Home Buying in 21229>Question Details

Sassycha, Home Buyer in 21229

can we afford to buy a $300,000 house if our monthly income is just $4000?

Asked by Sassycha, 21229 Tue Jun 2, 2009

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9
AND YOUR DOWN PAYMENT is ????
Property Taxes???

$4,000 x .33 allows you
$1,320 PITI (Principal, Interest, Taxes & Insurance)

These numbers just give you some fuel for thought:

$1,000/month at 5% =$187,000 mortgage amount
$1,000/month at 4%= $210,000 mortgage amount
$1,000/month at 3% = $271,000 mortgage amount

We don't recommend that you overextend yourself... But if you have potential for increased earnings, when you are ready to buy, you may want to consider negotiating a purchase where the Seller pays discount points at closing to reduce your interest rate/payments for the first two years. Most lenders allow you to Qualify at the second year rate.
GOOD LUCK!

Temporary Buydown Calculator:
2 votes Thank Flag Link Tue Jun 2, 2009
I would be happy to try and help you buy a house. There are some possibilities and many variables such as the area in which you would like to purchase. Give me a call 410-628-0011 or email me at:: carolynheggie@comcast.net and we will go over your options.
0 votes Thank Flag Link Fri Jul 12, 2013
Actually, unless you purchases a home with all cash, the UNDERWRITER will use the same formulas that I used to (dis)qualify you. Stated another way, the underwriter--not the loan officer--approves/denies a loan request.

Keep in mind that buying a home doesn't just end with the purchase itself; there are ongoing costs. Barbara is correct you definitely don't want to over extend yourself, and the payment structure that she suggested could possibly work--assuming that you don't have too much debt.

Something that you'll have to ask yourself is what would you do if you were to purchase that 300K home this month, you were to lose your job at the end of this month, and it were to take you 3-6 months to find a new job. Could you afford to keep making those payments and paying your other bills on-time for the next 3-6 months while looking for work? If not, then you should probably wait or consider buying something less expensive.
0 votes Thank Flag Link Tue Jun 2, 2009
Only YOU can decide how much you can afford. Question is, what will you qualify for? A loan officer can help you with that.
0 votes Thank Flag Link Tue Jun 2, 2009
Unless that $4K is your net income, you have great credit, have no other debt, and can afford to put down at least 10% to 20%, then the answer is "no". Also, even if the aforementioned are true, then you'd be skating on very thin ice for a while, and you could easily end up losing that home if you were hit with a storm.

Here's how I determined that:
.4 * 4K = 1.6K (the maximal mortgage payment you'd be able to qualify for--assuming you had no other debt)

.8 * 300K * (.055/12) / (1 - (1 + .055/12) ^ -360) = 1362.69
.8 * 300K * (.06/12) / (1 - (1 + .06/12) ^ -360) = 1438.92

.85 * 300K * (.055/12) / (1 - (1 + .055/12) ^ -360) = 1447.86 + mortgage insurance
.85 * 300K * (.06/12) / (1 - (1 + .06/12) ^ -360) = 1528.85 + mortgage insurance
.9 * 300K * (.055/12) / (1 - (1 + .055/12) ^ -360) = 1533.03 + mortgage insurance
.9 * 300K * (.06/12) / (1 - (1 + .06/12) ^ -360) = 1618.79 + mortgage insurance
0 votes Thank Flag Link Tue Jun 2, 2009
The answer depends on several factors. Check with several mortgage brokers before you start house shopping and they can give you a range. With income at 48,000 per year, you will need a large down payment to qualify for a mortgage on a $300,000 house. There are several options that might assist you such as up to 40 year mortgages, if your state will take the $8000 tax credit (or the percentage you can qualify for) and apply that as down payment, and having a good credit rating to get the lowest interest rates to name just a few. You really need to speak with a lender who can check your credit scores and assess your purchasing power. Before you fall in love with a house that you can't afford, PLEASE check with your LOCAL bank or the banks in the state where you will be purchasing property. If you are looking for property in lower fairfield county, give me a call.

Judy Hendrickson
Weichert Capital Properties and Estates
1051 Long Ridge Rd
Stamford, CT 06611
203-858-7876 (cell)
203-322-8800 ext 229
0 votes Thank Flag Link Tue Jun 2, 2009
The easiest way to determine the price of the home you can afford is to start with you net take-home pay and other earnings estimated on a monthly basis, deduct all of your fixed or required expenditures (such as credit card bills, school tuition and contributions, health insurance, etc.). Deduct a monthly allowance for food and clothing according to your needs and something to put in to savings, as well. Deduct the expected real estate taxes, HOA, any expected upkeep expenses for the specific home you may be considering. Divide the remainder by $5-$6 (your mortgage banker/broker/agent can help you determine the correct amount). Multiply the anwser by $100,000 and deduct expected closing costs and add your expected down payment. This will approximate what you can afford (usually lower that the "pre-approval" amount. So, with $4,000 in income, deducting the above fixed costs of approx. $1500 and RET of $500 will leave $2000. If you can get a rate of 5% (will depend on your credit rating) , you will divide the $2000 by $5.35 and get $373,000. Add your downpayment of maybe $50,000 and deduct $15,000 of closing costs, you are at $400,000 approx.
0 votes Thank Flag Link Tue Jun 2, 2009
it depends on how many other bills you have, i.e. credit cards, insurance, car payments. also if you can afford the mortgage payment make sure you dont forget about the taxes. sometimes people see that the mortgage payment is a certain dollar amount, like $400 per month, that usually doesnt include taxes. you also want to consider if one or both of you lose your jobs can you still afford to live there. thats one of the reasons why the market went the way it did. like the other poster said contact a lender. most places will tell you the max your approved for and if you know a specific house they can figure out the monthy payments and the taxes.
0 votes Thank Flag Link Tue Jun 2, 2009
Hi Sassycha ,

I would say the best thing for you to do is contact a Lender to get pre approved . Also if you do not have one I would be more then happy to refer one to you . Also if you would like I can send you listing of homes that you can view . Please do not hesitate to contact me at anytime with any questions you may have . I look f orward to hearing from you soon.

Thank You
Lynn Kedzierski
Realtor
Home Selling Assistance Platinum
Office: 410-285-4663
Cell: 443-739-1194
0 votes Thank Flag Link Tue Jun 2, 2009
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