I earn 120,000 a year (before taxes, morgage, etc.) and have 2 kids. How expensive of a house can i afford?

Question

just so you know the reason i put this question in this catergory is because no one would ever answer and I was in desperate need of help.

Just so yall know Im a radiologist and my pay is small compared to other radiologists.

IM selling my old 400,000 grand bungalow and im interresting in getting a loan to buy an even bigger house in downtown Chicago.

Answer 1

Although how much you make is a factor, more importantly is how much you can put down.

http://www.quickenloans.com/mortgage_calculator/home_buying_calculators/home_afford_calculator.html

Answer 2

Your gross income is not the criteria, use the net after taxes.

Your present morgtage will just roll into the new one. At the present time, if you're just making ends meet, your present payment may be all you can be comfortable with.

If you have any excess at the end of a month, then you might consider a higher monthly payment. As an old timer, If any excess, you should consider some savings, even a minimum amt. Then consider your options. If you would like an idea of what price home you can afford, based on the payment, a couple factors come into play. Your credit score, not my business, which will affect your interest rate, and the current interest rate even if your credit is A1.

I could run an amortization for you, but I would need the expected interest rate, and the number of years. I can do more than one, but need a little time, no more than 30 min. to an hour.

You can contact me through this board.

Answer 3

Chicago housing is pretty expensive, from what I recall. I know my father was able to sell our old house for around 200K (though he was still making payments, so we didn't get that much) and had been making around 100K a year. He's down to 68K a year again (the company moved and he couldn't afford where it was moving to) and was able to buy a 350K house. In Chicago you're probably looking at a larger price tag. My dad's house has already gone up in real estate to somewhere around 500K, and the area we're in is still decently cheap. Not as much as if we moved to Georgia or something, but still. I'd say look for around 400-500K. Talk to a banker in the area, though, as they'll know a little more about what the real estate market is in the area. They'll also give you options, what the down payment will be, and what percentage you're looking at . If you've been making good on your mortgage (and have good credit aside from that), then they may be able to adjust things so you can afford something a little larger. Sadly, I know that even with how much you're making, that isn't really as much as it seems. It all goes away quickly between kids, house payments, and everything else. Remember too, that cost of living is pretty high in Chicago.

Answer 4

This is a tough question simply because we don't know where you live.

In San Diego, for instance, $500,000 will get you a comfy, 4 bedroom, 2 1/2 bath, two-story, one family home . That same amount will score you a fantastic mansion with acres of land in another state.

The general rule of thumb, however, is not to pay more than 1/3 of your salary on your monthly rent / mortgage. Of course, you can fudge a bit, but as you have 2 kids, you can put money away on college savings and other buffer.

Now -- just to let you know how "facts" do not out-weigh other factors, I'm a Christian, and believe ultimately that everything I own belongs to my Heavenly Father. I prayed about the home ownership situation, and waited until I got a strong green light.

We ended up placing 60% of our salaries into the rent the first year, but He took care of us bigtime. And, my oldest son is entering college this fall with a full scholarship.

Hope that helps, bro.

Answer 5

the overall rule that one and all banks use is that your loan can't be better than 28% of your gross wages. purely utilising this rule of thumb may propose that you'll arise with the money for a house of $428,000 ($one hundred twenty,000 / 0.28). for sure, as others right here have stated, there are different aspects to think about and a number of those will be considered by technique of the monetary corporation: a million. What are your othert money owed (autos, charge playing cards, and so on)? 2. what's your down charge? 3. Any unusual month-to-month prices? and so on, and so on, and so on. prices of interest are at 3 -4 365 days highs yet given historic averages, they're nevertheless extremely low. on condition that, i'd stay faraway from spending on the extreme end of your determination if (a million) it truly is your first living house, (2) you've lower than 20% for a down charge, or (3) you intend to get an adjustable price loan. i'm a huge fan of hybrids - fastened for 5 or 7 years given widespread circumstances. desire that permits

Answer 6

The general rule is: 1/4 of your monthly income will pay your mortgage. So you need to find a bank and figure your monthly income and interest rate so your payments meet that. If you go over youll find yourself on a very tight buget kids are expensinsive. You give no detail as to monthly are you paid salery weekly etc . But your monthly income is what your looking at. and even then make sure you buget your expenses. Its too easy to buy the kids a new toy and next thing you know the car insurance is due.

Answer 7

It depends on what state and city that you live in. For instance if you live in CA you could afford a med to low priced home which is 300k-450k. But in other parts of the country you can buy a fablous house for under 300k. So it is location, location, location. But remember when you are buying a house you are paying yourself. You can write off all of the interest the you pay including the loan orgination fees. And if you play it right when you sell you will make some cash also. Good luck.

Answer 8

There are several factors here and you should probably talk it out with someone at your bank or a financial planner.

You migth also check out some websites that help you budget to determine how much is going out the door, how much really needs to go out the door, and thus how much you have left.

Some things to consider are, are you set for the near and distant future? Where will your kids be going to school? Do you see the house as an investment, a roof or a center for entertaining guests, etc.? How good are you at planning your financial activity and sticking to it? Many things to think about. In short, where are you going and how will you get there?

Answer 9

Your mortgage payments shouldn't exceed 30% of your monthly income. How much do you pay in rent? I'd look for something with a similar payment. Owning a home is a smart step but you don't want to go broke paying an enormous mortgage. Also you'll have to pay homeowners insurance and property taxes, they can total hundreds of dollars a month.

Talk to a real estate agent and a loan officer.

Answer 10

If you've ever talked to a mortgage broker, you would know that they make you fill out a big form (or many forms) and reveal a ton of personal financial data before they come back and tell you how much they think you can safely borrow to buy a house. What makes you think that anyone here could give you the same answer with hardly any of the required information?

Answer 11

The general rule of thumb, is that you can afford a house that is 3 times your annual salary. Another way to do it, is to fugure out how much of a mortgage payment you can afford, and multiply that by 100. So if you can easily afford a $2,000 a month mortgage payment, then you can afford a house that is $200,000....not to say that is what your mortgage payment would be that if you bought a house like that...that is all dependant on interest, down payment, taxes...ect, ect. But, it gives you an idea.