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Buying a house - how much can I afford?

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Buying a house - how much can I afford?

Old 07-03-13, 08:08 PM
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Buying a house - how much can I afford?

I'm going to be looking into buying my first house in the not-too-distant future. Before I go in and sit down with a bank I'm just curious about how much mortgage I can afford (the GF and I have fun looking through real estate ads). Are there calculators online?

Right now I have a little over 110k in savings, and ZERO debt. No car payments and no credit/school loan debts. I make slightly over 50k a year.

Thanks for any help.
Old 07-03-13, 08:13 PM
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Re: Buying a house - how much can I afford?

Make sure the mortgage is in your name. You have a GF, so how much is she putting in? Nowadays you gotta go in with about 20% down.
Old 07-03-13, 08:13 PM
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Re: Buying a house - how much can I afford?

Does any of that even matter if you have a bad credit rating?
Old 07-03-13, 08:14 PM
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Re: Buying a house - how much can I afford?

Also try your credit union if you have one.
Old 07-03-13, 08:48 PM
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Re: Buying a house - how much can I afford?

Yeah unfortunately not having debt or having a record of paying off debt is a big detriment in getting a mortgage. One of the things mortgage calculators ask for is credit rating.
Old 07-03-13, 08:58 PM
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Re: Buying a house - how much can I afford?

If you want to be house poor, I am sure some loan place will approve you for more house than you can really afford

Don't ask this question to anyone but yourself. You know your bills, you know what your take home pay is, you can figure out the tax deduction that you will get via mortgage welfare from the government

Ask yourself, how much of your take home pay do you want to put into a house payment and how much does that leave you for everything else?

Assume you go 'old school', on your salary with 20% down, you should not finance more than a 200k loan at the absolute max (201k is too much). If you want more house, put more down.

By the 'crazy' loan standard that some have adopted, I am sure they could put you in a $350k loan, but then you won't have money to buy food

but I am old school, I don't buy things I can't afford, my advice is outdated

oh yeah and keep the GF 100% off of anything to do with the house, do no let her put money in.

If this isn't an option, then don't buy a house or have some lawyer draft up a financial agreement of what happens to all value when you two split.
Old 07-03-13, 09:30 PM
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Re: Buying a house - how much can I afford?

As a person who can't make up his damn mind on if he wants a house or not (um...talking about myself) - it really all depends what you want.

If you want that boring waste of a $200,000 development house with the ADT sign in your front yard....I can't really relate to that so I won't comment.

I myself live in an area where houses are very decently priced and I wouldn't spend an outrageous amount even If I had it.

If you are looking for something doable and not too over the top...you really don't need to put much down - if your credit is really good you can look to only making an initial payment (down payment + closing costs) of 3.5 to 5% - also, depending on the state you live in....look into sellers concessions if you need it (although, you may piss of the seller because a lot of people don't understand how this works and how it looks on the contract) - but it is still a very common method in a lot of places.

You don't need to put down 20 percent unless you're definitely looking for a shorter loan term - you will have to pay PMI though (again, there may be different rules where you live) which isn't too much each month.

There are a lot of things to consider but I do want to make sure you know that even if you have a ton of cash saved up and are gunning for that outrageously priced house....seriously take some time out to consider if you REALLY want it.
Old 07-03-13, 10:06 PM
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Re: Buying a house - how much can I afford?

Thanks guys....don't worry the GF will not be involved financially AT ALL.

Is there any advantage to putting say 33% down as apposed to 20% or even less? Aside from paying PMI? Assuming I'm looking at a 30yr mortgage.
Old 07-03-13, 11:14 PM
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Re: Buying a house - how much can I afford?

Originally Posted by namrfumot View Post
Thanks guys....don't worry the GF will not be involved financially AT ALL.

Is there any advantage to putting say 33% down as apposed to 20% or even less? Aside from paying PMI? Assuming I'm looking at a 30yr mortgage.
Well, your monthly payments will be lower.

A $100,000 loan over 30 years at 5.625% would be a monthly payment of $575.66. Can you afford that? Don't forget things like maintenance and utilities and if there's an HOA.

Anyway, why not check out www.Realtor.com. The have a Mortgage calculator that I've found helpful when we were searching for a home.
Old 07-03-13, 11:59 PM
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Re: Buying a house - how much can I afford?

The mOre you put in, the less your loan amount will be and the less interest you would pay.

You have to ask yourself if you plan on living there for at least 5 years, if yes then go ahead and do it.


If you buy an older home I would make extensive checks on the plumbing and septic system.
Old 07-04-13, 12:01 AM
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Re: Buying a house - how much can I afford?

Originally Posted by Why So Blu? View Post
Make sure the mortgage is in your name. You have a GF, so how much is she putting in? Nowadays you gotta go in with about 20% down.
They're more lenient than ever on low % down, with credit > 680 you can put 10% down and avoid PMI entirely. 0% down will cost you though (either a .5% interest rate hike or PMI until 20% is paid off).

Anyway, I built a house for $160,000 (30 year loan) in late 2011, I put about 12.5% down ($20k), I pay about $1000/month for combined mortgage, escrow and insurance. It was $940 last year but the escrow was too low
Old 07-04-13, 12:15 AM
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Re: Buying a house - how much can I afford?

Originally Posted by RichC2 View Post
They're more lenient than ever on low % down, with credit > 680 you can put 10% down and avoid PMI entirely. 0% down will cost you though (either a .5% interest rate hike or PMI until 20% is paid off).

Anyway, I built a house for $160,000 (30 year loan) in late 2011, I put about 12.5% down ($20k), I pay about $1000/month for combined mortgage, escrow and insurance. It was $940 last year but the escrow was too low
I'm in L.A., so I'm programmed to say 20% all the time.

Shit is still expensive around here.
Old 07-04-13, 12:16 AM
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Re: Buying a house - how much can I afford?

Ah yeah, I guess everything is location dependent. I'm in Florida, which it largely still one of the cheaper states around, even with my whopping $220/month summer utility bill.
Old 07-04-13, 12:19 AM
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Re: Buying a house - how much can I afford?

My recommendation: buy something where the mortgage is just a 'drop in the can'. Do not max yourself out.

I personally don't get much out of owning a home. It's just a place. Make it so you have tons of money to spend on other stuff. Nice car, travel, leisure, etc.
Old 07-04-13, 12:20 AM
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Re: Buying a house - how much can I afford?

I agree with that, I bought a house because renting a 2 room apartment cost me over $900, the extra $100 was a no-brainer.
Old 07-04-13, 08:08 AM
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Re: Buying a house - how much can I afford?

Originally Posted by cungar View Post
Yeah unfortunately not having debt or having a record of paying off debt is a big detriment in getting a mortgage. One of the things mortgage calculators ask for is credit rating.
Incorrect. If he has previously had a car loan or student loan, that history of repayment will still be on his credit report. Also he could have open trade lines that he is not using that also build credit. But if he has no credit score at all, he can still obtain a mortgage by having he lender obtain non traditional trade lines: rent payment history for last 12 months, utility bills, auto insurance, health/life insurance that is not auto-deducted from paycheck.

NOTE: I'm a mortgage banker and have done deals with people having a zero score or having a good score but not enough trade lines.
Old 07-04-13, 08:10 AM
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Re: Buying a house - how much can I afford?

Originally Posted by namrfumot View Post
Thanks guys....don't worry the GF will not be involved financially AT ALL.

Is there any advantage to putting say 33% down as apposed to 20% or even less? Aside from paying PMI? Assuming I'm looking at a 30yr mortgage.
If you are obtaining conventional financing, there is a slight discount against the pricing with putting 25% down vs 20%. The next pricing discount would be if you put 35% down.
Old 07-04-13, 08:15 AM
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Re: Buying a house - how much can I afford?

Originally Posted by RichC2 View Post
They're more lenient than ever on low % down, with credit > 680 you can put 10% down and avoid PMI entirely. 0% down will cost you though (either a .5% interest rate hike or PMI until 20% is paid off).

Anyway, I built a house for $160,000 (30 year loan) in late 2011, I put about 12.5% down ($20k), I pay about $1000/month for combined mortgage, escrow and insurance. It was $940 last year but the escrow was too low
Lenient compared to when; 2010??? It is still tougher than the housing boom in the early 2000s. To put <20% down and avoid PMI, lenders typically require a credit score >720; and you pay for it in a higher interest rate.

Only 0% down program out there now is a VA Loan, and you must be military or veteran.
Old 07-04-13, 11:34 AM
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Re: Buying a house - how much can I afford?

Don't forget the insurance and taxes. Insurance in some place like Texas, Florida or Oklahoma can easily be $3,000 a year. As opposed to some place like Arizona, New Mexico or Utah where it might be $750ish. Also here I. Texas we have do not have state income tax, so property tax is pretty high. I pay about $8,000 a year. Would be similar in like California, but much less in some other states.

Just keep in mind that Insurance, property taxes, HOA's and utilities could add another 50%. Not trying to scare, but just don't forget these.
Old 07-04-13, 11:41 AM
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Re: Buying a house - how much can I afford?

Originally Posted by tbone View Post
Incorrect. If he has previously had a car loan or student loan, that history of repayment will still be on his credit report. Also he could have open trade lines that he is not using that also build credit. But if he has no credit score at all, he can still obtain a mortgage by having he lender obtain non traditional trade lines: rent payment history for last 12 months, utility bills, auto insurance, health/life insurance that is not auto-deducted from paycheck.

NOTE: I'm a mortgage banker and have done deals with people having a zero score or having a good score but not enough trade lines.
Right so it's detriment just like I said.
Old 07-04-13, 01:05 PM
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Re: Buying a house - how much can I afford?

Personally, with that amount of savings, I wouldn't use it all as a down payment. Look for a fix-er-upper in a nicer neighborhood, use some of the money to fix up the issues and then you have a nicer house in a better neighborhood with more equity in it. I'd save some of that as an emergency fund, too. Throwing a ton of money into a house may seem like a good idea, as you will get a lower payment, but then again, you may not have instant access to the equity like you would with some money in the bank.
Old 07-04-13, 03:06 PM
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Re: Buying a house - how much can I afford?

I think it's about 3x income so about $150k plus whatever you want to put down.
Old 07-04-13, 03:37 PM
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Re: Buying a house - how much can I afford?

Originally Posted by cungar View Post
Yeah unfortunately not having debt or having a record of paying off debt is a big detriment in getting a mortgage. One of the things mortgage calculators ask for is credit rating.
Completely <b>absolutely</b> untrue.

Open credit with no debt <i>helps</i> credit. It does not hurt it.

What does not help credit is having no credit history whatsoever.
Old 07-04-13, 03:39 PM
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Re: Buying a house - how much can I afford?

As for what you can afford, look at the monthly payments you can make. You will have some tax benefits from owning your home, but you will also have lots of upkeep and other expenses.

And I wouldn't spend every last of the $110K on the downpayment.
Old 07-04-13, 04:07 PM
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Re: Buying a house - how much can I afford?

110k - that's what you can afford.

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