Hi,my husband makes 100k.I don't work but plan to look for a job soon.We have a 1 year old.We have about 65k savings right now.we are paying 1500 for rent.We are planning to buy a house/condo next year around LA.What do you all think,how much can we afford?
2007-10-04 04:07:56 · 5 answers · asked by jassymink 2 in Business & Finance ➔ Renting & Real Estate
I don't think you are going to like my answer, but I would say ~$300k. Here's why.
There are absolutes and rules of thumb.
Rule of thumb is you can afford a mortgage of between 2-3x your annual salary which is $200k to $300k for you.
In reality you would be wise (it used to be a banks underwriting rule) to not spend more than 28% of your gross income on your housing payment. That would be $2333 per month and should inclue principal, intereste, taxes and insurance (PITI) and PMI (personal mortgage insurance) if necessary. The other rule that used to be absolute was no more than 36% of your income could go to all debt payments including your mortgage. That means that any car payments and student loan payments, etc., would have to fit between the $2333 and $3000 per month. These are affordability guidelines and I am guessing you would be pretty financially stressed if you were right up to the 36% limit.
At 6.5% interest (assumption, jumbo loan, good credit), and assuming ~1.5% of the value of the house for real estate taxes (could be high or could be very, very low depending on where it is) and assuming ~$1000/yr for insurance (could be low, could be high, depends on where it is), then your payment of $2333 would cover a mortgage balance of approximately $300,000 (which certainly falls within the rule of thumb). Assuming you put 20% down (avoids PMI), you could be looking at a $350,000 house if you were comfortable using all of your savings for your downpayment and closing costs.
I know in LA this doesn't buy much, but exotic mortgages to fit people into more expensive homes in areas like LA are what caused this mortgage mess in the first place!!
Good luck!
2007-10-04 07:56:02 · answer #1 · answered by Rush is a band 7 · 0⤊ 0⤋
This time of the year, you may not want to put a lot money into the house. Use your $65K for leverage instead.
If you are not familiar with all the processes, learn and read about it. Best of you can find a mentorship that can show you how they have done with their past experience.
Check it out with friend, neighbor or joint some RE investment club that you can learn how to make money works for you in this time and situation.
Best of Luck.
2007-10-04 07:01:43 · answer #2 · answered by L L 3 · 0⤊ 1⤋
There are too many variables to get a reliable answer in a forum like this. I suggest that you visit a local mortgage broker or your bank. You will need to give them a more complete picture of your finances including all sources of income and your debt load. They have the tools to run a wide variety of scenarios. It depends on what kind of loan you want to get. Do not give detailed information about your finances over the Internet.
2007-10-04 04:15:15 · answer #3 · answered by artwhiterealtor 3 · 1⤊ 1⤋
In answer on your final question, specific. you are able to borrow a inventory and sell it on the instant fee. The wish could be that the fee right now falls, then you definately purchase the inventory returned. No funds down. And now it appears that evidently taxpayers will conceal your losses.
2016-11-07 06:01:15 · answer #4 · answered by ? 4 · 0⤊ 0⤋
It use to be you could afford 2 1/2 times your base earnings. I do not know if this is still the norm.
2007-10-04 04:27:43 · answer #5 · answered by Squat1 5 · 0⤊ 1⤋