Financing in Fullerton>Question Details

Mamamea33, Other/Just Looking in Fullerton, CA

We have a gross income of $75k, no debt , and credit scores above 700. What can we afford? We pay $1515 in rent but are considering buying.

Asked by Mamamea33, Fullerton, CA Tue Sep 20, 2011

We also have two young children so we need a safe neighborhood. We are looking to move regardless and are looking at places around $2k a month for renting.

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7
Mamamea,

"Affording" and "qualifying" mean two different things, I assume you meant how much can you qualify for, but if you meant how much can you afford, and if you are thinking about a higher monthly payment then you make now, I would test yourself by making that payment (i.e. putting the additional amount into a savings account) for at least 3-6 months and see how things go with finances. If you are already doing that, then great, you know that you can manage your budget with the higher monthly housing expense. There are other expenses than just the mortgage payment though, upkeep/maintenance, lawn/garden care, etc. If you'd be new to homeownership I'd suggest you take a 1st time homebuyer education class (they are often free/inexpensive) so you can get a good idea of what the full monthly expenses could be when owning a home.

As far as qualifying, the only other variable that you are missing is how much of a down payment you'd like to put down. But if you are going to be keeping your total mortgage payment between $1.5k-$2k/mo then your income, debts, and credit should indicate you should have little problem qualifying for that amount. Generally you want to keep your housing payment to no more than about 31% of your gross income (that is called the "housing ratio"), and when you add in other debts (car, credit cards, student loans, etc.) no more than 43% (called the "total debt ratio"). Higher than those ratios can qualify in a lot of situations (particularly if you have good credit scores + some money in the bank, those are called compensating factors). $2k/mo vs. $6.25k/mo of income = 32.342% housing ratio & total debt ratio (since you have no other debts), and would pose no problems qualifying.

But translating that payment into a sales price can be a bit tricky - you need to know mortgage interest rates, property tax rates, homeowners insurance rates, as well as mortgage insurance rates (if applicable). A higher property tax rate could make the same sales price home have a much higher payment than if it was in a different neighborhood/city, etc.

If you had 5% to put down, then for a $2k/mo payment (including property taxes/insurances) would come out to about a $350k sales price (house, not a condo). For $1.5k/mo payment it'd be more like $250k sales price with a 5% down payment. For the same sales price & down payment, a condo has a higher payment because you have a monthly homeowners association (HOA) fee ... so the purchasing power is a little bit lower if you are looking at condominiums (townhomes are the same thing + any home which has an HOA fee, which you will find about a 50/50 mix in Orange County, older areas such as Fullerton tend not to have any).

You should sit down with a mortgage professional or a few and discuss what type of financing options you could have, what the pre-approval & homebuying process goes like, as well as make sure you do as much research as you feel you need to do, and then you should be in a position to determine if buying a home right now is the right thing to do... or if continuing to rent is the smarter choice. I'd be happy to be one of the loan officers who helps you out.
1 vote Thank Flag Link Tue Sep 20, 2011
What you qualify for has additional "components" like how much are the taxes, insurance, HOA/maintenance fees and possibly PMI. These will affect how much house you can buy.

If we assume 20% down (no PMI) and $800 for taxes and insurance, then you qualify in the $380,000 range.

Give us a call to go into greater detail to firm up the quote.
0 votes Thank Flag Link Fri Sep 20, 2013
Hello, have you purchased yet? It only takes a few dozen questions to qualfy you in minutes with as low as half percent downpayment programs from a minimum 580 fico score which can contribute towards your closing costs as well. Here are some links to study and consider.

http://www.under640ficoscoreloans.com/Pages/Conventional.aspx
http://www.under640ficoscoreloans.com/Pages/CHDAPLoans.aspx
http://www.under640ficoscoreloans.com/Pages/HalfPercentDown.aspx
http://www.under640ficoscoreloans.com/Pages/ContactSheryl.aspx
Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
REO & Short Sale Specialist
Credit Repair At No Cost
20+ Years Experience
DRE# 01140252
NMLS# 297251
760-486-4225
9am till 9pm 7 days
http://youtu.be/MrygA2_8fAY
0 votes Thank Flag Link Sat Jan 19, 2013
As any of the agents will recomend, is to get pre qualified for a real estate loan prior to looking for a condo or townhouse to buy.
Contact Brentwood Pacific Financial for a free no obligation pre qualification...or

for a free recorded message on how Brentwood Pacific Financial can help you in your home search 800- 316-5913 ext 2501

Also, you can visit the website http://www.pacwestforclosures.com for a list of very low priced homes in the fullerton area.
0 votes Thank Flag Link Sat Jan 19, 2013
Hello Mamamea,

Congrats on considering buying a home of your own!!

Current market conditions present some very good options for buyers. Low interest rates, reduced home prices and plenty of inventory are just calling for buyers.

If you can pay $2K to pay some one else's mortgage (by renting from them) I urge you to please invest that $2k in your own mortgage.

Since you are a first time buyer I suggest you visit http://WWW..HUD.GOV
You will be able to find several resources for first time buyers. With your credit scores being above 700 you are great shape for getting the best prevailing interest rates and terms. In addition as a first time buyer you are able take advantage of FHA financing. The HUD website will have information on FHA loans as well as FHA approved lenders you can contact to start the pre approval process.

Only a lender can truly inform you as to how much you will qualify for, and lay out the terms, conditions ect of your loan. Once you know the amount you qualify for ,then you can take a good look at your monthly income and make an informed decision on how much of your monthly income you want to allocate to your monthly mortgage payment.

I wish you and your family the best of luck. If I may be of any further assistance, please contact me at :
714-293-1151 KawaindPayne@gmail.com

Best Regards,

Kawain Payne, Realtor
Web Reference: http://WWW.HUD.GOV
0 votes Thank Flag Link Wed Feb 22, 2012
Hi Mamamea,
I grew up in Fullerton, live in Placentia and my office is in Yorba Linda. Contact me through my profile and I will help you with both a purchase or a lease in the Fullerton area.
Thanks,
0 votes Thank Flag Link Tue Sep 20, 2011
One of the best calculators is at bankrate.com. You can do your own calculations.
0 votes Thank Flag Link Tue Sep 20, 2011
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