Vic
Elite Member
- Jun 12, 2001
- 50,422
- 14,337
- 136
$900 car and student loan payments? How about paying off your debt first? Then you buy the house. Plus, you pretty much never have to put money down to purchase a primary residence conventional mortgage unless you have damaged credit/unverifiable income/lots of debt/etc.
BTW, Ginnie Mae appears to be cutting off the ratios pretty short there as well, at like 37% for the governments and 43% for the conventional (actual allowable ratios are 43% and 50% respectively), and they seem to be overestimating the "other monthly housing costs" section but I suppose that varies by area.
At $65k/yr. with little or no debt and excellent credit, you should be able to EASILY walk into a $250k home with little or nothing down and an affordable fully amortized fixed rate PITI payment of about $1900/mo conventional (which makes for a 35% DTI). Hell, you could do $300k for $2300/mo. (for a 42% debt ratio). That's all day everyday.
BTW, Ginnie Mae appears to be cutting off the ratios pretty short there as well, at like 37% for the governments and 43% for the conventional (actual allowable ratios are 43% and 50% respectively), and they seem to be overestimating the "other monthly housing costs" section but I suppose that varies by area.
At $65k/yr. with little or no debt and excellent credit, you should be able to EASILY walk into a $250k home with little or nothing down and an affordable fully amortized fixed rate PITI payment of about $1900/mo conventional (which makes for a 35% DTI). Hell, you could do $300k for $2300/mo. (for a 42% debt ratio). That's all day everyday.
funboy6942
Lifer
- Nov 13, 2001
- 15,368
- 418
- 126
I have said it before and will say it again, need to move down here by me. Jobs, low taxes, and cheap homes.
Just look at what $24.9K will buy you, and no thats not a down payment, its full price.
Just look at what $24.9K will buy you, and no thats not a down payment, its full price.
Out of curiosity what car does he drive?
Did he run out and blow all his money on a car payment? I'm guessing he's just blowing his money needlessly. If a house is a goal then he should start looking to save 1-2K per month for that goal.
Did he run out and blow all his money on a car payment? I'm guessing he's just blowing his money needlessly. If a house is a goal then he should start looking to save 1-2K per month for that goal.
UDT89
Diamond Member
- Jul 31, 2001
- 4,529
- 0
- 76
I got into a first time homebuyer program from wamu...I used a mortgage broker.
I got a fixed rate 30 year mortgage at 5.875%. I pay about $130 PMI a month, but my co-op appraised for 15k more than I paid so im already pretty close to the PMI going bye bye. I'll probably have it appraised again in 6-12 months.
My mortgage is slightly under $1200 and my maint. Is a little over $900. Between my second job bringing in $800/month during the fall winter and $1600/month in the summer.....and declaring 5 dependents it works out just fine.
The key is claiming 1 dependent for every $30k borrowed. Then when tax time comes along, your refund cancels out the owed tax money.
I got a fixed rate 30 year mortgage at 5.875%. I pay about $130 PMI a month, but my co-op appraised for 15k more than I paid so im already pretty close to the PMI going bye bye. I'll probably have it appraised again in 6-12 months.
My mortgage is slightly under $1200 and my maint. Is a little over $900. Between my second job bringing in $800/month during the fall winter and $1600/month in the summer.....and declaring 5 dependents it works out just fine.
The key is claiming 1 dependent for every $30k borrowed. Then when tax time comes along, your refund cancels out the owed tax money.
ColdFusion718
Diamond Member
- Mar 4, 2000
- 3,496
- 9
- 81
DUAL INCOME
a school teacher and a police officer wants to get a house. 40k+50k = 90k. bank approves 3x of income good for 270k house. (how they come up with downpayment and mortgage payments is another matter)
your friend cant afford a house because he has car loan. people give up certain liberties to buy a house.
a school teacher and a police officer wants to get a house. 40k+50k = 90k. bank approves 3x of income good for 270k house. (how they come up with downpayment and mortgage payments is another matter)
your friend cant afford a house because he has car loan. people give up certain liberties to buy a house.
Sealy
Platinum Member
- Aug 4, 2002
- 2,438
- 1
- 71
Unfortunately in this housing market (I'm in Vancouver area btw) it's hard for first time home buyers to get a "House". When we first got into the housing market, we bought a condo for 92,000K Then we moved up to a townhouse for 150,000K now we're in a house for 490,000K. That's in a span of 12yrs. Mind you the house back in '94 would probably have cost 1/2 that.
Alot of factors apply, we live out of the city, that was the only way we could get a house. It all depends on area, and yes, sucking it up for a few years to eventually get what you want.
Alot of factors apply, we live out of the city, that was the only way we could get a house. It all depends on area, and yes, sucking it up for a few years to eventually get what you want.
Vic
Elite Member
- Jun 12, 2001
- 50,422
- 14,337
- 136
Well, it (as you noted) didn't hurt you because the low interest rates in recent years make it so people can buy well above 3x income. And with rates still being relatively low, you should look into refinancing that ARM into a fixed before it goes up. Best bet is to shop for low cost/"zero points" fixed rates and see if you can get one at or below the rate your existing loan is going to adjust to.
With foreclosures and delinquent payments skyrocketing, it's clear that everyone doesn't afford a house.
It was a response to "Some of the people that we hang out with do not make $65k/yr, but somehow, they were able to buy a decent house in a nice neighborhood."
how working class people afford "decent house"
absolutely. but a new grad with a 499$ bmw lease is going to have difficulties buying a house.
Yeah, it really does sound like he is just throwing away a lot of his money. I mean, other than a handful of places in the country, $65k is more than enough to support a decent house (figure the national average is around $200k and he lives in Florida).
AMCRambler
Diamond Member
- Jan 23, 2001
- 7,715
- 31
- 91
I absolutely agree with you on this. I've been living at home, saving money and paying off all my debts so that I could save enough to buy a house for the past 5 years. It's been a strain on my relationship with my parents, but they really are helping me out. I've paid off all my student loans, paid off my car and I've saved around 30 grand, but still don't have enough to buy a nice house around here. I don't know how the people that live around here can afford these houses. I'm going to be renting an apartment and of course everyone keeps telling me you should buy not rent. None of them have run through the mortgage calculators though or have any idea what the going rates for houses are. Maybe they'll wise up when they go to buy their own houses and see. I'd much rather live in an apartment until I've got a nice down payment that will allow me a decent monthly mortgage payment. This will ensure that any unforeseen expenses that come up like repairs to the house, or a need for a new car do not break the bank. Maybe I could pull off one of those adjustable mortgages without getting myself in trouble and getting foreclosed on, but I think playing it safe is the smarter move.
Some of the downward trend we're seeing in the housing market now are from all these companies giving mortgages to sub prime candidates and they are all defaulting. I do not want to make the same mistakes they did. Live within your means, not above it.
Some of the downward trend we're seeing in the housing market now are from all these companies giving mortgages to sub prime candidates and they are all defaulting. I do not want to make the same mistakes they did. Live within your means, not above it.
cKGunslinger
Lifer
- Nov 29, 1999
- 16,408
- 57
- 91
QFT. You don't just up and buy a brand new, $200K house a few weeks after graduating college. These things take time and planning.
Tell your friend to slow down a bit - he's got plenty of time.
BurnItDwn
Lifer
- Oct 10, 1999
- 26,353
- 1,862
- 126
Yes, I should, but I am toying with the idea of selling the place in the next 12-24 months, and the max amount it can go up when my adjustment comes in October is 2%. (Currently at a nice 4.25%. It's a 3/3 arm and it's from my Credit Union. The max it can increase on any adjustment is 2%. It will likely go up to about 6.0% at the adjustment.
Though, I am tempted to just stick around here for longer as it's cheap to live where I do, and it isn't too bad (Though I really wish I had a basement.)
Ahh well ... I got a lot to think about ..... PS .... to the OP .. sorry about invading your thread ...
Gunslinger08
Lifer
- Nov 18, 2001
- 13,234
- 2
- 81
You're using gross income. With net, $1900/mo is right around 50% of your monthly income. $2300 is closer to 60-61%. That's way too much money to be spending on just your house payment when you take home $3800 a month (assuming you don't contribute to 401k).
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