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I am new to these forums, but have already found it very useful. I am a 24 yr old male from Wash Twp, Gloucester Co. My fiance' and I are beginning the process of buying our first home. We feel like we are prepared to live on our own, but really very clueless on how to go about it. Here are the main questions we've come up with. Any response is much appreciated.
1. We have no idea how much we can afford. We have used calculations we found on line, or our realtor/broker gave us. However, we feel like they are just trying to get us to think we can afford more than we can. I am self employeed, and she is a government worker. After all taxes, we take in an estimated $5,000 a month. We were wondering if there is a general rule of thumb where for instance every $1,000 a month you bring in, you can afford this much house.
2. We have been looking at brand new town homes (Ryan, KHov, and DeLuca). The prices, with the upgrades we want, have been coming to around $235K-$250K. Is it worth to pinch some pennies, and buy a single family house for $300K? Will we even be pinching pennies, given our income? I would like to get as much house that I can afford, but still be able to have a fun life. We aren't the party type by any means, but we do like to have a nice dinner a couple times a month, check out the movies here and there, and go on small get a ways.
3. Being a first time home buyer, are there special programs for NJ first time buyers? We have tried doing research on this, but seem to come up empty each time.
4. We work in South Jersey, and have been looking mainly at the Gloucester, Camden Co. areas. Are there any new constructions that haven't started yet?
I am new to these forums, but have already found it very useful. I am a 24 yr old male from Wash Twp, Gloucester Co. My fiance' and I are beginning the process of buying our first home. We feel like we are prepared to live on our own, but really very clueless on how to go about it. Here are the main questions we've come up with. Any response is much appreciated.
1. We have no idea how much we can afford. We have used calculations we found on line, or our realtor/broker gave us. However, we feel like they are just trying to get us to think we can afford more than we can. I am self employeed, and she is a government worker. After all taxes, we take in an estimated $5,000 a month. We were wondering if there is a general rule of thumb where for instance every $1,000 a month you bring in, you can afford this much house.
2. We have been looking at brand new town homes (Ryan, KHov, and DeLuca). The prices, with the upgrades we want, have been coming to around $235K-$250K. Is it worth to pinch some pennies, and buy a single family house for $300K? Will we even be pinching pennies, given our income? I would like to get as much house that I can afford, but still be able to have a fun life. We aren't the party type by any means, but we do like to have a nice dinner a couple times a month, check out the movies here and there, and go on small get a ways.
3. Being a first time home buyer, are there special programs for NJ first time buyers? We have tried doing research on this, but seem to come up empty each time.
4. We work in South Jersey, and have been looking mainly at the Gloucester, Camden Co. areas. Are there any new constructions that haven't started yet?
Any help would be appreciated. Thanks!
-Brian
You may want to buy a 2br 2ba condo that is just "BIG ENOUGH" for your both, or imagine YOU lost job and only your fiance's government job is still there. Can you still afford to pay the mortgage and property tax? Renting an apartment is only ONE YEAR binding, i.e. if any problem should happen, you may just wait till lease expired, and say move to your parents to save monthly payment. But, buying a home, mortgage is normally 30 years, that is to say, if one of you lost job and for substential among of time, bank may come to foreclose your home! That's very sad and panic experience.
Another parameter to check is go to Barnes & Noble or Borders to read the book "Two Income Trap" by Harvard Law School professor, and get a very accurate prediction what could have happen to millions Ameircan Families.
A rule of thumb is no more than 1/3 of your income to pay your housing, either rent or buy. So, $5,000 means $1,700 for housing. rent or buy. So, for lower mortgage rate, you can afford more expensive, otherwise, less.
In Chinese Feng Suei when few people living in BIG house, it is no good, your energy can not concentrate. So, you may not want to stretch to buy too big a house to start with. e.g. you may end up spend lots of time and effort to do the yard work, snow removal ...etc rather than your self employed work, and more expense and less income.
NJ and Fed gave all kind of programs to low income families, and you sound you already making a lot, and may not qualified; however, for 1st time buyer and owner occupied property, the mortgage rate normally much lower than investment, and may be lower point.
I heard some bank like Bank of American has new program to pay all the mortgage points and application fee and closing cost, and that could be over $10,000 discount. It acquire a China bank in China and has access to huge saving and low cost saving there... but you need to be Bank of American customer, very easy, just open an account, but you can also visit BoA. You can also ask your own bank too.
You may also find the best condos or townhouses are the ones of a few years old already, NOT the new ones or to be built. Why? because anything needed upgraded, it is pretty much down. But dealing with building, any upgrade or just add anything, everything they will ask for MONEY! Also, the community would be already complete, not that you move into a "construction site" where your building is done, but there are dozens of other building to be built, and therefore, all the community road is NOT yet done, and also you may NOT have swimming pool, club house, tennis court ...etc that builders may wait till more unit sold later ...etc.
This info has been very useful. When you say 1/3 of income should be towards house, i think they mean pre-tax dollars. This amount (5,000 a month) is post tax dollars. Please correct me if I am wrong.
It is a rough idea, more or less, because rental office or mortgage company also want to check your other sources.
In general, "credit check" covers 5 major things, and of course, "job" is one of the most important factor, and others like "bank saving", "any defaul bills" like pseg, student loan ...etc. "loan amount" (do you have big car loan?) and "credit card balance".
For rental, since rent can not deduct from income tax, so after tax is more accurate. For mortgage, since mortgage interest and property tax (not maintenance fee), can deduct income tax, so may be pre tax dollars can be count better.
All my belief is surounding on the point when your rent, your obligation is one year, but when you buy, depending on your mortgage, it could be 15 years or even 30 years. That commitment is HUGE, especially, you are NOT married.
Not that I assume you will not get married, but if after you got a BIG mortgage (barely can maintain with two income), should you "broke up" one day, BOTH of you with have the mortgage amount follow you. That is to say, you may both agree under your divorce lawyers that YOU would take care the mortgage payment, but when she MOVE OUT, and want to buy another home, she will find out that she MAY NOT BE qualified due to the fact, under her name, she already got a "big mortgage", and when the leave you, her one income may not even qualify for that big amount.
You and most of young couple really shoud spend a few days to read this "Two Income Trap" written by Hardvard Law School Professor Elizabeth. And, you will realize that you should play conservative, even if you got two income. Since your two income may NOT last for 30 years, but your mortgage will!
What I said above could be WRONG a few years ago since you could always sell your home should you break up and walk out good profit each of you, but for next years to come, there is no guarantee on that.
Bankrate.com really isn't trying to sell you anything, no vested interest. And frankly, I find their calculations a bit on the conservative side as NJ real estate is more expensive then most other places.
Quote:
We have been looking at brand new town homes (Ryan, KHov, and DeLuca). The prices, with the upgrades we want, have been coming to around $235K-$250K. Is it worth to pinch some pennies, and buy a single family house for $300K?
Buying a home is a lot more expensive then the initial price tag. There's maintenance and up keep, yard work, garbage pickup, etc. If buying a home is a stretch, buying all the extra stuff you'll need like lawn mowers will surely be tough.
there are banks that are giving a rate for a first time home buyer 5.875% no points plus you can get a grant towards the down payment of your house. so figure if you buy a house for 300,000 and put down 20% down payment so your mortgage would be 240,000 and payments would come out to 1,419 plus u add in taxes and insurance. and you figure out if the mortgage payment is 45% of your gross income then you are standing in good shape.
there are banks that are giving a rate for a first time home buyer 5.875% no points plus you can get a grant towards the down payment of your house. so figure if you buy a house for 300,000 and put down 20% down payment so your mortgage would be 240,000 and payments would come out to 1,419 plus u add in taxes and insurance. and you figure out if the mortgage payment is 45% of your gross income then you are standing in good shape.
just don't get sick, lose your job or have some unexpected expenses or you're screwed, like someone said own the house, don't let the house own you
that is why the banks want to see only 45% of your income going towards the mortgage. so maybe you shouldnt buy anything because maybe one day you will loose your job or get sick?
that is why the banks want to see only 45% of your income going towards the mortgage. so maybe you shouldnt buy anything because maybe one day you will loose your job or get sick?
that 45% is before taxes and coupled with even a low rate of about 20% of income for taxes, both property and income, you are now at 2/3 of your income going for mortgage and income and property taxes, now think about insurance expenses for both your home and autos, now what about the need to eat? have kids? they cost a few bucks. now figure in some unanticipated expense like needing a new refrigerator. are you beginning to see why 45% of gross income is way too high to base your purchase price on?
that is why the banks want to see only 45% of your income going towards the mortgage. so maybe you shouldnt buy anything because maybe one day you will loose your job or get sick?
45%?!?!?!?!!?!? no wonder there are so many foreclosures now.
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re first time home buyer
