So, again, the question is: would $2,700 be a reasonable amount to live on in a decent area? that would include: rent, utilities, groceries, etc.
By the way, I have no debt of any kind. Please, never mind how much how I can afford. I am interested in renting.
Lastly, we eat out once a week.
With housing costs being one of the largest in a household budget, it makes sense to deal with that first. Getting to a stable/fixed housing payment that fits your budget will allow you to evaluate if everything else falls in line.
If $33k/year is your gross income and you have reasonable debts, you can likely afford about a $100,000 home with about $700 a month payment at today's 4.5% interest rate. If $33k/yr is your net after taxes, the amounts may be slightly higher. There some homes in this price range, and you would need about $3,500 down payment to be able to purchase. However, there are special financing programs with lower down payment requirements for first time home buyers and programs and that will provide up to $7,500 towards down payment and closing costs. Other plans will match your savings with $4 for every $1 you save.
The combination of low interest rates and current prices is in your favor now. As interest rates and home prices increase, obviously your purchasing power and housing options will decrease. My recommendation is to speak with someone who understands financing and can give you guidance on the various programs and financing options, then find out what financing you may qualify for now and get a list of what you need to specifically be working on before becoming a homeowner, With that info, you can make a rational decision on the timing of the purchase of a home. You may want to read the Trulia Real Estate Blog Should I be a Homeowner or a Renter (link below). If you appreciate an answer, please give thumbs up. For the most helpful answer, please say thanks with a best answer click.
Charlotte is a great city to live in. I moved here 8 years ago from Connecticut. I do not know where you are coming from or the cost of living of where you are at. I can tell you that from Connecticut to Charlotte the cost of rent/mortgage, utilities and taxes were less than Connecticut making our quality of life better.
I think a lot of it has to do with your expenses every month. What you may have in car payments, credit cards, student loans and such.... Anything is conceivable it just a matter of the quality of life you want and what you have for expenses now.
Helen Adams Realty
Depending upon your lifestyle, you should be able to qualify for a reasonably sized home without much difficulty. Naturally, things can change between now and then but knowing the parameters will help you stay on target and reach your goal.
Assuming your Gross Monthly Income is $2700 and your maximum (back end) DTI ratio is 50%, you don't want your debts to exceed $1350 or you could hit some resistance getting approved for a mortgage loan. Go to http://www.annualcreditreport.com to get a copy of your credit report. Add up the monthly total of payments that are reporting for a rough 'ballpark' figure and subtract that from $1350 and that's your remaining allowance for PITIMI. Adjust accordingly.
Saving: if you are not doing so already, MAX OUT your 401k with your employer--it's the best way to accumulate savings and compound its growth at the same time, in my opinion. The money is deducted pre-tax, reduces your tax liability and you can borrow against it without penalty if/when necessary. (Check with plan administrator)
Further, depending upon the location you settle upon to by a home, you might even wish to obtain a USDA RD loan which is 100% Financing to eligible buyers on qualifying properties. For more details on property eligibility and income restrictions, go to their website here: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
Call or email any questions you may have!