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Asked by Queencuse, 18045 Mon May 19, 2008

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Answers

6
Jeffrey Schn…, Agent, Austin, TX
Mon May 19, 2008
Queencuse,

You're probably going to get a lot of answers now that you've been specific as to an MLS # that you're interested in. Be careful here.

As to your income, so you're at about $45K gross today and will be going to $52K in the August. If you're not going to have another source of income to help with the purchase in the near future, and your savings available for a downpayment is almost nil, I have to say you should strongly consider waiting.

The last thing you want to do is stretch to buy a home with no real downpayment available, and no cash in the bank for any repairs, remodeling or emergencies. Remember, there will be no shortage of people telling you that you should go for it, but I would tell you to save up for a down payment of at least 10% of the purchase price, plus save an additional $3,000 to $4,500 for your closing costs.

Good luck,

Jeffrey
1 vote
Jeffrey Schn…, Agent, Austin, TX
Mon May 19, 2008
Queencuse,

First, don't let someone else tell you what you can afford. Put together a budget of where your money currently goes, then go to the bookstore and buy (or read while you're there) one of the top selling personal finance books. You need to think about things long term, budgeting for stuff like retirement, education, etc. I won't plug a book because I'm not trying to promote anyone in particular, but you need to get a handle on where you should be putting your money, and making decisions about your own personal situation.

Remember, people with money and contracts on their side, are always willing to lend people without money and contracts on their side, way more money than they should be borrowing in the first place. While some say it's all the lender's fault, which does happen some times, it's also the people who asked for the money that didn't know they shouldn't have borrowed as much as they did in the first place (or didn't care how much they borrowed).

Don't consider the purchase of a home or other type of residential property as the solution to your long term financial success. Knowing your finances, and your personal situation is what it's all about. Then look at the purchase of a home as part of the solution.

All this said, your take home pay seems light compared to your total annual income. Do you really have 40% in deductions? Do you get a large refund from the IRS every year?

Presuming you have what you have, and all of your deductions are going out the door and never coming back (no tax refund, no retirement in those deductions, etc.), then spending half of your take home pay on a mortgage is on the high side of reasonable. That equates to about 28% of your gross income.

Again, without anyone knowing your personal situation, it's tough for some other "expert" to tell you what's reasonable. But consider this, if you only have $1,000 in savings, but you're bringing home $2,500 a month after deductions, why don't you have more in savings? I'm not being judgemental, just asking where you're currently spending your money.

If you're spending it on things that make sense to you, and those things are more important than putting money into savings, you have to ask yourself how that's going to change when you have a house payment? Clearly, you'll have to stop spending somewhere.

In the end, remember it's called personal finance for a reason, you own your own destiny in this area. Don't let anyone else "tell" you what to do; know what you currently have, learn from the experts, then put together a plan that makes sense for you.

Best of luck,

Jeffrey
1 vote
Julie Broder…, , Reading, PA
Tue May 20, 2008
I would suggest that you get prequalified by a reputable lending institution and stick with the amount that you are comfortable spending. If this is what you're already paying in rent and you're happy with houses in your price range-buy. It's a down market, there are deals to be had, andyou will be building equity. However, I do agree with saving at least for a few months. You have costs to buy, move, turn on utilities. Good luck to you.
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0 votes
Jeffrey Schn…, Agent, Austin, TX
Mon May 19, 2008
Queencuse,

Based on the answer you provided, still referencing the research you should do about your own personal finances, consider saving up for a much more substantial down payment. Seems like you might be able to live with your father for a while, and you don't technically need a place for you and your fiance until you want to get one (you're not being forced out of your home, and you could live in an apartment while you save up).

Your financing will be much less expensive, you could avoid private mortgage insurance, and you'll feel more comfortable about your financial situation without having to stress about the house payment.

Lots of options, but tread carefully, and all my best for your wedding!

Jeffrey
0 votes
, ,
Mon May 19, 2008
Queencuse,

This is a great question. Its totally about what you are comfortable paying because the way the banks caluclate it is based off of your gross not your net. If your making about $50k a year and your debt is about $1000 a month the banks will actually only allow you $1083.33 of PITI. Also in regards to how much you have saved up depending up what area your in you may be able to qualify for the 100% financing program at low rates, no mortgage insurance, and no out of pocket expenses. There are also other programs such as FHA, MyCommunity, and the conventional 97% financing with your credit score. All of these 3 options require 3% down. If you would like a free analysis please feel free to give me a call and I can help walk you through the process. I can be reached at 800-839-6186x334. I hope this helps thank you and good luck.
0 votes
Debra, , Quakertown, PA
Mon May 19, 2008
You need to contact a good mortgage person for the answer to that. I know a fantastic realtor in your area and she works with a great mortgage guy who I know could help you out. Email me at dhollingsworth@kw.com and I'll give you her contact information.
0 votes
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