Question Details

Lisa, Home Buyer in Brooklyn, NY

Does mortgage amount = home price?

Asked by Lisa, Brooklyn, NY Mon Aug 11, 2008

My SO and I are beginning to search for our first home. We're looking in Brooklyn NY, with close proximity to public transportation, perhaps a 2 bedroom. I work from home so I need office space (convertible to a second bedroom as we need to think about starting a family in the near future). I am completely debt free, and he has some student loans to pay off, and has been managing to pay more than minimum. We both have good credit, and a combined 70k available for down payment (from IRA, 401k, savings). We're not in too much of a hurry, but we would like to take advantage of the buyer's market. After an initial chat with a bank rep, we were given the number 320k. Does this mean we can look at homes priced up to 390k? Or does this mean we should be looking for homes UP to 320k? Please pardon my ignorance on the subject. I just want to make sure we are not limiting ourselves when we can afford more, nor do I want to look at things that is out of our range. Many thanks in advance!

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The short answer, you should call back the person who qualified and ask them to clarify. The long answer; it appears that the person you are dealing with did not make it clear and that in and of itself is an issue. In order to properly pre-qualify a borrower a mortgage planner should take the time to meet with you for an extended period to fully understand not only your financial picture but your emotional concerns as well. Once this is determined they in consultation with you can then design a mortgage plan that addresses your short term cash flow concerns (how much you can comfortably afford to pay) while being mindful of your long term retirement goals. This is a process that should take place face-to-face with a local professional and not over the phone in a few minutes. After all, a mortgage is the biggest expense and asset you will have and they type of mortgage you have will directly impact your ability to retire. I hope this helps and best of luck in your search.
Dave Muti
0 votes Thank Flag Link Mon Aug 11, 2008
Lisa - It is such a great question, I think you'll need to ask that bank rep one more time! It depends on if she was telling you that you qualify for a LOAN for $320K kor a property priced up to $320K. Generally, in my area, loan originators speak in terms of property value; but she should have given you a Good Faith Estimate. Did you get one? If not, ask for one - it should have everything broken down for you. Then, consult with a local agent to get their ideas on how much (if any) negotiating you might be able to expect to do with a seller. I have been referring a lot of business to Brooklyn lately, it seems that market is picking up! If you don't have an agent, send me a list of neighborhoods you might be considering, and I am happy to put you in touch with an agent in that area. I've learned that neighborhoods in Brooklyn vary widely and most agents do not service all of Brooklyn.

Good luck to you!
0 votes Thank Flag Link Mon Aug 11, 2008
GREAT QUESTION: You are approved to purchase a home for $320K if you go over that amount you would need to pay via cash at closing for the difference the bank approval is for $320K.
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0 votes Thank Flag Link Mon Aug 11, 2008
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