can we afford a new house?

Question

Hi All! We are currently living about an hour outside of Cleveland Ohio. In 2003 we purchased our condo for $80,000. Last year, we refianced and consolated our debt for a new balance of $84,000. For that loan, we had our condo reppraised for $98,000. Our monthly mortgage payment is around $850 plus a $100 condo fee. When we refianced we were informed that if we payed off the balance within three years, we would have to pay six months of interest.

Now we have our second child on the way and would love to move into a new house with a yard and basement! :o) My question is, do you think think it would be a smart move to at least look into what kind of a loan we can get at this time. I am currently attending nursing school so we will definitely have a second income within the next year or two. I just feel like for what we are paying for a condo, we could be living in a house. I was thinking somewhere between $100k and $125k.

Thanks for any advice you can provide!

We pay our own insurance and property taxes living in the condo as well.

when we bought the condo we had three years fixed and then it went to an adjustable rate. That's why we refianced and consolated some debt.

Answer 1

Hi, My name is Tricia Grant and I am A Senior Loan Officer at Iron Wood Investments in Graniter Bay, California. I do believe that it is right for you to at the very least take a look at your options. that 6 months of interest you are talking about is a pre- payment penalty. It is unfortinate that you were given that type of loan. So I would love to try to help you out with this and I do believe that I can come very close to a payment that you are already paying for the condo. If you want to take about 125k loan out depending on the credit and the type of loan you want, your payment will be about $850 a month with out taxes and insurance. you are paying that right now on your condo you must have a high rate because the 125k loan amount at 6.875 would give you a payment of about $830 a month and that is Princaple and Interest.If you have any questions please feel free to call me 1-800-277-2018 ext 544 my name is Tricia Grant and I am a senior Loan Officer.

Answer 2

No, for the following reasons; (a) your condo is not worth 98k unless other units are selling with in 60 day for that price, (b) you and your spouse do not seem tho have a clue, that you do not have a conventional mortgage, and that with a payment of 850 on 84k at 30 years you have been taken to the cleaners, your interest rate is outlandish, ill advised, and you should first look to find a way out of this mess before you create another.
you are a student, mother and about to be a mother again, you and your husband DO NOT have a second income. if your first child is 2 or so and you give birth in the next 120 day, then both children will still be under 5 in the next two years, when you could be working, the children are of an age where more than a postage stamp of green grass is nice.
I am sorry to say this but you two are headed down the wrong road, you are trying to spend money you don't have, and may not ever have. How could you be so blind as to refi for less than 10, 000, you appear to have consolidated for less than 5K net, that was less than intelligent.
Do you two even have a budget? What about a Savings account? It is not illegal to think, so i ask you why would a Lender want to take a chance on you.

Answer 3

you're asking the incorrect question and finding at this incorrect. The question should not be "can i locate the money for this" yet could be "what's the ideal investment i will make with the money I spend on preserving a roof over our heads?" given which you pronounced which you and your spouse make 110K a 365 days and are spending $1100 a month utilising positioned up-TAX earnings TO pay for it; that funds is doing not something to boost your internet nicely worth. determining to purchase a house could be a greater advantageous determination of ways you spend your contemporary earnings. So confident, you need to purchase a house yet now you may ask, WHICH homestead, what community, what length, what layout, what college district, what funds, what's the interior sight crime fee, and plenty greater???? You seem finding on the acquisition of a house like it became right into a pair of footwear or a sparkling vehicle. "what's the nicest i will locate the money for, what would be acquaintances think of of it? How will it make me seem? ALL of those are the incorrect point of view. seem at it from an investment point of view. What quantity of money are you able to place all the way down to purchase an investment which will circulate up over the years and how will that investment influence our taxs? As a married couple; you may declare a TAX loose earnings of 500K on the sale of a customary resedence which you lived in 2 out of the final 5 years. Use this "tax loophole" to pinpoint what homestead you purchase, stay in for 2 to 4 years and then sell; arising a 500K tax loose earnings. do not purchase the biggest or maximum priced homestead you think of you may locate the money for!!!! purchase the homestead which will make you the main funds!

Answer 4

Hello! I would if I were I would get out of that condo, because your paying a lot of money just to live there...I would move to a house as soon as you can, but make sure you look good and get a deal! Because your going to be a nurse I would not worry much about the finances because nurses can take a lot of money! So, just stick to the gun, move and good luck on your new child! I would also recommend David Ramsey to you..go on his website and see about getting some of his curriculum.! let me know how it goes!

Answer 5

Sure...look into your options, but with the housing market right now, it is suggested to wait until at least the end of Spring 08 before making any purchases. With all of the foreclosures and builders being forced to lower prices, it will be an optimal time for home buyers. Also, unless you are ready to do something, don't let the lenders pull your credit--just ask them to discuss option with you. If they pull your credit, it will show up as an inquiry when you are ready to do something, and knock points off of your credit score.
Good Luck!

Answer 6

I don't see how you'd have a problem affording a more expensive property as you won't be paying the H.O.A. dues, you will now have to pay your own insurance, but thats only going to be around $30 as opposed to $100.

another thing is: it looks like on your refinance you got a pre-payment penalty, there are 2 types, there is a hard and a soft pre-payment penalty, on a soft pre-payment you are only charged that 6 months worth of interest if you refinance, so if you sell you are not required to pay that. and on a HARD pre-payment, you are required to pay that wether you refinance, or sell. so you may want to call your lender and find out if it is still required to pay that if you sell your home.

if you have any other questions go ahead and hollar at me!

Answer 7

It would make far more sense to wait until you actually HAVE that second income coming in. If you jump out and buy now, your living style will be pretty cramped. Your idea of going out to dinner to celebrate will be limited to the drive thru at the local Burger King.

Answer 8

Um....you can probably afford a new house but your budget will be very tight. If you dont mind that kind of lifestyle, then yes, you can.