To those that have a resbonsiblity of living on your own, please give me some advice here... First of all, I'm very dumb when it comes to managing my money so I need your help to see if I could afford and live comfortably when I'm buying a house. My motivation for buying a one is b/c I've been living with my folks for too long and needed to get my own place for freedom,space and privacy. Well I finally stumpled across this beautifull brand new house that I really love. Its centered in a very peacefull neigborhood and its about 50 min south of Chicago. It retails for about $177,000 not incuding tax. So here's the deal, I have $40,000 in the bank(savings) that I don't really touch and I make around $35-36,000 a year. I live in a low tax area and I just about done paying my car off. I have good credit so approving is not a problem unless I'm missing something else. I only have two credit card, one is paid off and the other is use for leisure and emergency which I pay $100 a month to keep interest low. I want to do a 30 yr mortgage plan....so my question to you is should I buy the house? If I should buy the house how much should I put down base on my account? 10 grand? or maybe 20 grand? Remember that I want to live comfortably and be able to buy food and all the neccessity needs of living.
I'm also looking for a home presently. I'd recommend putting about $15K down, depending on what kind of rate you get. I'm assuming you'll be taking a 30 year loan, correct?
OK send me your accnt # and personal info, like Social Security # etc, and I will email you the information.
Sorry, missed it in your original post. Anyways, make sure you find a good mortgage broker that won't screw you on the fine print. Some are notorious for doing shady deals with people who go in looking vulnerable.
Yes, that is one thing I'm afraid, that they might take advantage of me since I will be a first time home buyer. I just don't know what to look out for...
I work with a great guy who does loans in 45+ states. In fact, he's working on one in Illlinois now. I sent you an email with his web address. Give him a call. BTW-- FYI they just moved their offices and are having an open house this afternoon from 4-7. You may not be able to reach him if you try to do so today. He offers very conscientious service.
Try to put down at least 20% for a down payment. That way you can avoid paying "mortgage insurance" which is a total ripoff. It also allows you to escrow your own taxes and insurance. That way your monthly payment won't change all the sudden without any warning. I escrow my own taxes and insurance. I opened up a savings account at my employers credit union (on the advise of some other bbs posters) and I put all my band money in it every monday morning. When it's time to pay my taxes, I'll just use that money. That way, I don't even feel it in my pocketbook.
Oh yeah. Don't be an "emotional" buyer. Use your brain, not your heart. Otherwise, you could really regret it later on.
If my math is correct, if you borrown $160,000 (i.e. - put $17,000 down), and get an 30 year fixed interest rate at 6.5%, you would pay a mortgage of a little over $1,000 a month (5.5% = $900+, 7.5% = $1,125). Keep in mind, though, that there are also property taxes and maintenance upkeep you will have to pay, but that you do get a tax benefit from owning a mortgage.
Thanks, for the head up, I didn't know that. I wonder if I could have one of my parents co-sign for the house, so if any financial situation goes wrong they could contact them since they are good with talking out of a bad problem. I want to get use to living in the new house and taking care of bills and stuff before I go ahead and sign under my name.
That sounds pretty reasonable...thanks. There are soo many factor to consider thats why I come here to see everyones opinion and make sure I got everything down before talking to a broker.
Hate to say it but u can NOT afford that house. Since each area of the country is different, the numbers below are only ball park figure: Monthly expenses: House payment: $1,000 - $1,200 Property tax: $ 400 - 500 Insurance: $ 100 - 200 Utilities: $ 300 - 400 (electric, gas, water, sewage) Maintenance: $ 200 - 300 (general wear& tear, clean-up, yard maintenance ...) Minimum $ 2, 000 a month or more. This does not even include telephone, tv cable, internet ... , gas, car insurance .... and of course you need to eat a meal or 2 a day ... As a rule of thumb, u can afford a house 2.5 times your annual salary. If u make 36 K, u can afford a house that costs ~90K. Anything over and you are stretching it.
I'd even venture to say you should look for something more like 2x your annual income (with a little +/- in there). You don't wanna stretch your paycheck too thin, PLUS, I dunno what kinda job security you have, but you never know ...
Given you said in the outset you don't manager your money well, I think you should put 20% down. That way you don't have PMI, or 2nd mortgage (e.g., 80-10-10) which otherwise is usually preferable than PMI if you are disciplined to pay off the 2nd quickley. Let's say you can get the house for 175K. That means 35K down. You also pay closing costs,say another 3K. That uses most of your 40K in savings. But if you can rely on your parents for 5K or so for immediate issues until you get your saving back to 5K or so, you are OK there. I think Ragingfire's numbers are way conservative. By my calc, the mortage payment should be around $800 month (fixed rate of 5.5 on 140K). You do have taxes and insurance on top, most lenders include this in your payment and build an escrow account for you (so it isn't a big painfull hit to you and you don't have to manage it). Depends on Illinois property tax, but I guess this would be another 250-400 per month for taxes and insurance (around $1050-1200 total monthly payment). However all this is tax deductable and is more than the standard deduction, so you willl probably get a $100-200 back off the top of my head (depending on other tax factors). So I don't think you are definetely out of your house range because you do have so much saving and given the great fixed rates. Definetly go for a fixed rate based on historical averages (assumign there is a good chance you will still be in the house after 4+ years). If you have a roommate to kick in some ($400?) you are definetly in there. Of course all this is predicated this house is all what you think it is and is valued right. You want to get a lot of unbiased (friends, family) experienced opinions on that. Agents can be helpfull but they are rarely unbiased, same with the appraisers the agents or mortage companies arrange for you.
That's really kind of incredible to think about as a rule of thumb. Makes me wonder where most people live (since, on average, people don't make $36K per year, and many times rent is more than a $90K house... or a $72K house... would cost in mortgage, insurance and taxes per month). I mean, a $72K mortgage at 5.5% for 30 years would be roughly $410 or so a month. Property taxes and insurance would have to be over $300 per month to be more than the rent on a one-bedroom apartment in my neighborhood, and my neighborhood isn't anywhere near the top of the market as far as rents go.
If he uses your numbers, I bet he'll get into debts and lose the house before long (even if a lender agrees to give him the loan in the 1st place) 1) The guy asked if he can afford a $177K house. U showed him his payment for a $140K loan at the best rate u can get (which he likely does not qualify for) 2) Yearly tax rate for Houston is 3.3-3.5 %, and insurance is 1% of your house value of $177K. That is close to $7,000 / year. BTW, I just quickly looked up Illinois property rate and found this page which shows a property rate of 8%. http://members.aol.com/cemf/gov/taxes/propgc.html Illinois' folks, is that accurate? 3) Tax return: he might get $100-200 back with the house, but without the house, I bet he'd got $50-100 back already. Buying a house would get him back a little but not that much more. 4) Getting a roommate to lower his payment by $400 is one way to go but there are inconveniences that come with it too. For his situation, he will need more than one though!
