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Looking for feedback on how large a mortgageyou think I can afford without significantly over extending. Annual income is 90-100k, current home market value is 230K, loan balance 122k, and 25k in savings. Considering 30 year fixed, 30 year with first 10 interest only(have one child and they will be in college in 10 years, probably want to downsize), 10 year ARM, or 10 year Interest Only Arm. No credit card debt and only other loan is $275 per month car payment w/2 years left. Last credit report was in high 700's. If you were a lender, what would you advise? I'm looking at larger homes within a couple miles of my current residence, most new construction or will have one built. Any feedback suggested.
Fannie Mae's guidelines are 36% of your income minus total debts including the new mortgage payment.
Most lenders can go up 65% with sufficient assets, and 10-20% down.
Quote:
Originally Posted by PJM44
Looking for feedback on how large a mortgageyou think I can afford without significantly over extending. Annual income is 90-100k, current home market value is 230K, loan balance 122k, and 25k in savings. Considering 30 year fixed, 30 year with first 10 interest only(have one child and they will be in college in 10 years, probably want to downsize), 10 year ARM, or 10 year Interest Only Arm. No credit card debt and only other loan is $275 per month car payment w/2 years left. Last credit report was in high 700's. If you were a lender, what would you advise? I'm looking at larger homes within a couple miles of my current residence, most new construction or will have one built. Any feedback suggested.
Couple things....I'd payoff the loan on the car immediately. It looks like you have more than enough funds to get that gorilla off your back. Unless you might be thinking having enough for a downpayment and an emergency fund?
Why are you going w/a 10yr ARM or I/O? does that mean you won't be living in this next house long term? I wouldn't fool around w/arm's...stick w a true fixed, rates are at record lows already.
We need more personal info that you might not be willing to share...how old are you? Do you have any other children? Are you married? does your wife work? Can you wait another year before you buy? etc... Its a very difficult question to answer w/o alot of other info...
So, you're probably around $1k/month w/mortgage and prop taxes right now...why don't you create a budget with all your monthly expenses (fixed and variable). Why don't you also plug in some #'s to see what your monthly payment would be if you increased your mortgage by 50K...at a 6% 30yr fixed....how much more would that add to your monthly payment? You also have to be conservative in your "estimate" of what your house is worth....also, figure in closing costs and realtor commissions as subtracted from what you have left...
Sorry my post is all over the map...just coming up w/some ideas before you jump in...good luck
Thanks so far. Additional info: age mid-forties, stable employment w/same employers for over 10 years each, pay off credit cards in full each month, 300k+ in retirement savings. One child. Goal: live in home for 10 years, once she starts college, either downsize or relocate. Current PITI is $900 per month. Saving and additional $600 per month outside of retirement plans(have two through employer: they contribute 14% and I add 7%). My spouse works part-time, though anticipate full-time within 2-3 years, increasing income by 20-30K per year. Further, my savings don't include an additional 10k after tax partnership payment each, that I can currently save. Can cover all other expenses through current income, including college funding. We live very modestly: each out very little and use coupons for everything. No expensive hobbies, and budget for travel -driving and staying with family. Hope this helps? Would really like to trade up for "dream home" for the next 10 years.
Looking for any Mortgage Professionals to share their thougths before we start looking. Let me try to break it down one more time, been a long day and a bit sloppy with my prior data, sorry.
Ages: mid-forties and we have one child.
Current Gross Income: 96K per year
Current Market Value of Existing Home: 230K (great location, highly desirable schools, last two homes in neighborhood sold before the For Sale signs hit the front yard).
Current Mortgage Balance: 121K
Current Mortgage Payment: PITI $900 per month ( 7 year balloon maturing Spring 2008 at 4.375%)
Current Saving(non-retirement): 25K
Current Saving to non-retirement account:$1200 per month
Current Retirement Savings: 300k+
Current Retirement Contributions: 12K per year
Current Additional Income that can be applied to mortgage:income tax refund 2K per year, bonus approx. 2-3K per year
Current Net Pay(take-home): 4K per month
College Savings for Partial College Cost Funding:$100 per month
One Loan-Car: $275 month for 24 remaining months (expect to continue as we rotate cars, keep for 10 years each with approx. 8k miles each per year).
Credit Cards: Pay off in full each month
Credit Score: Mid-High 700's, at least
thanks for that info...it really seems like you have your financial house in order...nice job.
Just to give us an idea, what developments or areas would you consider to be "dream home" territory? Do you have any geographical limitations? Looking at the numbers I'd be hesitant going above 450 right now. (This is based on you coming out w/about 80K in equity after closing costs and commissions from selling your home...)
However, the good news is there are tons of homes in that price range in Charlotte metro. Also, looks like there will be more inventory and falling prices in the future w/the limited buyers pool and huge supply. I don't know, maybe if you crunch the numbers I might be off base...
Your mortgage payment will be your biggest "nut" so that needs to be figured correctly.
Coupon Jack: thanks for the feedback. We currently are in the Ballantyne area and want to stay in the area. We have our eyes on new construction in the 340-380K range. Just trying to get a feel if this is realistic? Willing to do an interest only to keep payments lower. If spouse goes back to work full-time, instead of part-time, would expect another 20K+ per year in income. Appears to be a lot of "good" advice within this forum, thus value others opionions. Don't want to get caught-up in the moment and over extend.
I think w/your retirement savings, the kid covered for college, and your day to day financial habits, it should be doable w/o much pain to worry about. If you were to look in the 4's, the fixed expenses would start to creep up to somewhat uncomfortable levels I'd figure...
Couple things...In our local market you must sell before you buy, that's a given. Just read the horror stories of people strapped w/two mortgages...you don't need that. If you sell first, you can push the closing out a couple months if you have to.
Again, as you've prob seen, there are plenty of homes for sale and much more to come because of the limited pool of buyers and overabundance of supply. If you can sell pretty quickly, you'd be in the drivers seat. Good luck.
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