Home Buying in Tonawanda>Question Details

Home Buyer, Home Buyer in Tonawanda, NY

Ive been preapproved for 70, My realitor says I should only look at houses under 70. I on the other hand think I could look at houses with asking

Asked by Home Buyer, Tonawanda, NY Tue Mar 27, 2012

price of 75. This is my first home any advice is appreciated

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When you negotiate the purchase of a home you have 2 directions that you can take with the seller. The first direction is to get them to lower the price. The second direction is to ask them to pay all or a portion of your closing costs. If they priced the home to sell the wiggle room I have seen from asking price is to selling price is generally around 3%. Ironically, this is also what most buyers need for their closing costs. To the seller the money they provide in either a discount off price or paying your closing costs nets them the sale at closing......so you get to chose the pocket you want or need to help you most. Most buyers would prefer the closing costs money as a 3% reduction on the price will only save you $10/month. Having them pay 3% towards your closing costs allows you to bring $2,100 less to closing. In this economy, hold on to your cash!

If you were to look at higher priced homes and were able to get them to come down to your budgeted pre-approval, they may not have any room left to assist you with paying your closing costs.

Stay in your budget or work with your lender to find out what items are holding you back. You may find out by paying off a couple small credit cards that your budget increases to purchase.

Best of luck to you in your search. With rates this low, it’s a great time to be a buyer.

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Best,

Chris Schilling, ABR, GRI, CRS, GREEN
Broker-Founder
Turbo Realty
2 votes Thank Flag Link Tue Mar 27, 2012
Generally speaking, the average offer is 5% lower than the average asking price in Western New York. The seller usually comes back with a 3% counter which is accepted.

I was asked this so many times by people who thought that a "low ball offer" would be fine, that I sat and did the math for sold houses in the last 6 months for 5 communities. Of course exceptions do happen, but hardly ever.

When you get a preapproved number, it will be at the top of your ability to pay, and may be higher than your actual comfort zone. $70,000 isn't very much money to find a house in most of the area, and that house will need repairs- an additional expense. You will likely need "all cash" for anything under 50,000.

I think you should seriously evaluate what you can spend monthly, what you have for repairs, and what you have for the closing costs,downpayment, and taxes. If you can cover it, then I would be in favor of looking at the highter price point.
0 votes Thank Flag Link Wed Apr 11, 2012
There are pre-approvals and then there are pre-approvals. Many loan officers are too user friendly or just plain lazy and will not review all of the support documents before issuing a pre-approval letter. Did yours do that? If so, back up and go over everything again, take your LO all of the docs, 2 years of tax returns and w2’s, pay stubs for at least a month, bank statements for 2 months, any other docs that may pertain to you, bk or divorce for examples. Run through the numbers again. Then have your realtor give you a report showing the average list to sale ratio for homes priced from the number your LO gives you up to 10% above that figure. If the average is 95% you can look 5% above fairly safely. If the number is 105% you may need to stay at the LO’s figure and be prepared to pay your own closing cost, good luck,
0 votes Thank Flag Link Tue Mar 27, 2012
Ann, my letter says purchase price 70 but home loan amout 67. and allowable up to 6% concessions but I wouldnt want to use 6%. My reason for asking is I just dont want to waste time looking at homes outta my reach.
0 votes Thank Flag Link Tue Mar 27, 2012
Your agent offered great advice; keep in mind that what lenders don’t know are borrowers’ non-debt spending habits, present and anticipated. You, the borrower, need to consider the economic factors of your lifestyle that would impact on your individual comfort level of affordability. A mortgage outside your budgetary constraints can dramatically alter your overall living conditions. So, be sure to factor micro and macro economic concerns into your mortgage amount deliberations.
0 votes Thank Flag Link Tue Mar 27, 2012
I would need more information, such as, do you need seller contributions? If so, and $70,000 is the amount you are qualified for with the Seller contributiona then unless a house is considerably overpriced you are better off staying in the 70 price range. Ann
0 votes Thank Flag Link Tue Mar 27, 2012
Just because you are approved for an amount, does not mean you should spend it. The bank/mortgage company will approve as much as you can qualify for; the more you spend, the morethey make.

But you don't want to be house poor. You want to bs able to do repairs and fix ups and go to a movie or out to dinner now and then or afford a vacation.

Your Realtor is giving you good advice.
0 votes Thank Flag Link Tue Mar 27, 2012
Thank you all for your answers, very helpful and much appreciated.
0 votes Thank Flag Link Tue Mar 27, 2012
If you've been pre-approved to $70k, you may not be qualified to purchase a home for $75k, at least not without exceeding general guidelines, and that is why your realtor is suggesting you concentrate on homes within your limit.

In my opinion, concentrate your search efforts on homes within your price range and utilize the advantage of having been pre-approved in advance.
0 votes Thank Flag Link Tue Mar 27, 2012
You probably could look at homes up to $75,000 or even a little more assuming that you could negotiate them down to $70,000 however I would tend to agree with your Realtor. $70,000 is the maximum you can afford per the lender, and just because you can doesn't mean you should. Trust me and your Realtor, if you can find a home you can buy for $60,000 you'll be much happier. You'll be able to make your payments easily and won't be pushing the envelope. This is as true for you as for someone who could get a mortgage for $700,000. There's nothing wrong with living slightly below your means. I applaude your Realtor for not pushing you to the max, it sounds to me as if you're in good hands.

I wish you the best of luck and happy house hunting.
0 votes Thank Flag Link Tue Mar 27, 2012
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