2006-07-09 13:27:14 · 6 answers · asked by Anonymous in Business & Finance ➔ Credit
The ole rule of thumb is your housing payment should be less than 28% of your gross salary, which in your case would be $10,360/year.
Assuming you have an absolutely stellar credit rating, no debt (no credit card debt, no car loans/leases, no personal loans, etc...), and have at least $35,000 cash for a downpayment, and another $10,000 cash for closing and move-in costs, you might be able to qualify for a $135,000 loan, assuming that you'll want a 30-year fixed mortgage, with the current rate about 6.5%.
Together, this mortgage and downpayment amount would put you in the market for a $169,000 house.
However....
The 6.5% rate is only if you have an absolutely stellar credit rating, no other debt, and a great relationship with your bank/lender. Anything less (or more), and the bank will probably charge a higher interest rate. The higher the rate, the less you can borrow.
For example, if the bank gives you a 7.5% rate, then you would qualify for a only $123,000 mortgage (or a $155,000 home). An 8.5% rate gives you a $112,000 mortgage (or a $140,000 home)
Also, the bank may ask you to pre-purchase points to reduce your interest rate, which means more cash up front.
This is a very, very rough approximation. Your best bet, visit the web site of your (any) bank. They all have mortgage calculators.
One word of advice... never, never, never pay an up-front mortgage application fee. If the bank/lender asks for one, refuse. They'll usually let you apply for free, but only if you press them.
2006-07-09 14:03:47 · answer #1 · answered by Volleyball Socrates Jr. 3 · 0⤊ 0⤋
Refer to the 4 "C"s of mortgage lending:
*Creditworthiness (check your FICO score).
*Collateral (The House/Condo you select).
*Cash (How much you have to put down, as well as how much you have for reserves after closing)
*Capacity (how much income vs. how much debt do you have? Do you have 2 years history in the same industry/field?)
If your FICO score is 740+ I'll bet you could get a "No Doc" Loan up to $500,000 or more- just be prepared for a substantial down payment
On the other hand if your credit is average or worse, be prepared to document your income with pay stubs, bank statements & W2s. The amount you are approved for will depend on a LOT of factors- Do you want a 30 year fixed mortgage? An interest only ARM, or one of those crazy Negative Amortization Mortgages?
Look for an up front mortgage broker, or lender who is willing to take the time to explain these items to you in depth. Be careful- lots of money hungry creeps lurk in the mortgage industry.
10+ Years in Mortgage Lending
2006-07-09 17:20:18 · answer #2 · answered by User 3 · 1⤊ 0⤋
It depends on the worth of the house, the mortgage rate, and your credit score. But one thing I have to advise. Be well under the mortgage they offer. In other words, don't take every dime you are capable of taking. They don't care if every bit of your free money goes to them, and they want to make as much money up front as possible, because they will probably sell your loan anyway. So if you fail later, it won't be their problem.
2006-07-09 13:44:12 · answer #3 · answered by marie 7 · 1⤊ 0⤋
It depends on where you live. In Southern California, you'd have trouble buying a garage with a salary that "low". However, if you have no outstanding debt and a low-cost life-style, your best bet would probably be a condo then trade up in a few years. The only way to actually find out, though, would be to go to your bank and ask them.
2006-07-09 13:55:04 · answer #4 · answered by CarolO 7 · 0⤊ 0⤋
It is not just your income it is also the debt you have that has to be taken into consideration. There are mortgage sites (Lending Tree) where you can do a calculation.
2006-07-09 13:34:20 · answer #5 · answered by MadforMAC 7 · 0⤊ 0⤋
Plenty of good advice here.
2006-07-09 20:05:37 · answer #6 · answered by Anonymous · 0⤊ 0⤋