must admit, I didn't think of things breaking, rather, the thought of buying a house with newer roofs, furnace, etc. I mentioned my parents would be living with me before the TL;DR. Our net income with my dad alone this year should be roughly $120k annually altogether (not including my moms disability/SSI, She has stage 4 breast/lung cancer and can barley walk). I guess that's also not accurate because some people brings up the fact that anything can happen to any of us at any time, but by that logic, doesn't that technically mean you shouldn't be doing anything at all cause anything can happen? I could be wrong or exaggerating a bit, but it seems relevant to the same scenario. Moreover, after all the advice that has been given, you guys can't fathom the appreciation I have towards you all. You guys are literally giving me knowledge of being aware of a comfortable/affordable lifestyle. I've learned something new today and I've come to the conclusion to talk to my wife about these options, either we rent a big apartment until we finish school and find a full time career, or simply buy a cheaper house where we can afford to live comfortably; build equity; and have a decent resale value to live for x amount of years.
DM84, a huge thank you for your advice. I must admit, I didn't think of things breaking, rather, the thought of buying a house with newer roofs, furnace, etc.
New everything costs a lot of money and it's unlikely you'll find a house in your budget with new everything; at that price point in this part of the country, sellers just replace what they HAVE to replace to get the house sold.
Regardless, even if you found a house with brand new everything, things break, whether it's a pipe breaking or your lawnmower needing to be repaired. Some things simply cost a lot of time, some cost a lot of money, and some cause a combination of both. When you rent, these things just aren't your problem.
What towns/cities were you looking at?
Quote:
I mentioned my parents would be living with me before the TL;DR. Our net income with my dad alone this year should be roughly $120k annually altogether (not including my moms disability/SSI, She has stage 4 breast/lung cancer and can barley walk).
This changes things somewhat. Are you comfortable having your dad co-sign for your mortgage? Potentially have him on the deed? Is his credit up to snuff? If you include him in the process you have a better chance of being approved. When you apply for a mortgage, they pour over your financials (pay stubs, tax returns, bank statements etc); you have to make sure your dad is comfortable with that if you want to include him.
Personally, with your mom being sick and all, I'd advise against buying a house. The home buying process is very time consuming; you'd be better off spending that time helping your mom.
Quote:
I guess that's also not accurate because some people brings up the fact that anything can happen to any of us at any time, but by that logic, doesn't that technically mean you shouldn't be doing anything at all cause anything can happen? I could be wrong or exaggerating a bit, but it seems relevant to the same scenario.
Obviously anything can happen to anyone at anytime, but when both wage earners are working part time, it raises the risk. Honestly I'm not even sure you would make it out of underwriting unless your dad is on the application.
Quote:
Moreover, after all the advice that has been given, you guys can't fathom the appreciation I have towards you all. You guys are literally giving me knowledge of being aware of a comfortable/affordable lifestyle. I've learned something new today and I've come to the conclusion to talk to my wife about these options, either we rent a big apartment until we finish school and find a full time career, or simply buy a cheaper house where we can afford to live comfortably; build equity; and have a decent resale value to live for x amount of years.
Again guys, thank you so much!
The time and financial commitment of home ownership is very large. Had I known what I was getting myself into, I would have waited a few more years. If I was in your situation, I'd wait.
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; a 250k mortgage loan with a 10% down payment would be roughly $1100 a month with the average 30 year fixed and 4% interest rate. Adding insurance, pmi, taxes, utilities (sewer,garbage,water,gas,heat,cable etc) The total monthly bill would roughly be 1700$ (really depends on taxes) We gross 4500 a month, is it possible to get approved for 250k? I'm 90% sure the payment per month wouldn't be a problem because we saved about 20k alone in 2014. The only reason why we didn't go check what we would get approved for is because we want to keep saving for a few more months.
. 
, I hope you understand the fact that I truly appreciate your help. I do however, would like other people's input/opinions on my current dilemma.
