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So I think my hubby and I do pretty well financially. So we decided we were going to look for houses up to 300k. That would make our payment approx. 1500-1800 with 20% down (which we have) which is definitely affordable on a 30 yr mortgage, but really we might even come out under that if we find the perfect property. We could probably afford up to 2k / month but that would be pushing it.
So WHY did the bank approve us for $500k?!?!?! I just don't understand it. I would be SO SO SO broke if we bought a property for 500k. The payment would be like HALF of our take home pay.
I feel that this is the reason for the housing crisis in this country.
I suppose my opinion is that one of the reasons for the housing crisis is that borrowers ASK ANONYMOUS MESSAGE BOARD POSTERS QUESTIONS THAT THEY SHOULD HAVE ASKED THE BANK.
Also, that payment range does not take into account taxes, insurance, or HOA.
LMAO. I'm not really asking the question to you all seriously as i KNOW I cannot afford 500k. The answers to this post are not going to change what I know I can afford that has already been decided. It's sort of just creating a conversation about why banks are willing to loan this kind of money.
I say who cares. Be happy you qualified for that much. Then from there you determine what you want to spend. Some people making what you make could swing that payment, you're deciding to stay in your own budget.
I say who cares. Be happy you qualified for that much. Then from there you determine what you want to spend. Some people making what you make could swing that payment, you're deciding to stay in your own budget.
That is probably true. I do have 2 kids and they are expensive little boogers!
well I just put in all our expenses into one of those "affordability" calculators and based on that I would have approx $2500 for a mortgage payment which would equal out to a 500k house. I guess it would be POSSIBLE, but I just don't understand why someone would want to put themselves in such a stressful situation that they have NO leftover money for other fun things in life like vacations, etc. I guess in other parts of the country you can't get a nice house for less than that and can't rent for less than that either, so there is that, but I would be so stressed out every day knowing that at any moment I was on the brink of bankruptcy.
And we don't have a lot of other debt, either, so it really is pushing it to the limit.
The bank loans the money, but ultimately, the people doing the borrowing have to decide how they want to prioritize their lives. Personally, I would never spend half of my income on any kind of house payment. I'd rather take the money and have fun with it. And again, sometimes when people are young and just starting out, they know that in the future they'll be making more money. So they buy more house than they really should at first, knowing that in a few years the payment won't be so onerous.
Here in Texas it's really not the P&I that will kill you. That's actually quite affordable with the interest rates so low. No, here it's the taxes that will kill you. I'm looking at a tax rate of 3.2% before exemptions, which works out to be $16k a year per $500,000 borrowed (I'm buying in the 300s, but still). And while the P&I is more or less fixed, the taxes fluctuate based on valuation. Ugh.
The bottom line is that home buyers should be looking at ALL the costs, not just one line item. Just because they pre-qual you for an amount doesn't mean you'll be 100% good to go when it gets to underwriting.
Most cars can go 120 mph, but that doesn't mean everyone gets in their car this morning and drives that fast.
It's impossible to tell you if they are smoking something or if you are overly conservative - but every day I have to tell prospective buyers they need a cosignor. When I pre qualify someone, I provide two numbers: 1) the home price at their desired mortgage payment, and, 2) the maximum sales price and loan I can get them to. The final number they decide upon is almost always in the middle of the two.
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