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So I talked to a mortgage broker today about getting a preapproval. He ran the numbers basing it on just my salary and leaving out my husband's (since his income comes from self-employment). I make only about 60K a year (before taxes) and I was approved for 350K mortgage!! I was like that's insane. He's like well you earn 5K a month and you have no debt.
I'm like I know how much I take home every month and that's 3400 per month after taxes. And apparently I can afford a 2400/month mortgage.
Does anyone else think this is crazy? Or am I just too conservative?!
Its that type of thinking by the mortgage industry that contributed to the crazy financial situation we are in... the other half of the stupidity were the people that took them up on the generous offer so bought too much home and over extended themselves.
You are not being conservative, you are just being realistic. There are other monthly expenses that are not really debt that need to be accounted for. I would definitely sit down and figure out your real monthly expenses and work from there. Our mortgage sets us at around 20% DTI ratio after taxes, and we enjoy the capability to save or spend however we want without worrying about watching our bank account every month. There are enough stresses out there to add another to the pot.
And just because you qualify for a certain amount, doesn't mean you have to get that amount of loan.
I use more than $1k a month every month... it is insane... Perhaps the mortgage broker is counting on you to miss a few payments so the mortgage industry can rip you off on fees... they are trying to maximize their profit by counting on you overbuying and missing payments or underpaying...
something similar happened to us.....we were told a much higher amount than we were comfortable with.....we just stuck to our guns and shopped around within our budget......
I use more than $1k a month every month... it is insane... Perhaps the mortgage broker is counting on you to miss a few payments so the mortgage industry can rip you off on fees... they are trying to maximize their profit by counting on you overbuying and missing payments or underpaying...
Mortgage Brokers have nothing to do with the servicing of a loan or the collection of fees for late or missed payments. You've been watching too much evening news lately where everything related to homes is the fault of the mortgage broker.
We had a similar scenario happen to us. However, we just figured out how much WE wanted to spend every month on a mortgage and went from there. I'd never trust someone else to tell me how much I feel comfortable paying for something as expensive as a house.
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