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| How much of a loan could I be approved for in your opinion? Posted by wegotdatwood Also, how much would you feel spending a month on a mortgage in my situation?  on 4/6 at 10:57 pmWe will net 65k a year. That's around 5400 a month. How much of a loan do you think I could be approved for? and How much would you feel comfortable spending per month? (Fwiw, no debt, cars paid off but obviously keep in mind I'll need a different car at some point.) I know about the 36% total thing, that's not what I'm asking about. Thanks, I'll hang up and listen. This post was edited on 4/6 at 11:07 pm Reply • Back to Top |
| You should have no problem getting approved for around 300,000. Of course you should never borrow that much with your income but that's what the banks, scarily, will lend you. When the wife and I bought our house, we were pulling in about 75,000 gross and we were approved for 225,000. We didn't borrow nearly that much though but were still very surprised we were approved for that. If you have credit above 680 and your income, you'll be fine. This post was edited on 4/6 at 11:05 pm Reply • Back to Top |
quote: What's tour income? I want to do a 15 year note. Been looking at homes from 125 to 200k but would like to be more in the range of 125 to 150. Thanks for the response.  Reply • Back to Top |
| Sorry man, I'm on the iPhone and my typing on here is horrible lol Reply • Back to Top |
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| I'm not trying to be a dick but our opinion doesn't matter. Just walk into a local bank and get pre-qualified. That will give you a more realistic answer. Reply • Back to Top |
Posted by LSU9102 on 4/7 at 6:25 am to wegotdatwood quote: Why? 15 year notes are not always the best choice. Note that even if you take the 30, you can still make prepayments to pay it off in 15 years, and save interest just as if you had a real 15-year loan. An advantage of doing it this way is that you keep your monthly payments low so that if money gets tight, you're not locked into a higher monthly payment. With a 15-year loan you have to make the higher payment every month whether you want to or not. With a 30-year loan whether you make extra payments each month is up to you. So a 30-year loan gives you some extra flexibility. Of course, if you're not diligent about making extra payments on a 30-year loan, then you'll pay more interest Reply • Back to Top |
quote:I bet there are banks that would loan you 300K or more. I think that's a bad idea though. quote:25% of net is a good target for what your monthly house payment should be. I'm guessing your net is between 4K-5K per month, so I would say a monthly payment of $1000 to $1250. As for price of the house, I think 2X your annual gross income is ideal, 3X is the max. You stated you are looking at 125K-150K as the price so I think you are right in that ballpark. I would also recommend having enough cash to put 20% down so you can avoid PMI, enough to cover yourself for 3 to 6 months should you lose your income, and enough to buy stuff you need after you move in. Such as, but not limited to -- a refrigerator, blinds, curtains, pictures, light fixtures, a lawnmower, a weedeater, etc. you will be amazed at what you need to buy after you move in. All of this is just my personal opinion, not an economic template. From my experience I am happier and less stressed by living far beneath my means instead of stretching it to the max. Reply • Back to Top |
| Also, How much can i borrow? Reply • Back to Top |
quote: Because I don't think I would always pay the extra to do so and I don't want to take 30 years to pay off something. Reply • Back to Top |
quote: Why do you want to earn 2.5% on your money for so long? If you get a 15 year note at (for example) 3.25%, your interest is tax-deductible so your after-tax rate is more like 2.5%. A 30 year note at 4% gives you an after-tax rate of about 3%. That is the effective rate of return of the money you spend paying off the note. You are *much* better off investing in a 401(k), Roth, or what have you. This isn't even a close decision. Your discomfort with having a loan will cost you quite a bit. Reply • Back to Top |
| Is your figuring are you including estimated insurance, property tax? Reply • Back to Top |
| It'll be based on last two years of tax returns. Do you honestly plan to stay in house 15 years? If not you'll pay it off when you sell. I'd go 30. If you pay a 30 like a 15 it takes about 15 years, 6 months to pay off loan. I'd personally rather the flexibility to stick that extra money in the market over a 30 year period vs. a 15 year period to play swings in market, especially considering the last 5 years. Even if you make bi monthly payments you'll knock 8 years off a 30 year. And 4%? JMO This post was edited on 4/7 at 1:43 pm Reply • Back to Top |
| I guess I changed my mind. Going with the 30 year. My original thinking was that I hate having debt. Reply • Back to Top |
| Lots of advice about how you will be better off ideally with the 30. I think that is dangerous especially if you are worried that you won't be so regimented with the difference (as you stated). Houses are the biggest purchase you will likely ever make. You need to be comfortable with the terms. Mathematically the best is not always the best. Reply • Back to Top |
quote: Anyone who can handle a 15 year note can handle a 30 just as easily. We aren't talking about short term stuff like credit cards. Reply • Back to Top |
quote: quote: quote: Agree quote: quote: Agree. I don't think the 15 vs 30 is as clear cut as many are saying. I'm a math guy, but I don't think your home should be treated as you would other investments. Peace of mind in knowing that you are quickly building equity in your home can be a good thing. I'm curious of the people who are in the "do a 30 and invest the difference" camp. Would you take out a loan for 4% to invest? Reply • Back to Top |
| If my two options were 4 to play market over 30 or 3.5 to play it over 15 i'd take 30 every single time. Anyone who doesn't is a fool. The tax benefits on the backend would be a plus Apples to apples This post was edited on 4/7 at 4:25 pm Reply • Back to Top |
| Are the tax breaks above the line? Reply • Back to Top |
quote:I don't think the 25% recommendation includes tax and insurance. But when I did the math in my head for your example, I was thinking total payment. So if you want to add a couple hundred bucks to those numbers, that's still a good target. And there is nothing wrong with getting a 15 year loan. Mathematically it makes more sense to get the lowest payment possible and invest the difference - over the long haul you should be able to beat the mortgage rate. But as was said already and I completely agree, mathematically best is not always best. Owning your own house, without the obligation of a house payment, brings more joy to some people than others. And if that's what you want, you should do it. It doesn't make you foolish. Now - you do need to have long term investments like 401K, Roth IRA, etc in place before you buy a house. I'm certainly not saying "Don't invest". Reply • Back to Top • Refresh |
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on 4/6 at 11:03 pm to 
on 4/7 at 4:18 pm to