Went to look at townhomes in suburban Chicago with a friend who makes about what I do, $53,000. Places we looked at said she could go FHA and get a $170,000 townhome. None of my calculators have her getting that much with 3% down. Does this sound right? She doesn't have any debts, 1 credit card she pays off monthly, no car payment. I told her don't get your hopes up, the most she could do would be maybe $150,000 (which gets you NOTHING in Chicago), was I wrong? I make a bit more and was never quoted that high.
I live in Chicago as well and make a little bit more than the amount you stated and was quoted almost 200,000 for a townhouse using FHA with 5% down. However, for me to be able to pay that much was just not logical and I'm glad I decided on a townhouse in a suburb right outside of Chicago that was only 125,000 because I am capable of doing other things besides just paying for a house. Remember they are looking at gross income.
What about if you owe a bit of debt, make about 115K a year. Where are these calculators that determine what you can afford. I'm paying 1050/month for an apartment, but the houses/condo's would be more like 1800+/month for the same quality due to area. I would rather put money into a house than any other object, as it appears to be a growing equity (rather than junk, cars,etc). Just not sure about committing 3-5 years yet. Anyone have any low down payment (my house was XXX roughly, i paid a low down payment 10k or less to close) and this is my total monthly payment. calculators are great but real life things come out different. what would a low down payment get ya with $1800 (total out the door) a month? I could manipulate the debt to my business cards for several months to make it appear that i have ZERO personal debt, actually i would keep a few grand on amex, and use the amex business line to cover the payments since most credit deciders would not be able to see WHERE the amex payments where going or applying since the online systems do not encode the account # on the payment type. I would like to buy a house after honeymoon (ouch$$$) but not sure with all the debt if i could get something we'd both be happy with. I can most certainly give up the basics (new car,etc) to put my money into an object that would increase in value, i'd do it right now, but as you can imagine the whole wedding deal is quite costly
I'd go to a good mortgage broker, get a prequalification and a Good Faith Estimate of what the closing costs would be. They'll check her credit as part of the prequalification. Also, they should be able to tell her about what her payments will be. Make sure she adds on for taxes and insurance. Just because she qualifies for it doesn't mean she can really afford it. She needs to think about the numbers they give her and decide what to do. Real estate agents are notorious for pushing you to buy more than you can really afford, as long as you can qualify for the mortgage. Don't fall for it. Judge what you feel comfortable paying, and stop there.
My REAL-ESTATE agent tried to PUSH THE LIMIT of what we were PRE-APPROVED FOR... He also showed us some DUMPS that were not even as good as what we bought and were $20,000 more!!!
This is new construction, but I know what you mean about the real estate agents pushing! They do their own financing at alot of these developments. It just sounds high, I know our paychecks are similar, I wouldn't want a $1600 mortgage payment!
#1 where did you find a townhome outside of Chicago for $125,000????? I'd like to know! I'll move there now.
I live in alsip in the south burbs... Very nice area that is townhouse is only 6 years old and most people don't even know about this subdivision. I work in the nothern and western suburbs and couldn't afford a thing decided to look else where.
cant understand how some people can make 50k a yr and pay monthly on a 200k home..just seems crazy to have a house payment that high, unless they are getting it with no PMI.
Mark, I agree w/you, which is why I sent out the post. I am looking at $158k myself fha w/3% down, so I have paychecl left to live on plus curtains on the windows!
Real life scenario: In early 2002 we built a new home for 180K We paid 5% down and closing costs were another 2.5K, so we got into the house for 11.5K out of pocket. With a 6% conventional note for 30 years our mortgage payment including insurance and PMI is $1370. Now, our combined income is 110K per year and we are relatively debt free, so the amount you can afford will depend on debt/income ratios and how much $$$$ you want to put down.
I think FHA max is 28% debt/income, which would mean max PITI of about $1240, which is possible depending on interest rate. For example, $170,000 30 year fixed at 6.375% ~= $1060/month, leaving $180 for interest/taxes. That probably isn't quite enough, but it's ballpark. That would leave her with $3180/month minus all of her salary deductions to live on. She might save $2-300 on income taxes when she itemizes. She will have to pay for maintenance and her utility bills will be higher than an apartment. She needs to think about her lifestyle and whether she wants to box herself in like that for the near future. In theory, income increases let you grow out of a mortgage, but in a low inflation economy, that can take a long, long time. She doesn't make enough to have a nice house AND other stuff. She gets the house and not much else. If that's what she wants, OK. Just advise her to think about it.
Hi, Guys. She took my advice and found a nice NEW townhome in south suburban Romeoville for $148k w/upgrades, fha and 6.5%, so she can pay the mortgage and live, too...plus she got all the bells & whistles and lender is giving $2000 for closing costs and $3000 in free upgrades...now lets see what I can do!
