Financing in North Andover>Question Details

Gowithwind, Home Buyer in North Andover, MA

How much I can afford and what the rate likes?

Asked by Gowithwind, North Andover, MA Fri Jan 1, 2010

raise next year (if the market is not so bad as right now.) Cash in hand, 50,000. However, my wife does not work and I have a son. Tell me how much house I can afford and what the interests rate I can expect in today's market. Assume less than 20% down.

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8
Ken Lambert’s answer
Hello- I assume you're not looking to buy now? In a few months? Nobody can tell you what rates will be in a few months. The most you could lock in a mortgage rate is 90 days- and it will cost you plenty in fees to even do that.
I am local; we have an office in Danvers and many others in Massachusetts. If you'd like to talk more directly and get into some details, please let me know. We are a direct lender with our own in-house underwriting. We do FHA and VA as well. Thanks, and good luck,

Ken L.
0 votes Thank Flag Link Sun Jan 3, 2010
BEST ANSWER
Do not count on your expected raise until it actually arrives.
Generally speaking a safe mortgage amount is your income x 3

$93k x 3 = $279k
$105k x 3 = $315k. (add most of your down payment on top of the loan available) (keep a cash cushion)
Only get a fixed rate mortgage. Rates will increase.

I am not a lender, But I am sure any lender would love to see your FICO score. That looks very good.

You realize that your debt will be an issue. they say 28% for mortgage, but 36% total debt to income.

Look at what I said in my previous post below. Take you take home income (forget tax benefits) subtract all your expenses except for rent. Take 20% of the top for savings and problems. Whatever is left is the absolute most you should buy. Remember, clothing costs do not come every month, but they do come.

No matter what a lender says you can get for a loan do not exceed what would be comfortable for you to take as a loan.

Look at what is expected to come in your state for housing prices in 2010.
http://www.housingpredictor.com/better.html
Q3 2009 U.S. Foreclosure Heat Map
http://www.foreclosurepulse.com/blogs/mainblog/archive/2009/…
Resets Projected to Cause Mortgage Crisis in 2010
http://www.dsnews.com/articles/index/loan-resets-projected-t…

Do the research. Foreclosures coming from alt-a mortgages may or may not be a big problem in your area.
Unemployment is one of the best housing price predictors there is. No job, no new mortgage.
How is your local economy? Maybe you are lucky and your area is doing great. But find out to be sure.
0 votes Thank Flag Link Fri Jan 1, 2010
The best answer is that you sit down with a local lender. Your realtor should be able to refer you to one. Key points to ask you realtor prior to selecting a lender:
- Are they experienced?
- Are they a broker or direct lender?:
Crucial. The answer to this may determine how long it takes and how much you have to pay to close. Choose wisely. And remember: just because you're dealing with a direct lender, that does not mean they always have direct in-house underwriting. Whether they do or don't is a determining factor in how long it may take for you to get an approval and to close. Clearly the sooner you can do both the better, and the more bargaining power you'll have when negotiating with a seller, especially if you are already pre-approved ( a true preapproval) and can close in less than 20-30 days. In itself, that is HUGE.
- Do they communicate timely and well?:
This is equally as crucial for both you and your realtor. Timely and trustworthy information is essential.

This is one of the most impactful investment/decisions of your life. Make certain you are working with professionals that have the same point of view. Hope this helps and happy house hunting!
0 votes Thank Flag Link Sat Jan 2, 2010
Hello! I am a North Andover home owner and agent here in town.
There are a handful of excellent mortgage people I can recommend if you would like.
Feel free to email me at lisa.johnson@nemoves.com and I will forward you their contact info.
Best of luck!
Happy New Year

Lisa Johnson
http://www.route495.com
Web Reference: http://www.route495.com
0 votes Thank Flag Link Fri Jan 1, 2010
Thank you for all the answers.
Sorry, the 1st part of my question got cut off for some reasons. Income. 93,000. Fico socre. 760+ for all three. anticipate a 10,000+ raise this year ,most likely the annual income will be 105,000 soon.
0 votes Thank Flag Link Fri Jan 1, 2010
You should really sit with a mortgage professional to get the most accurate estimate for a rate, it'll be more important to look at your 1,3,5, 10 year plans, credit history, career plans, family plans to find the right loan program for your specific interests.

Ask your friends, family, colleagues and other trusted people in your life for the name of a mortgage professional they have used recently and been happy with, this is where you'll get great service from, they'll have an interest in keeping the good will of your friend as well as potentially have you as a client. You should check them out with the Mass Division of Banks, Better Business Bureau, Attorney Generals Office even Google them to see how others experiences are with the lender and the broker. Once you've had a detailed conversation with them they can outline how their services will be beneficial to you. You should also see how approachable and responsive they are to you, this is important because along the way there will be questions you might have and need answers to. Hope this helps, Happy New Year
Web Reference: http://www.MedfordHouse.com
0 votes Thank Flag Link Fri Jan 1, 2010
No one can tell you that.

A general rule of thumb is your yearly income x 3 = a safe loan amount. But if you have massive debt (which I doubt) that could change it a lot.


You might qualify for more, but be careful about making yourself house poor.

Since I have no idea of what your numbers would be consider the following example ($9k month income) and advice.

Disregard what any lender will tell you.

Take your monthly take home income subtract your normal expenses and expenditures from that. ( $9k - $5k) Add your rental payment to that amount. ($4k+ $1k)Take off 20% ($5k-$1k) for a safety margin (and saving for the future) whatever is left ($4k per example) will be a very safe amount for you to spend. That amount has to include your taxes, insurance, electric, water etc. That amount could be much higher or lower than a lender will allow. But it will be safe for your lifestyle. Doing it this way you will be able to handle it when unexpected expenses come up.

How you live your life can greatly change what you can comfortably spend on a house. If you enjoy a lot of recreational activities that cost a lot of money the loan calculations do not take that into account.
It all depends.

That means you should really go not from what you can get a loan for, to what you can comfortably afford each month including taxes, insurance, electricity, repairs and so on. If you know you can afford $1k a month for a payment ask what amount of loan you can get for that. Look at different length of times can do for you. Mortgage can be gotten in many different years. 15, 20, 35, 30, and even 40 years are possible. You can even get oddball time frames like 12 or 22 years. The shorter the time the better your wallet will be.

Do you have a good fico score? If below 620 it may be almost impossible to get a loan.

Interest rates now seem to be in the 5-5 1/2% range.

One last idea for you, if possible save at least $5k of your money. It would be nice to have a cushion just in case you lose a furnace, car transmission, or anything happens.
0 votes Thank Flag Link Fri Jan 1, 2010
Gowithwind,

I would recommend your first step would be to contact your lender.

There are many variables when you are applying for a loan and locking in an interest rate:

* How long have you been employed at your current job?
* Your debt to income ratio.
* Your credit scores (FICO's)
* Price of home your purchasing
* Time frame of your purchase (as rates change)

Once you have your answer on what type of a loan & interest rate you qualify for, you should ask for a pre-approval letter from the lender.

At this point, an area Realtor will be able to look for properties that match the guidelines of what you can or cannot afford.

Best of luck!
Web Reference: http://www.weberhomes.INFO
0 votes Thank Flag Link Fri Jan 1, 2010
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