Home Buying in La Sierra>Question Details

Lisa, Home Buyer in Riverside, CA

I am househunting in Riverside and have been approved for 280k by a mortgage company. BUT I know that my

Asked by Lisa, Riverside, CA Mon Jul 21, 2008

budget will not allow for that large a payment. How do the powers that be decide what can be afforded and is it true that a lot of the cost can be offset by being able to claim the interest on my income taxes? Thanks in advance ot anyone that might answer:)

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The first thing that comes to mind is just because you are "approved" for that doesn't mean you have to buy for that price range. sounds like you are wise to question this, and don't forget to factor in living expenses, maintenance for your new home, utilities, etc. Many "approvals" are done with a computer program from the info you give the lender. Then an Underwriter actually goes through everything, and that 280,000 may or may not change. One word of caution....don't let a lender or Real Estate Agent talk you into more than you think you can reasonably afford. And think about this....if you were to get sick, or lost you job, would you be able to afford the Mortgage for at least 3 months?
Web Reference: http://cellingrealty.com
1 vote Thank Flag Link Fri Jul 25, 2008
Lisa,it's really simple. Tell the lender what you feel comfortable with, payment wise. They should then be able to tell you what you can afford. Just make sure that they factor in taxes, insurance, PMI (if applicable), association dues (if applicable). If you have any other questions, please feel free to contact me directly.
Shane Jones of
"The Shane Jones Team"
1 vote Thank Flag Link Thu Jul 24, 2008
I don't think the tax advantages will typcially be large enough to make you feel comfortable with a payment you say is not in your budget.
0 votes Thank Flag Link Tue May 28, 2013
Because you think the way you do, you probably have stellar credit and won't fall into the trap that others have fallen into time and again. A formula was designed by the banks to determine how much they will lend you based on your income, assets and liabilities. You probably could afford the payments on that amount, though you may have to forego the vacations, savings, investments, etc. that make life secure and happy.

Too many people in your situation would light up like a Christmas Tree and go for every cent in their house hunt and scrimp to pay for it the rest of their lives. Others decide what payment they're comfortable with and set their sites on that. I favor the 2nd approach, though it's all a matter of perspective. In a rising market, some may want to extend themselves for a few years, then downsize to gain more equity and lower payments. Of course, if interest rates rise substantially, that could backfire, depending on the numbers.

Yes, we have a tax deduction for mortgage interest that offsets how much money you put out for mortgage vs if you were renting. Currently, buying is usually the better strategy. Rents are typically higher than mortgages, especially when you take the tax deduction and equity accrual into account and realize that we're now in a rising market.
Web Reference: http://CoronasBestHomes.com
0 votes Thank Flag Link Tue Jan 29, 2013
YOU have to FEEL comfortable with whatever payment you will have. The banks use a formula based on credit, debt and income to determine an amount that the "formula" deems you can make. NOW the test is whether YOU feel comfortable. No one said you HAD to spend that much money, only that you are qualified up to that point.
0 votes Thank Flag Link Tue Jan 29, 2013
good afternoon...fha all the way.......please call me if you would like some details.i am in michigan, but licensed in california.....earnest money deposit and first year's hazard insurance many times is enough $ to close the deal...best regards...bob mcclure- mortgage now- farmington, michigan (248) 806-0366.....
0 votes Thank Flag Link Sat Jul 26, 2008
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