Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I left the mortgage industry right before all the creative financing was in..and quite frankly am glad that the normal financing is back (if there is such a thing). I was trained that 2-3x your yearly income should in theory be the max mortgage you get. I would always shoot for lower than higher..because lets face it..you dont want to give up your lively hood. I would go NO MORE than 240k Again factor that as a monthly, and add your taxes in too. SEe what your ratios look like.
Location: Ohio, but moving to El Paso, TX August/September
434 posts, read 1,653,500 times
Reputation: 310
Quote:
Originally Posted by Evey
See? They don't care if you can't really afford it. Their commission is based on closing your loan.
My sister in law is about to get foreclosed on because she listened to a broker.
The number I use is 1.5 times gross annual income = loan amount. I rounded yours up a little.
Ok, no offense, but I have to go on one of my pet peeves here. Your sister in law is about to get foreclosed on because of the decisions she made. No one forced her to get the mortgage she took for the amount she took. People need to learn how to look out for their own financial interests and stop blaming others when they bought more house than they could afford.
Ok, no offense, but I have to go on one of my pet peeves here. Your sister in law is about to get foreclosed on because of the decisions she made. No one forced her to get the mortgage she took for the amount she took. People need to learn how to look out for their own financial interests and stop blaming others when they bought more house than they could afford.
Rant done.
I totally agree. She is learning a very valuable lesson about taking someone else's word for things.
She wanted instant gratification, and was told she could have it. She has owned this house for less than a year. She could not afford it from day 1.
People have been giving me all kinds of grief about holding out for a house that I can pay cash for (the market here is heading south in a serious hurry). So many benefits to a mortgage! Not for me. Too many things can go wrong in today's world, and the security of knowing that whatever comes down the road I will still have a roof over my head (even if I am eating canned cat food in the dark). Peace of mind is everything.
If those numbers were my household I would not look for a mortgage of more than $130K. I am sure that a lender would be happy to give you more, but you have to be able to pay your bills AND buy food.
Evey is right. In the $130-$140k range, not much more.
I know it doesn't sound good, but you'll probably need to go for a modest fixer-upper in a decent neighborhood, work on it and improve it as best you can (without going overboard), and then move up a better property in a few years.
But first you'll need to see where you stand credit wise (husband) and, if I may say, rethink the approach of the monthly "payment" on the credit card.......are you only making minimum payments on a balance? I'd get that squared away as a top priority before taking on a mortgage.
Location: Moved to town. Miss 'my' woods and critters.
25,464 posts, read 13,575,909 times
Reputation: 31765
rent vs buy
Quote:
Originally Posted by mrshvo
My hubby wants to stay in SW FL...but I am not quite sure on it because of the house prices here. I think that if we bought a house here, my hubby would have to continue to work 50+ hours a week...and I don't want that to go on because I would like our children to have more time with their father.
Anyway, here's our data (as much as I will give online ).
I make about $39K. My hubby, WITHOUT overtime, makes about $45K. So that's about $84K. (he does make more, but that's with lots of overtime, and I would like to see if we can do it without overtime).
We only have one credit card...payment is about $140 a month. I have a student loan of $234 a month. We own both of our cars BUT do forsee within the next two years, maybe sooner, having to get rid of one of the cars being as it has over 100K miles on it and it about 10 years old. We have two children, and would love to have one more.........but I don't see how that's possible living here.
My credit is good. His...I am not sure. He had bad credit back in the day-loans went into collection, always late on a mortgage on his first house. Never went into foreclosure though. We sold the house and paid off every loan. This was October of 2004. Going on 3 years now, and he doesn't have anything in his name (shares his name on my credit card)....but he doesn't have any debt anymore.
I don't want to be house poor. I don't want hubby to be working overtime when I know that if we moved elsewhere, he wouldn't.
How much money for a house should we not go over? Taxes are high here and hurricane/flood insurance.....
Thanks!
I don't see any mention of savings. You do need to 'pay' yourself out of every paycheck. Now, about buying, an 8% interest for 30 yrs. on a loan amt. of $150K is about $1100/mo. If you are paying rent anywhere near this, then that is all you can afford evidently.
If you have a banker that you are comfortable talking with about your finances, I would suggest that is what you do. Do not let anyone talk you into buying something that you will not be able to afford. All of your hard work to keep your credit in good standing will go down the drain.
If your present rental is comfortable, maybe stay there and start on that savings for your future. Time passes rather fast and before you know it, you will be in a position to look around and fine your home. Good Luck to you.
I would not think in terms of your monthly payments to credit cards and student loans. What is your total amount owed?
You needs some savings, also.
To me, in that market you're in and considering your existing debt, it makes me think homeownership will be difficult for you at this time. But I could be wrong.
I am fiscally conservative. Worse than most. If I was in your position, I wouldn't buy now. I would be looking for the cheapest acceptable place to rent. It sounds like you aren't sold on staying in FL and with the market the way it is, how hard would it be to sell if you decide to move? Next, I would concentrate on paying off all my debts(on time) and saving money. It's good to have a cushion in the bank, at least 6 months living expenses. And you can work on a larger downpayment too. When I had met those contingencies it would be time to sit down with H and decide if we really want to stay in FL. Then if we wanted to stay, it would be time to start looking at houses. Houses I could afford with a mortgage no more than twice my annual income not counting the 20% down so I wouldn't have to pay mortgage insurance. My FICO score would be improving too!
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,591,098 times
Reputation: 677
There are lots of "home affordability" calculators on bank's mortgage sites (like Suntrust, etc) where you can plug in a desired payment amount you'd like, the percentage of the loan, estimated taxes/insurance and it will calculate you a price range of where you should be looking.
I agree with Evey & Rivereee on the amounts.
If it helps, I use a quick rule of thumb when estimating just the principal and interest portion of a mortgage, which is $650/mo for every 100K borrowed. So, if you got a 200K mortage, your P&I will be very close to $1300 if you have relatively good overall credit. Add in 2% extra annually for taxes and insurance, and that's $4000 per year or roughly $350 more per month. So now you are at $1750/mo for the $200K house. Add in PMI, roughly 0.5% or $1000 per year or $85/mo and your total monthly outlay is $1835/mo. Add in extra utilities that are currently covered in rent but you will have to pay for them yourself when you own and you are easily at $2000/mo. Add in your existing loan payments and now you are hovering around $2300/mo.
You make $84K. Roughly speaking, you take home $4500/mo. That's $2200/mo in which you to feed the family, save for the future & rainy day, go out occasionally, pay tuition, etc.. I think $200K is probably the MAX you should consider because it is do-able but will require fiscal constraint on your part.
Edit: another way to think of this is if you are paying $1000 in rent now, then with loan payments your monthly outlay is about $1300/mo total. Do you think you can come up with an extra grand each month given your current state of things? That only you can answer for yourself.
Great response from desibear. Figure out the payment (with all additions) and set the extra over rent aside each month for at least 6 months. If you can live on it and still enjoy life, reconsider at the end of 6 months. Plus you will have more for a downpayment. Better yet, do it for a whole year and organize your whole financial life.
There are more important things than a house especially in this market.
If you do buy, make sure you have enough term life insurance to protect each of you in case of death. Consider also disability and potentials for loss of one or both jobs.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
rent vs buy
).
