How much of a home can I afford? How much money should I put aside for lawyers fees, inspection, and closing cost? My husband and I have about $200K

Asked by Stellasmom, 11209 Sun Sep 27, 2009

saved. We want a single home or a condo with in Bay Ridge with at least 2 bedrooms. Is this do-able or should we wait for the market to cool down more?

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Robin Silverberg’s answer
Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Sun Apr 18, 2010
Stellasmom, I hope you bought by now. How was your experience, I hope everything worked out smoothly.
if you have not bought anything so far, and were looking to take advantage of the first time homebuyers credit, now would be a great time to finalize a deal.
0 votes
Pierre S King…, , Brooklyn, NY
Sun Apr 18, 2010
Hi Stellasmom:

This is a good question! Let's work backwards! If I may, I would like to through this back at you - How much are you willing to spend monthly on, (Principal, Interest, Taxes and Insurance) which will be your monthly mortgage? Based on your answer, we will know how much of a home can you afford!

Your downpayment is great: See calculations:
($200,000 - 25,000 (Approximately 6% of the purchase price as Closing Costs) = $175,000) With such a large down payment, you may not be obligated to pay PMI.

Eg: See below some of the examples of my colleagues. Normally, closing costs is approximately 6% of the purchase price (Considering what your financial institution will charge for POINTS). Additional expenses making up the difference are:

A. Inspection Fee (Engineer)
B. Termites Inspection (Highly recommended) Read: http
C. Appraisal Fees
D. Survey Fees.
E. Title Search Fees
F. Lawyer Fee, etc.

Let's consider additional information which may even lower your payments. They are
1. When last did you check your credit and what were your scores?
2. What are your gross income?
3. What are your debt to equity ratios?
4. Have you call your financial institution for a pre-qualification appointment?
5. Are you making timely loan payments, etc?

Just remamber, no one can time the market! This is a great time to BUY!

Good Luck!
0 votes
Rhonda Holt, Agent, New York, NY
Tue Sep 29, 2009
Hello, it sounds like you have saved alot of money and that is a great thing because you can reduce your mortgage and make it easier for you to get a loan depending if your credit and income are okay.

Now, no one online right now can tell you what your exact costs will be because it's all approximate. But, in the world of real estate a buyer would usually mutliply 6% of the purchase price to get the estimated closing costs (example: If you purchase a condo for $400,000 x 6% - $24,000). This amount could be higher or a little lower depending on what your going to pay for bank processing fees called points, inspections, taxes, and lawyer fees.

When you speak with your mortgage broker you will receive a good faith estimate, this is a list of all the closing cost fees and estimated fees. Remember the amount can change so it's not set in stone.

I hope my answer has helped you.

Rhonda Holt
Full Time Top Sales Agent
Weichert Realtors, H.P Greenfield
Brooklyn, NY 11234
Web Reference:
0 votes
Mitchell Fel…, Agent, Brooklyn, NY
Sun Sep 27, 2009
Dear Stellasmom,

In order to answer that question, we need to know how much your monthly budget for PITI (principle, interest, taxes & insurance) is. Let's say if you were to purchase a one family home in Bay Ridge for $580,000 (do-able in today's market), you would put down $175,000.00 and take a mortgage of $405,000.00. This mortgage would cost you about $2,150.00 per month. Then you add in $450.00 per month for real estate taxes and insurance which brings that up to $2,600.00 per month. You just need to make sure you go at least 20% down and keep the mortgage amount below $417,000.00 to get the best rate. You would have an extra $25,000.00 to pay your closing costs which usually are about 5% of the loan amount.

If you were to get a condo, the number would be even lower and you may wind up spending like $2,200.00 per month. This is all possible because you are coming in with a big down payment.

So the answer is that it is "do-able" and you should not wait for the market to cool down, that has already happened. Prices are low and so are interest rates, plus there are lots of homes to look at right now. If you wait you may miss the boat because odds are that things will get better, you really can't perfectly time out the bottom of the market.

Please bear in mind that the figures I provided above are estimates based on the average qualified buyer. In order to be sure of what you can do, you must speak to a mortgage banker or broker and have them pre-qualify you! If I can be of further assistance, please let me know. Good luck!

Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665
0 votes
Patrick Thies, Agent, Anytown, IL
Sun Sep 27, 2009
You can sit down with a lender and get preliminary information on what you can afford without any commitment to the lender. They will be happy to go over it with you and let you know exactly where you stand.

No one really knows what the market is going to do. There are great opportunities out there right now and interest rates are low. Anything can happen at any given time. Is the market going to shoot up anytime soon? Probably not. Is it going to go down a great deal yet? No one really knows. Trends tell us what we can expect the market to do, however, this is an unprecedented market. We have not seen a market like this before. There definitely are better buying opportunities out there now than a few years ago, but as far as what is to come only time will tell.
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