Any realtors or mortgage loan people here?

[Jumpem]

I remember from a finance course I took a long time ago that there is formula that takes in income, debt, taxes, etc to figure out what price range of house you can afford.

Do any of you use anything like that? Any web links, or formulas would be great. Thanks!

 

[CalvinHobbes]

Bankrate

 

[dullard]

Simple method: triple your income.

You can get a lot more sophisticated than that. But triple income is a great starting point. Yes you can easilly qualify for a bit more, but that reaches the point where you cannot afford furnature or to do anything fun in your life since you can barely afford your mortgage payments.

 

[Jumpem]

Originally posted by: dullard
Simple method: triple your income.

You can get a lot more sophisticated than that. But triple income is a great starting point. Yes you can easilly qualify for a bit more, but that reaches the point where you cannot afford furnature or to do anything fun in your life since you can barely afford your mortgage payments.

Net or Gross?

 

[StageLeft]

The formula is fvcking nonsense. If you're relying on one, you do not understand your own finances enough. You know what you can afford far more than some skeleton math formula.

 

[Jumpem]

Originally posted by: Skoorb
The formula is fvcking nonsense. If you're relying on one, you do not understand your own finances enough. You know what you can afford far more than some skeleton math formula.

Oh, don't get me wrong. I can look at my proposed budget and figure out what I think is good and can easily afford. I just wanted to take a look at some of the financial formulas to see what they come up with. Trust me, I would not blindly follow something.

 

[StageLeft]

Originally posted by: Jumpem

Originally posted by: Skoorb
The formula is fvcking nonsense. If you're relying on one, you do not understand your own finances enough. You know what you can afford far more than some skeleton math formula.

Oh, don't get me wrong. I can look at my proposed budget and figure out what I think is good and can easily afford. I just wanted to take a look at some of the financial formulas to see what they come up with. Trust me, I would not blindly follow something.

Well at least as far as approval you should be able to get approved for a house far more than most people would want to buy, so once you break out the insurance+principal+propertytax+interest+increased utilities+carpayments+car insurance+studentloans+savings, etc. you should be able to hit a good number.

 

[alkemyst]

Originally posted by: Jumpem

Net or Gross?

Most formulas work on Gross...

Checkout a site like bankrate or you can easily search with google 'how much house can I afford' and pull up calculators.

 

[Yax]

Just go to a mortgage broker or agent and ask him/her what you can afford to buy. Then let him/her ask you all the questions and give you the results. That way you don't need to do the calculating yourself.

 

[dullard]

Originally posted by: Jumpem
Net or Gross?

When I came up with that model, copyright Dullard 2003, I was thinking salary+bonus+other income sources before tax. Thus gross.

 

[Jumpem]

Originally posted by: Skoorb
Well at least as far as approval you should be able to get approved for a house far more than most people would want to buy, so once you break out the insurance+principal+propertytax+interest+increased utilities+carpayments+car insurance+studentloans+savings, etc. you should be able to hit a good number.

I have a budget put together with income and expenses for both me and my gf. We could easily afford a $1,500 monthly mortgage payment. Taxes would depend on which town around Syracuse we settle on, but it's NY so they are generally high regardless. I'm not really sure what homeowners insurance or PMI would cost though.

 

[Jumpem]

Originally posted by: Yax
Just go to a mortgage broker or agent and ask him/her what you can afford to buy. Then let him/her ask you all the questions and give you the results. That way you don't need to do the calculating yourself.

I'll probably do that in a few months. Right now I am moving into a townhouse since I got my first "real" position. I would like to buy a house by the time my lease is up.

 

[JulesMaximus]

Originally posted by: Jumpem

Originally posted by: Skoorb
Well at least as far as approval you should be able to get approved for a house far more than most people would want to buy, so once you break out the insurance+principal+propertytax+interest+increased utilities+carpayments+car insurance+studentloans+savings, etc. you should be able to hit a good number.

I have a budget put together with income and expenses for both me and my gf. We could easily afford a $1,500 monthly mortgage payment. Taxes would depend on which town around Syracuse we settle on, but it's NY so they are generally high regardless. I'm not really sure what homeowners insurance or PMI would cost though.

If you can put down 20% you won't have PMI, homeowners insurance varies based on where you live and the value of your home and personal property. My homeowners insurance is around $600/year.

 

[Jumpem]

Originally posted by: JulesMaximus
If you can put down 20% you won't have PMI, homeowners insurance varies based on where you live and the value of your home and personal property. My homeowners insurance is around $600/year.

PMI will likely be needed. We probably won't have 20% to put down, more like 5-10%. My gf has about $6k in credit card debt from four years of college. That would be first priority to get paid off.

 

[StageLeft]

You can avoid PMI with a higher interest rate second loan for 20%, and in most cases it's the thing to do.

 

[nakedfrog]

The lendingtree.com calculator that I used ended up only being ~$5 off from what my actual payments are on the good faith estimate (which was worked up with worst case scenario for tax and home insurance.

 

[flot]

Figure your monthly "house" (insurance, mortgage, taxes) bill to be roughly $750-800 a month per $100,000.

What are you paying for rent? How does that compare?

 

[Jumpem]

Originally posted by: flot
Figure your monthly "house" (insurance, mortgage, taxes) bill to be roughly $750-800 a month per $100,000.

What are you paying for rent? How does that compare?

My townhouse is $900 a month. A bit high, but it was hard to find a place with a garage and washer/dryer.

Edit: I can afford this on my salary, and still have $700 or so left after all of my monthly bills. When my gf starts her accounting job that will be basically extra money.

 

[dullard]

Originally posted by: Jumpem
My townhouse is $900 a month. A bit high, but it was hard to find a place with a garage and washer/dryer.

Edit: I can afford this on my salary, and still have $700 or so left after all of my monthly bills. When my gf starts her accounting job that will be basically extra money.

So you can afford $1600 a month. Subtract (estimates here):
[*]$150 a month for extra utilities - water, garbage, heating in NY can be expensive, etc.
[*]$50 a month for insurance
[*]$300 a month for property tax (I really don't know what it is in NY, adjust accordingly)
[*]$100 a month for unexpected repairs

So you can afford ~$1000 a month in pricipal and interest. That gives you a house approximately $200,000 more than your down payment.

Since you aren't married yet, I wouldn't count her potential future salary in with the math. With your girlfriends salary, you'll can then use it for furniture, paint, etc. And especially use it to pay off her CC loan. Heck you might be able to just get a bigger loan to pay it off when you get the house.

 

[QuitBanningMe]

Originally posted by: Skoorb
The formula is fvcking nonsense. If you're relying on one, you do not understand your own finances enough. You know what you can afford far more than some skeleton math formula.

You don't get to decide what you can afford. The bank does and they use a "formula"

 

[QuitBanningMe]

http://finance.realtor.com/homefinance/...c=FINLRNAV010&gate=realtor&poe=realtor

 

[StageLeft]

Originally posted by: QuitBanningMe

Originally posted by: Skoorb
The formula is fvcking nonsense. If you're relying on one, you do not understand your own finances enough. You know what you can afford far more than some skeleton math formula.

You don't get to decide what you can afford. The bank does and they use a "formula"

That's their opinion, which as I mentioned later is normally far more than most people's should be

 

[Jumpem]

Originally posted by: dullard
So you can afford $1600 a month. Subtract (estimates here):
[*]$150 a month for extra utilities - water, garbage, heating in NY can be expensive, etc.
[*]$50 a month for insurance
[*]$300 a month for property tax (I really don't know what it is in NY, adjust accordingly)
[*]$100 a month for unexpected repairs

So you can afford ~$1000 a month in pricipal and interest. That gives you a house approximately $200,000 more than your down payment.

Since you aren't married yet, I wouldn't count her potential future salary in with the math. With your girlfriends salary, you'll can then use it for furniture, paint, etc. And especially use it to pay off her CC loan. Heck you might be able to just get a bigger loan to pay it off when you get the house.

I'd prefer to marry my gf before the house. It seems feasible since we both have professional jobs. Combined we could easily pay the bills. But I have so much I want to do in the next year that a large downpayment might not be doable.

The amount you gave is even more than I was thinking of. A new ~1500sq.ft. house is in the $125-150k range around here. That's all I need. I'd like to even try getting by with a 15 year mortgage to save alot on interest.

 

[Jumpem]

Originally posted by: QuitBanningMe
http://finance.realtor.com/homefinance/...c=FINLRNAV010&gate=realtor&poe=realtor

I put in $85k income, $1k monthly debts... and it gave me a maximum house price of $123K. That seems off.

 

[jer0608]

When we were shopping for a house, the lender guidelines we encountered limited the mortgage, insurance and taxes payment to somewhere between 28-33% of gross monthly income, with total monthly debt payments (mortgage, car payments, student loans, credit cards) at no more than 35 to 41%. Most lenders were willing to adjust these numbers on a case-by-case basis (primarily based on credit rating) once the formal loan application was made.