can I afford this house?

[spitfire5454]

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Hello guys. I'm a new intern looking to buy a house. I found a house that I absolutley love. They are asking 180K. Me and my wife pull in around 65k and around 80k during pgy3. The only debt we have is my student loans. All the calculators I use say we can easily do it with money to spare. I just wanted to get some thoughts. I have 10k to put down which should put my payments around 1100/month. By the way I plan to be here for at least 8-10 yrs. Thanks.

 

[TRN1983]

Married with that kind of income you should be fine if your lifestyle is reasonable and you don't spend like crazy.

You may need more than $10k though. You can pickup an FHA loan, but that'll required 3.5%, or $6300. Your closing costs, etc, will put you over $10k unless you get the bank/owner to cover your closing in full.

Anyway, you should be able to get about 5.5% interest if you have reasonable credit (FHA requires at least > 620), so that put's your mortgage around $1000. Figure in your property taxes (what are they in that area? I figured for 1.25%.) and for your mortgage insurance (which you'll be required to have with an FHA) and you may see about $1,300/month. If you have HOA that needs to be considered and you'll probably spend about $50-75/month in homeowners insurance. So, it's likely you can get up to about $1,500 per month, so figure for that value to be conservative.

So, yes you can afford the house IF your other expenditures (and student loans) allow for it.

 

[foil]

(around 80k during pgy3. )

Is this take home pay?

In any case, the rule of thumb in the 60 - 70's was the mortgage is 1/4 of your salary.
In the 80's it went whack with all those balloon payments and creative financing.
Seems the latest creative financing has done in to many.

#1 As a buyer in todays market, you are in the driver's seat.

#2 Never pay asking price in todays market, drop it drown to a very low price
the haggle from there

#3 ONLY get a fixed rate loan, They will lie through their teeth to get you qualified with a variable.

#4 have a qualified skilled tradesman inpect the property before finalizing the deal.
Inspect the plumbing, electrical, drain, roof, termites.
Go up in the attic - do you see any daylight pin-holes?
Turn off the main water line at the house - does the water meter still turn? Hope not.
Do all the drains flow easily
Do all the windows open / close easily........houses sag from the soil
Research the property at city hall to see if all the permits match the exixting house / footprint.

# 5 drive by at odd hours to check out the nieghborhood.

This is an investment.
Do your research.

Foil

 

[Sol Rosenberg]

Turn off the main water line at the house - does the water meter still turn? Hope not.

Good advice, but I think you have this one backwards. You want to turn off all your fixtures, but leave the main line open to see if there is some leak somewhere which could be messy and expensive to get to. If you cut the shut off valve at the curb, you are just testing the shut off valve (which is the city/water company's problem to fix if faulty.)

For the OP, a conservative rule of thumb is to keep your house price to no more than about 2.5X your total gross annual salary. However, only you know your lifestyle and if you could handle a bit more house. Besty of luck to you!

 

[The White Coat Investor]

Hello guys. I'm a new intern looking to buy a house. I found a house that I absolutley love. They are asking 180K. Me and my wife pull in around 65k and around 80k during pgy3. The only debt we have is my student loans. All the calculators I use say we can easily do it with money to spare. I just wanted to get some thoughts. I have 10k to put down which should put my payments around 1100/month. By the way I plan to be here for at least 8-10 yrs. Thanks.

That should be doable. You sure you want to live in that same house when y'all are making $400K+ a year? What is comparable rent in the area? Are you sure you can't come up with another $18K to put down? It would really lower your payments. Perhaps your parents....

 

[TRN1983]

#2 Never pay asking price in todays market, drop it drown to a very low price the haggle from there

Except for this, that was all great advice 😀

Some areas are actually undervalued right now and full price bids are being rejected. I.e. in the inland empire of CA there are many homes where people have actually bid greater than asking price and still been outbid. I recently placed a full offer on a house and was out bid, and a friend of mine placed 7 full price or greater offers and was outbid before finally winning with an offer! My realtor said this is really common right now in this area.

I understand this isn't happening everywhere, but my point is just know your area. Some areas you can haggle, others you cant. If you want a particular property really badly you don't want to lose it b/c you underbid $5k and saved yourself a whopping $10/month on the mortgage, ya know?

Good luck!

 

[DOctorJay]

what's the shortest time period you guys would consider for buying a townhouse/condo? especially if you knew for sure you would be leaving the area at the end of that given time.

 

[Sol Rosenberg]

what's the shortest time period you guys would consider for buying a townhouse/condo? especially if you knew for sure you would be leaving the area at the end of that given time.

You may receive replies to this question that are in the form of a number, but I implore you to ignore them. You need to do the math. Figure out what your P+I payment, your property taxes, estimate about 10% for maintenence, factor in your closing costs (on both sides of the transaction,) etc. Then compare that to the amount of rent you would be paying for that same time period for a similar house. You might decide that if you come up slightly negative, the non-financial benefits of owning a house outweigh the negative financials, but you MUST DO THE MATH.