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Old 08-19-2012, 01:19 PM
 
3 posts, read 56,794 times
Reputation: 16

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I am in the process of purchasing $500,000 house.
How likely will I get the mortgage to get this house with 10 % down?

I have 812 credit score.
Same line of work for over 10 years.
I saved $80,000 cash.
Mutual fund $28,000.
401K $85,000
Annuity $30,000

My employer will pay closing cost (except pre pay) including 1% origination fee.

I make $95,000 per yr, before bonus and bonus is 15% annually.
I also had business while working and in 2011 I had to write off $10,000 for business related expense (so, loss of $10,000).

I have a condo(it is in other state) that is rented out at $1,650 but my broker told me I can't use this income because my condo does not have enough equity.
It was purchased 2005 at $240,000, balance owned as of today is $215,000, and condo sells around at $190,000.
Only debt I have is a car payment of $500 per month. No credit card debt, I pay off every month.

Right now I am living on a company paid house, but need to move out within two month. (so no extra expense at this time).

Please advise me.
Thank you.

Last edited by nadoo1004; 08-19-2012 at 01:24 PM.. Reason: Forgot to mention
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Old 08-19-2012, 04:02 PM
 
51 posts, read 136,347 times
Reputation: 20
Quote:
Originally Posted by nadoo1004 View Post
I am in the process of purchasing $500,000 house.
How likely will I get the mortgage to get this house with 10 % down?

I have 812 credit score.
Same line of work for over 10 years.
I saved $80,000 cash.
Mutual fund $28,000.
401K $85,000
Annuity $30,000

My employer will pay closing cost (except pre pay) including 1% origination fee.

I make $95,000 per yr, before bonus and bonus is 15% annually.
I also had business while working and in 2011 I had to write off $10,000 for business related expense (so, loss of $10,000).

I have a condo(it is in other state) that is rented out at $1,650 but my broker told me I can't use this income because my condo does not have enough equity.
It was purchased 2005 at $240,000, balance owned as of today is $215,000, and condo sells around at $190,000.
Only debt I have is a car payment of $500 per month. No credit card debt, I pay off every month.

Right now I am living on a company paid house, but need to move out within two month. (so no extra expense at this time).

Please advise me.
Thank you.


Before you make the mistake of your life - ask yourself if you REALLY KNOW what it means to have a HALF A MILLION DOLLAR DEBT. Millions before you have learned a tough lesson about the FANTASY of 'home-ownership' (remember if you take a mortgage the BANK owns you house, not you...) -- that lesson is that a mortgage is a HUGE DEBT.

Just imagine that I come up to you and lend you $500,000 -- do you want that burden on your shoulders for the rest of your life.. the average mortage pays 3 times by the time its all said and done - thats 1.5 million and you'll be 77 years old before you TRULY own it.

The myth that you can always sell 'your' house is just that - a myth. Look at at the trapped bubbletards from the housing bubble era.

My advice for you is that if you have 165k saved between savings and 401K, why not BUY your house with CASH and be DONE WITH IT.

Debt is DEBT - remember: the banks dont lend to make people happy and make their lives better, they lend to them to make them SLAVES.
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Old 08-19-2012, 04:49 PM
 
Location: None of your business
5,466 posts, read 4,222,420 times
Reputation: 1173
Debt will not only make you poor, it will make you miserable. If you must buy a home use the 20% down as a rule. When you don't have 20% you will pay a higher payment via PMI. This is simply an insurance paid by you to protect the bank because you are viewed as a higher risk. These people are smart. Take a que from them.

You will have a much better life if you do.
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Old 08-19-2012, 05:30 PM
 
28,460 posts, read 80,784,868 times
Reputation: 18656
I will not argue with people that, for whatever reason, have some fixation against mortgages or debt in general, it is pointless.

I do agree that it is almost always far more sensible to finance no more than 80% of the value of home because of the penalties like PMI and higher interest rates.

As to the specifics of the OP's situation I agree with what they've been told about the condo they own. I would recommend that anyone that want to explore how their debt-to-income ratio and overall financial obligations effect one's purchasing power use a calculator like this one -- House Affordability Calculator - Yahoo! Homes Like most "automated underwriting" there is not much weight given to retirement funds or other assets.
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Old 08-19-2012, 06:08 PM
 
51 posts, read 136,347 times
Reputation: 20
Sheeple make the mistake of thinking that DEBT is an ASSET - it is not - debt means you owe. PERIOD. A $500,000 debt, to me, IS A ROYAL NIGHTMARE.

You CANT WIN the debt-game, EVER. The ONLY way to WIN is to NOT EVER BORROW. I SAVED CASH for my house. People laughed at me then - now they are the ones in an absurd 1/2 a million dollars in debt, while I have zero debt, a paid house, a buisness and a family and most of all *TIME*. They are in rush hour traffic while I am getting in my morning sun-tan. Why? I have no bills to re-pay.

WORK for what you want - EARN IT. Dont borrow for it, if you borrow you MUST pay it back - thats whats happening with 'underwater' people now - they ARE paying it back!

What did you think the bank was going to GIVE everyone houses so the masses could live the high-life? LOL! The American 'DREAM' -- *DREAM* stop DREAMING about santa-bank-clause giving you a FREE $500,000 house, and start WORKING and SAVING to buy one that you CAN afford in THIS REAL LIFETIME.

live in reality

nothings yours unless you earn it FIRST...
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Old 08-19-2012, 07:42 PM
 
Location: Long Island
9,761 posts, read 21,768,370 times
Reputation: 5660
Quote:
Originally Posted by Rolling_Rock View Post
My advice for you is that if you have 165k saved between savings and 401K, why not BUY your house with CASH and be DONE WITH IT.

.
There are plenty of areas in the US where $165K will barely (if at all) pay for the land a house can be built on...
The OP didn't state in what part of the country s/he lives
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Old 08-19-2012, 07:59 PM
 
51 posts, read 136,347 times
Reputation: 20
Quote:
Originally Posted by Elke Mariotti View Post
There are plenty of areas in the US where $165K will barely (if at all) pay for the land a house can be built on...
The OP didn't state in what part of the country s/he lives
No no, there are PLENTY of areas in the US where you can get a house, land, or both for LESS that $165k ---- the ISSUE is that the masses REFUSE to live in anything LESS than a 1/2 a MILLION dollar McMansion -- well like the saying goes, be careful what you wish for...

The masses think they are ENTITLED to a mansion..lol... funny how we are happy in our little hut with our TIME while the debt-enslave rat-racers are seemingly on at the breaking point with their housing debt that has no end in sight...

To me a car cost $500-$2000.

To the masses a car cost $20,000-$50,000

Its a mentality. And of course you gotta WORK (earn) to get what you want!

I dont have a car payment like the masses do - how? I learned how to fix cars long ago. Want a cheap house? Then learn how to work a hammer! NO FREE LUNCH! Those who 'have it all' got that way from WORK - the masses on the other hand are LAZY and simply BORROW expecting the 'good life' to come with the signature of a bank loan agreement.

REALITY CHECK!
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Old 08-20-2012, 10:03 AM
 
3 posts, read 56,794 times
Reputation: 16
Thank you all for the advise.
I do not know what I was thinking, you are right!
I have been living debt free and should stay that way!
I will look for something I can easily afford.

Thanks everyone!
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Old 08-20-2012, 10:11 AM
 
51 posts, read 136,347 times
Reputation: 20
Quote:
Originally Posted by nadoo1004 View Post
Thank you all for the advise.
I do not know what I was thinking, you are right!
I have been living debt free and should stay that way!
I will look for something I can easily afford.

Thanks everyone!

Just keep your LIFE in mind. You only live ONCE - you can live FREE in a SMALL, *PAID* house and work on your sun tan and retire in your 40s. OR you can live in a $500,000 McMansion and slave a 9-5 until you are 77...

dont get caught up in the American dream myth - live in REALITY and value your REAL LIFE - cause you wont get another one!
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Old 08-20-2012, 10:30 AM
 
Location: Boise, ID
8,047 posts, read 27,220,643 times
Reputation: 9443
Quote:
Originally Posted by nadoo1004 View Post
Thank you all for the advise.
I do not know what I was thinking, you are right!
I have been living debt free and should stay that way!
I will look for something I can easily afford.

Thanks everyone!
While I don't agree, at all, with those who think you should drain your retirement accounts to pay cash for you house, I do think you were drastically overreaching, so I'm glad to hear you are backing off.

The general rule is to buy a house for no more than 2.5x (maybe 3x, if you have no other debt, but you have a car payment, so stick closer to the 2.5x range) your annual gross income. Instead, you were looking more like 5x. That is FAR too much.

Look for something more in the $250k-$275k range instead. That will give you enough savings for 20% down, while still leaving an emergency fund in the bank, and a mortgage you can live with.
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