You need to speak to several mortgage bankers and see what they can offer you. This is also known as getting yourself pre-qualified. When you meet with the mortgage bankers, in order for them to properly pre-qualify you, you will need to show them your last two years tax returns and/or W-2 forms, recent paystubs, last three months bank statements and also have them review your credit report. This is the only way you will be able to get definitive answers.
When you go to the first bank and they run your credit report, ask them for a copy of it which you can then bring with you to the other banks so they will not have to repeatedly run your credit as this can lower your credit score if done too often.
When you meet with the banks you want to find out what type of mortgage programs they have to offer you, what type of interest rate they can give you and how much your closing costs will be. You also want to ask if there are any points attached to getting that interest rate (a point is an additional fee that is equal to 1% of the loan amount) and if you can lock in the interest rate (for how long and is there any cost)?
In the end you need to figure out what your monthly costs for the mortgage, real estate taxes and insurance will be in order to see if you are qualified. This is also known as PITI and is the number the banks use to see if you are qualified based on your income. Lets say you borrowed $300,000 with a 30 year fixed mortgage at 4.5%. Your monthly mortgage payment would be $1521.00. If you purchased a home here in Brooklyn in this type of price range your monthly real estate taxes and insurance would be about $350.00. Also, if you purchase a property and go less than 20% down you will have to pay what they call Private Mortgage Insurance (PMI), this would be equal to about 0.55% of the loan amount, so if you borrowed $300.00 and had to get PMI that would add $137.50 to your monthly expenses and PITI. Hence, with PMI your monthly expenses would add up to $1,958.50. If that is within your personal budget, you can spend up to $350,000.00 for a house based on the fact that you have $70,000.00 saved up right now. Keep in mind that you will have closing costs of about 5% of the loan amount (at $300,000 your closing costs would be about $15,000.00).
In order to qualify for a loan like this you would probably have to have an income of about $60,000 per year that you report to the IRS. If you do not have this type of income of if you want your monthly payment to be lower, you would have to borrow less money. When you pre-qualify yourself with a mortgage banker you will get all the answers based on your qualifications and then you can figure out how much you can spend to purchase a home. At this point in time you would want to look at all the homes that are at or near your price range and see if any of them meet your wants and needs.
If you need further assistance please let me know. I can help you every step of the way including introducing you to good mortgage banker(s) and showing you homes. Good luck!
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665
Cellular: (917) 805-0783