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The issue is the home i want cost 360k. I only qualify for 230k because of my income. Thats why my broker cause to use an investment loan that that I can qualify for more. ( but now its sounding like a bad idea).
Seeker, going into a ARM is not always a bad thing, BUT you do have to be very aware of your term (dont wait till the last 3 months to look into refinancing) and watching market trends.
Getting a low rate with the variability of a ARM does one thing in your favor, give you leverage...not a low payment, just leverage.
So I guess the main thing you should be concerned with, is are you going to be making 45K for awhile?
Do you still have 6 months of payment savings?
If you're fairly certain say you'll get a 25% increase in pay either in a new job or promotion then you can afford to take more of a "calculated gamble"
moreso if you have a decent 6 month savings still...
Some may say that kind of 'gamble' is not worth it, but based on your age, savings, and forethought to purchase a house, you are far from the typical buyer....Use your head and instinct you seem to have a above average amount..
Typically, you can get a mortgage for 3 times your salary. Don't go into this amount of debt for this house! You'll be miserable and bankrupt in no time. Don't rent it out. You have no idea if it would be trashed or a drug den. You're responsible if any of that happens! If you have a tenant you're insurance is NOT going to be $50 a month! You MUST have insurance to cover renters.
With an ARM it may good right now, but what happens when the rate rests? What happens if the rate is 10%? That's NOT unheard of with mortgages! Can you afford the dramatic increase that you will be hit with? Remember this is for 30 YEARS.
RUN do NOT walk to a different lender! Try a local bank.
Typically, you can get a mortgage for 3 times your salary. Don't go into this amount of debt for this house! .
To make sure I follow you, because my income (fixed) will be 36K, then the max loan would be about 100k on a house priced at around 120k, but that I shouldn't buy that costly a house? I should look for a house that cost 80k to 100k instead?
To make sure I follow you, because my income (fixed) will be 36K, then the max loan would be about 100k on a house priced at around 120k, but that I shouldn't buy that costly a house? I should look for a house that cost 80k to 100k instead?
Are you the OP?
Did you sign in under a different username?
At any rate, NEVER get the biggest loan the bank tells you you can afford.
Make a conservative budget, and stick to it.
WHy did your income suddenly go from $45K to $36K?
To make sure I follow you, because my income (fixed) will be 36K, then the max loan would be about 100k on a house priced at around 120k, but that I shouldn't buy that costly a house? I should look for a house that cost 80k to 100k instead?
You should NEVER EVER max out your loan. You are going to be paying for this for 30 YEARS! You can always upgrade later. The OP said his income was 45K. If your income is 36K, then yes the max for a loan you should be able to get is 108K. A lender will often say you can max out, but they're not paying your bills and they get paid to sell mortgages. Your escrow will ALWAYS INCREASE! So your payment will increase usually every year. Taxes and insurance always go up.
You also want to have be able to pay for repairs or updates you want to make. Hot water heaters always go on weekends or or night. Never at 9 am on a Tuesday. Furnaces break down during the middle of a snowstorm or cold spell. Air conditioners always kick the butt on the hottest day of the year. Pipes freeze in the winter. Paint isn't free. Appliances break down or need to be replaced because they're older than Grandma. Pipes get clogged. A tree branch falls and breaks a window. Things happen and you need to be able to pay for them. If you're paying most of your income to a mortgage, you'll be house poor and not be able to pay for repairs. A run down house is worth far less than one in great shape. Some issues may also be code violations and you could run into complications from your local government for them. Not fun!
You should NEVER EVER max out your loan. You are going to be paying for this for 30 YEARS! You can always upgrade later. The OP said his income was 45K. If your income is 36K, then yes the max for a loan you should be able to get is 108K. A lender will often say you can max out, but they're not paying your bills and they get paid to sell mortgages. Your escrow will ALWAYS INCREASE! So your payment will increase usually every year. Taxes and insurance always go up.
You also want to have be able to pay for repairs or updates you want to make. Hot water heaters always go on weekends or or night. Never at 9 am on a Tuesday. Furnaces break down during the middle of a snowstorm or cold spell. Air conditioners always kick the butt on the hottest day of the year. Pipes freeze in the winter. Paint isn't free. Appliances break down or need to be replaced because they're older than Grandma. Pipes get clogged. A tree branch falls and breaks a window. Things happen and you need to be able to pay for them. If you're paying most of your income to a mortgage, you'll be house poor and not be able to pay for repairs. A run down house is worth far less than one in great shape. Some issues may also be code violations and you could run into complications from your local government for them. Not fun!
You are leaving out quite a few variables with your "E-Z" calculation: rate, property taxes, potential for Mortgage insurance or no mortgage insurance, state of the house upon move-in, other debts, etc., etc.
A 38% housing ratio from a $36k income = $1140 per month.
At today's rates, a $150,000 loan yields about a $1000 per month payment, give or take actual taxes and insurance.
I wouldn't impose my tastes or comfort zone on the OP. What we need to ask is: 1)What state are you going to live in, 2) What is your comfort zone for down payment, 3) what are your other debts, 4) what is your COMFORT ZONE for your monthly payment.
You are leaving out quite a few variables with your "E-Z" calculation: rate, property taxes, potential for Mortgage insurance or no mortgage insurance, state of the house upon move-in, other debts, etc., etc.
A 38% housing ratio from a $36k income = $1140 per month.
At today's rates, a $150,000 loan yields about a $1000 per month payment, give or take actual taxes and insurance.
I wouldn't impose my tastes or comfort zone on the OP. What we need to ask is: 1)What state are you going to live in, 2) What is your comfort zone for down payment, 3) what are your other debts, 4) what is your COMFORT ZONE for your monthly payment.
Only then can you reverse engineer a price range.
The general rule of thumb for years has been 3x times your income. That doesn't mean spending that much is actually a good idea! Being house poor sucks. It also depends on what you have for a downpayment. In many areas of the country, taxes and insurance will push your mortgage payment up well over that 1k because of your escrow. And don't forget PMI which if you're putting down less than 20% you're stuck paying.
[QUOTE=ss20ts;30074914]You should NEVER EVER max out your loan. You are going to be paying for this for 30 YEARS! You can always upgrade later. The OP said his income was 45K. If your income is 36K, then yes the max for a loan you should be able to get is 108K. A lender will often say you can max out, but they're not paying your bills and they get paid to sell mortgages. Your escrow will ALWAYS INCREASE! So your payment will increase usually every year. Taxes and insurance always go up. [/quote]
Good points all, especially the property tax increases which are absolutely inevitable with the governments being broke. Many people with paid for houses have been forced out due to huge tax increases.
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