How Do I Know How Much I Can Afford?

Question

I'm 25 and graduated college about 2 years ago and make about 48k a year as a dental hygienist in Orlando. I am looking into buying my first home but am having a hard time figuring out how much I can afford. I keep using these calculator things I find like on google, but they keep telling me I can only afford about 90k. How can that be right? Like seriously? Could it really be that until I make like over 100k I can hardly afford a house? I find it very hard to believe.

Answer 1

Forget the "websites". They are out of date and ignored once in place more often than not. Forget "prequalified" go for pre-approved. They are not the same. Pre-approved tells you what to buy price-wise, your loan is approved, credit/work/debt is verified and your purchase basically is subject to an appraisal and pest/title/flood cert inspection typically. That tells a potential seller that you mean busines, you're ready to go. You also tend to get your best deals as pre-approved as guessing whether or not you can do the deal is eliminated..

Call a local real estate broker, do not get assistance from anything less than a full broker. Associate or affiliates hold a lower level license than a broker and as such you will benefit from the broker's higher level of experience and training at the same cost. The agent is paid by sharing in the gross commission that is paid by the seller because you agreed to pay the seller a price to buy it. It is also good to have an experioemced pro walk you thru this process. Look for agents with CRB and/or CRS designations as they are considered tops in the industry.

You are best served by going to a banker you trust that can do in-house underwriting (major important) and apply for a mortgage. Ask if there are first time homebuyer programs available or if there is a special program you may qualify for. Some will assist with closing costs, down payment or special lower interest rates. In Orlando SunTrust Bank should be a good resource.

As I recall FHA uses ratios of 29% of your gross income as a proposed house payment, and a debt ratio of 39% total debt including the proposed house payment and all other recurring debt (student loans, car payments, daycare, etc.) that will not be paid in full in less than 10 months. So if you earn $48K then the porposed house payment will not exceed $48K x 29% divided by 12 for the monthly payment. Same thing with the total debt ratio, take $48K x 39% divided by 12 for that answer. Be sure to use your correct annualized income figures.

Many times FHA is coupled with other special programs for first timers. Again your lender will be best able to assist you with that as many are specific to the local market. The FHA is a US government arm that regulates and sponsors numerous programs for people to become homeowners. It is a great program and I've bought homes on it as well as advised numerous people in buying homes to use it.

FHA requires all lenders to give you a good faith estimate of the cost to obtain the loan and buy the house. You can take the good faith estimates and shop for the best deal for you, which will mainly be the cost to obtain the loan as FHA regulates the interest rate, that will be the same anywhere.

Good luck and let me know if I may be of additional assistance.

Answer 2

Calculators are not always accurate because there are thousands of loans available and hundreds that probably meet your criteria. My best suggestion would be to contact your bank or a mortgage company and request a pre-qualification. They will give you a very clear idea.

Things to consider: What other debt you have? How is your credit history?

My niece got a condo for about $98K in Orlando about three months ago and she makes significantly less than you. Don't loose heart! Let me know if you need a Realtor!

Good luck!!

Answer 3

I consistently had what mother and father now-a-days name an "underprivileged" Christmas. In the times that I believed in Santa he could write me a letter EVERY yr on Christmas explaining the 'lack' of items. Most of the time it used to be anything geared toward an elf being in poor health and not able to make the reward in query, or anything to that tone, however I on no account made a fuss. Most unspoiled youngsters are grateful to get a reward and are hellaciously excited for Christmas to even come! I'm no longer certain the way you men manage Christmas and Santa Claus (in case your youngsters suppose) however you'll consistently supply them a letter from Santa and give an explanation for the shortage, or you'll inform them that mommy simply does not have the price range to supply them the whole lot. Kids will ALWAYS have a record 2 miles lengthy, and except you are a dull guardian, you will not get them EVERYTHING on it. Most of the time, you'll inform what they REALLY desire, and what they 'kind of' desire. Disappointment stings, however being broke and not able to devour stings so much worse.

Answer 4

Well, it gets determined by your GROSS income. You take that how much your new payment will be by your current bills on YOUR CREDIT report. Thats how u find out. For example, a 125k sales price will be roughly at 1020.00 this includes your taxes and insurance. Assuming you have NO major bills, like student loans, car loans. etc. Your debt ratio, based on your income, would be roughly around 26%...... you can go up to 50% so, if I were to max it to the fullest, you would qualify for roughly 230k sales price with a payment of 1955.00 and this includes your taxes and insurance
(This is based on good credit and qualifying at an 80/20 conventional program with no money down. The first mortgage would be at 7% and the 2end mortgage around 10.99%)
And if you do decide to purchase a home, DONT GO THRU THE INTERNET, too many scams. Contact a realtor, then have them REFER you to a mortgage broker or go to a LOCAL lender in your area.

Answer 5

reverse engineer the problem

no more then a 1/3 of your monthy income can go to a mortgage
less if possible - depends on your bills.

Estimate what kind of a down payment you can cough up

go online to realtor.com or a site like that and browse houses
in your area.
Just for pratice pick one, they generally tell you what your monthy will be. Adjust for you downpayment and always
remember they do not always include taxes and insurance in the monthy esitmate. Add 1/3 of the mortgage estimate as taxes and insurance (unless it is estimated in ) and see if the house falls in your price range.

good luck.

Answer 6

How long have you been in your current job? I am a professional mortgage planner and would love to help you out. Send me an email or a YIM message and I'll gladly assist you.

Answer 7

Simple rule of thumb is that your house payment or rent payment should never be more than you clear in a week...Start small and work your way up.

Answer 8

Go to your bank and they will be thrilled to work with you.