With low interest rates not only is your payment lower but you build up equity quicker. A $500,000 mortgage at 3% interest will have a monthly payment of about $2,108 and will build up $55,468 of equity in 5 years. A similar mortgage at 6% would have a payment of about $2,998 and would only build up $34,728 of equity. Keep in mind you will also have HOA fees, taxes and insurance. See my general real estate mortgage information at:
The equity you build up would likely cover the costs of moving if for some reason you needed to after four or five years. Any appreciation would be extra money in your pocket. If you plan on moving in one or two years, buying may not be a good choice.
San Jose real estate statistics show an average price for a condo in San Jose of about $500,000 and a minimum condo price of about $170,000.
Getting qualified for a mortgage should be your first step and will be a very important step. You need to understand the different mortgages available and the risks and costs each has. After you understand the mortgages you will be able to judge where and what a typical condo would be like that you could afford. If you would be satisfied with the typical condo and you expect to keep it for at least five years, it could be a very worthwhile decision.
You could consider finding a rent paying room mate which could make it even more attractive. Your borrowing power to purchase the condo would probably not be improved by telling the lender that you intended to have a rent paying room mate because lenders like to see a history of receiving rent.
Talk to several lenders and think carefully about your expected future. My daughter has just made a similar choice (which I think is fantastic).
Top 2 agent nationwide at Keller Williams
Over 30 years experience
Over 1,000 homes sold in Santa Clara and San Mateo Counties
This means you only need 3% down payment.
A MAJOR BENEFIT of this is that you will not have to pay PMI (Private Mortgage Insurance) which is required by FHA and greatly increases you payment.
Drop me an e-mail or call if you would like more information on this.
I suggest you speak with a financial planner to discuss how much you SHOULD be spending on your home purchase before you ask how much you COULD qualify to borrow. If you're like most people, there is more going on in your financial life than just a place to live. A financial planner is the best place to start.
Your debt, credit, income history, etc. all play a part in the qualification. As stated, the market is tough on all buyers right now, so it is in your best interest to meet in person with a lender and get an understanding of what you can afford and if that fits your goal and lifestyle.
There are several choices here, and FHA is just one of them available.
There are conventional loans that do not require mortgage insurance (the lender can pay it for you in return for a higher rate), and there are combination lenders where we do an 80% equity usage for your first mortgage and a 10% equity usage for your second mortgage. 10% down would then be enough.
This option would allow you the best interest rate and not have mortgage insurance.
With your income level, it is important that you get a loan that fits easily in your monthly budget and not be risky.
Glad to see you are doing your research here.
Eric Olfred Nelson, III
Sr. Mortgage Planner
SVC Funding - Campbell
NMLS # 120412
DRE # 01258488
Private Mortgage Banker
Private Mortgage Banking
NMLSR ID 633276
Wells Fargo Home Mortgage | 225 W Santa Clara St | San Jose, CA 95113
Tel (408) 282-4727 | Toll-free 855-709-6727 | Cell 408-806-7005 | Fax 866-794-3309
I encourage you to meet with a lender in your area and go through the application process. This is the only way you will know what's possible.
Bear in mind that all California markets are very tight right now, have low inventory, and are very competitive. The FHA loan is a great program but difficult to get accepted right now in a real estate bid.
Good luck to you.
Yes, of course you have a chance to buy a condo! Start out by learning as much as possible.
Check with a financial planner and a lender to learn more about what you qualify for, and what it will cost (i.e., FHA has additional fees). Then, find a realtor you are comfortable working with. And be as flexible as possible in what you are looking for. Your purchase options may be limited by your financing options. For example, some condo and town house communities are not FHA approved; if you have conventional financing, some lenders restrict purchases based on owner-occupied rates. There are other parameters you should learn about from your lender and / or your realtor.
Good luck and have fun in the process.
It sounds like you have a shot at it, but you will need to talk with a lender before going forward. If you find an agent first, then ask him/her to recommend several lenders to you.
Best wishes on your endeavor.