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My wife and I are planning to purchase our first home. I have been doing extensive research and just need some clarification and advice.
We both make around 111,000 annually and I think based on my calculations we feel comfortable purchasing a house for in the 406,000 price range listing price but with possible upgrades or things I can push this value max up to 430-440s as a cushion but we will try our best to keep the upgrades and stuff to a bare minimum to keep is closer to the listing price or least to 425ish.
My question is how much do you really ask for when apply for a mortgage when you don't really have a figure on how much the value or the house will be? For example I am heard horror stories of people having to actually own 15,000 or 20000 out of pocket at appraisal time because a house they agreed to build with a seller came in at 430,000 but the appraisal value was only 415,000 and then the buyer would have to maybe owe this difference because the loan amount is given is 435,000 max.
I also heard same scenario a house agreed at 430,000 but appraisal comes in more at 450,000 then what happens? ( I KNOW THIS PROCESS OF APPRAISAL IS TOWARDS THE END, AFTER A HOUSE IS BUILT, I JUST DONT WANT TO PUT MYSELF IN SOME HORROR STORY SITUATION)
Isn't it always just safe to when applying for a mortgage over call the amount lets say 500,000 to be on the safe side then even if value is only 410 or 440 it wouldn't matter because you are pre approved for 500,000 so come closing time the loan only needed is 410 or 440 and your loan officer than readjust it then?
I have to read to many confusing posts online so this doesn't make sense.
I actually went into bank of america website to get pre approval and thought the bank would give me how much I can get pre approved for and after checking our credit, the next page loads and its asking suggested loan amount request ( I DONT KNOW ! I WANT TO KNOW HOW MUCH I CAN FREAKING AFFORD MAX , WHY ARE THEY ASKING ME THE EXACT PURCHASE PRICE IF I GOT NO CLUE). I WANTED TO KNOW THIS SPECIFIC AMOUNT I CAN AFFORD TO BE ABLE TO AT LEAST KNOW WHAT HOUSES WE CAN AFFORD.
can someone just explain in clear English if a LIST PRICE OF A HOUSE STARTING IS 406,000 what amount should I ask for a loan or pre approval to make sure I am not screwed in the end.
We dont have 20% saved We only have 10,000 saved but will have around 35,000 - 45,000 saved in 6 months times before the house actually gets built so we can give a down payment amount accordingly with closing costs after 6 months or more.
We are just rushing to buy a house because we like the area ,the price for this area, and the desirable location which will only increase in value in 1 year and all plots will be gone probably in the next 1 or 2 months.
ALSO of note we have absolutely no debt of any kind all cards, student loans , no car payments our current debt is zero and 2 credit cards which have a 0 balance. ( 0 DEBT)
Your mistake is applying for a mortgage online. Find a lender you can go sit down with and they will educate you on the process and the particulars. A 1 hour meeting will do wonders.
You get pre approved for the maximum amount you qualify for, and then you shop for a house accordingly. You do not, of course, have to spend that much, but comfortably under.
Your mistake is applying for a mortgage online. Find a lender you can go sit down with and they will educate you on the process and the particulars. A 1 hour meeting will do wonders.
This - congrats on having zero debt. You're way ahead of most. I advise all my clients to stay away from online lenders. Had one that found out the hard way with Quicken. Had an appraisal problem and her contact was out on vacation. His team was nearly clueless and her deal almost blew up.
I WANT TO KNOW HOW MUCH I CAN FREAKING AFFORD MAX ,
You and your wife determine this, NOT a lender. And please know that this maximum number is usually very different than the amount a lender will give you.
It sounds like you are looking at new construction homes, and the process there can be a little different than getting a mortgage to buy an existing home. So you need to look into that aspect as well, and of course it will depend on whether you are buying through a large builder who owns the land and you pick from one of their floor plans vs. you buying land, then hiring a builder.
As others have said… You need to talk with a good local mortgage broker or lender... Not a form on a website. You need someone capable of having a conversation like what you want. Ask some of your friends or coworkers who own a home who they used for their loan and if they would recommend them. Finding a good local lender is important because that person will need to be one pf your best friends through the process.
My wife and I are planning to purchase our first home. I have been doing extensive research and just need some clarification and advice.
We both make around 111,000 annually and I think based on my calculations we feel comfortable purchasing a house for in the 406,000 price range listing price but with possible upgrades or things I can push this value max up to 430-440s as a cushion What? but we will try our best to keep the upgrades and stuff to a bare minimum to keep is closer to the listing price or least to 425ish.
My question is how much do you really ask for when apply for a mortgage when you don't really have a figure on how much the value or the house will be? Mortgage loans are based on the LOWER of: the appraised value or purchase price. You don't set the parameters of the loan. For example I am heard horror stories of people having to actually own 15,000 or 20000 out of pocket at appraisal time because a house they agreed to build with a seller came in at 430,000 but the appraisal value was only 415,000 and then the buyer would have to maybe owe this difference because the loan amount is given is 435,000 max.
I also heard same scenario a house agreed at 430,000 but appraisal comes in more at 450,000 then what happens? ( I KNOW THIS PROCESS OF APPRAISAL IS TOWARDS THE END, AFTER A HOUSE IS BUILT, I JUST DONT WANT TO PUT MYSELF IN SOME HORROR STORY SITUATION) Nothing happens because the loan is based on the price.
Isn't it always just safe to when applying for a mortgage over call the amount lets say 500,000 to be on the safe side then even if value is only 410 or 440 it wouldn't matter because you are pre approved for 500,000 so come closing time the loan only needed is 410 or 440 and your loan officer than readjust it then? No. You are pre-approved based on a hypothetical loan amount, down payment, and home price. An appraisal coming in under the price triggers re-negotiation, unless your contract removes that contingency. An appraisal coming in above the sales price only offers peace of mind that you are getting a good deal.
I have to read to many confusing posts online so this doesn't make sense. Nothing is going to make sense until you talk with a human being who has the experience and patience to help you understand things.
I actually went into bank of america website to get pre approval and thought the bank would give me how much I can get pre approved for and after checking our credit, the next page loads and its asking suggested loan amount request ( I DONT KNOW ! I WANT TO KNOW HOW MUCH I CAN FREAKING AFFORD MAX , WHY ARE THEY ASKING ME THE EXACT PURCHASE PRICE IF I GOT NO CLUE). I WANTED TO KNOW THIS SPECIFIC AMOUNT I CAN AFFORD TO BE ABLE TO AT LEAST KNOW WHAT HOUSES WE CAN AFFORD. I DON'T KNOW, WHY DON'T YOU ACTUALLY TALK TO A HUMAN BEING? WHY DO YOU THINK AN ONLINE APPLICATION IS ALSO A COURSE IN MORTGAGE LENDING?
can someone just explain in clear English (ahem!) if a LIST PRICE OF A HOUSE STARTING IS 406,000 what amount should I ask for a loan or pre approval to make sure I am not screwed in the end. OK I'm going to predict the future here: you are not going to listen to any advice, you are going to muddle through with zero understanding of the basic concepts of lending, and you are going to blame the lender.
We dont have 20% saved We only have 10,000 saved but will have around 35,000 - 45,000 saved in 6 months times before the house actually gets built so we can give a down payment amount accordingly with closing costs after 6 months or more. Great between now and then, attend a first-time homebuyer seminar, and meet with a human being to get your questions answered.
We are just rushing Bad idea to buy a house because we like the area ,the price for this area, and the desirable location which will only increase in value in 1 year wow and all plots will be gone probably in the next 1 or 2 months.
ALSO of note we have absolutely no debt of any kind all cards, student loans , no car payments our current debt is zero and 2 credit cards which have a 0 balance. ( 0 DEBT)
You don't really ask for a finite amount until you have a purchase contract. Lenders tell you how much they will let you borrow when you get pre-qualified.
It also sounds as if you plan on building. It's very rare that a newly built home appraises for more than the sales price. The opposite can and does happen--appraises under the sales price. This is especially true when you start adding lots of upgrades.
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