Help with mortgage?

Question

I make about $2,000 a month. I am interested in buying an apartment for, let's say, $150,000. On a 10 year term, at an interest rate of 5.00% a year, the total comes to $1,590.98, according to:

http://www.bankrate.com/brm/mortgage-calculator.asp?unroundedPayment=1590.982728586134&loanAmount=150000.00&nrOfYears=10&nrOfMonths=120&interestRate=5.00&startMonth=9&startDay=28&startYear=2007&monthlyPayment=1590.98&monthlyAdditional=0&yearlyAdditional=0&yearlyAdditionalMonth=9&oneAdditional=0&oneAdditionalMonth=9&oneAdditionalYear=2007&paidOffDate=Oct+28%2C+2017&submit.x=23&submit.y=9

Now, are those figures realistic? I want to move out of my parents house fast. How much would the down payment be? Any other expenses? Would I save money if I rented it out to someone else? Please let me know. Thank you.

Answer 1

Not realistic. First, you'll never get a 5% interest rate, and you won't get 100% financing on an apartment.

More importantly, you can't afford it. Your debt ratio is too high. You won't be able to qualify for a loan with a total debt ratio above 50% or so, if your credit is perfect.

You'll need about 10% down payment, plus another $6,000 or so in closing costs. Other monthly expenses include utilities, food, telephone, internet, cable TV, parking, gas, etc. You could probably save money if you got a roomate.

Sounds like you should reconsider living with your parents until you are in a better financial position to move out.

Good luck.

Answer 2

Completely unrealistic. First off, you'll never get 5%. 6.25% maybe if you have strong credit and put down 20% ($30,000). That would work out to payments of 738.86 on a 30 year fixed rate loan. Figure another $200 a month for real estate taxes and insurance at least so you're looking at around $938 a month. You'd need about $3,700 a month to qualify for that so your income is way too low.

A payment of nearly $1,600 a month is absurd at your income level. You probably don't take that much home and even if you do you still have to pay for utilities, food, auto, insurance, taxes, etc. Where would that come from?

If you don't have strong credit your interest rate is likely to be higher and that will translate to higher payments, further distancing you from this plan.

If you don't have $30,000 to put down (plus another $5,000 or so for closing costs) you'll be looking at higher interest rates as well as mortgage insurance of one sort or another. An FHA loan would generally require about 3% down ($4,500) plus another $3,000 to $5,000 in closing costs. Your interest rate would be closer to 6.5% and payments of around $919.66. Again, you'd need about $200 or so for taxes and insurance. But now your income requirement would rise to around $4,400 or more.

Renting it out to someone else isn't practical at all as now you'd still need to find a place of your own. And investment properties generally require at least 25% down and higher interest rates, further distancing you from this.

If you need to move out quickly, your best bet is to find a modest rental and save for a down payment and build your credit. In a few years you'll be better positioned to buy your own place. At your current income you'd need to be looking at a purchase price of something closer to $80,000. Tops.

Be wary of the scheisters and ripoff artists that post here with their "I can help" messages. Their only interest is in pairing you up with a lender willing to take the risk and turning a profit for themselves; they don't give a toss about your best interests. Risky loans attract high rates further complicating things for you.

Answer 3

those figures sound unfair and unrealistic. if you're really tired of your familys house try somewhere else with really cheap rent to save up for a condo or house of your own