Please help a first time home buyer!!

0.10 Dollars($)

My wife and I are looking to buy our first house. Our combined income right now is $135k, but will jump to $162k in April. We both have excellent credit 739(hers) and 769(mine). We have been at our jobs for 2+ years and have zero debt except student loans($550/month) and a car lease of $298 a month. We have no credit cards bills, only what we charge during the month and then it gets paid off. We live in my wifes aunts house so we don't pay any rent.

We have about $95,000 currently in Liquid assets (Cash, IRA, and Stocks) that we are willing to use for the down payment of our house. We would be comfortable with a Total payment of ~$3500. If we find an outstanding house we would go slightly higher.

We are looking at a house that is $570,000 with taxes of $9,000 per year.

Is this doable for us? We are planning on using a 30-year fixed rate mortgage.

0.10 Dollars($)

Since I won't be able to document my pay raise until the end of April, I get paid monthly, will our initial income be enough to cover a loan of this size?

jameshogg · Posted: Mon Mar 24, 2008 10:55 pm Post subject: RE: first time buyer loan

Hi guest,

Welcome to forums.

Whether your combined income will be good enough for the loan worth $570,000 will depend upon the lender/mortgage company. They will also look into your debt to income ratios before they approve your loan. Since your payraise cannot be documented until April end, just inform the lender about it so that he may consider the raise while taking into account your combined income. Or even better wait till you are able to document it and then start looking for a suitable loan. By the way, when you start shopping, it takes some time before you actually end up with the right lender.

Your credit scores are excellent and you have good amount of liquid assets to make the down payment also. In all, your finances are organized such that you can take out a mortgage and start managing it!

It's good that you are going for 30 year fixed rate loan, but in case you'd like to give it a second thought, refer to the discussion on other possible loan options for first time buyers .

Thanks

sara

Hi guest,

To know whether your payments will be around $3500 approx on a monthly basis if you're taking a loan worth $570,000, use the FRM Calculator at http://www.mortgagefit.com/calculators/simple.html .

For the right loan program that can suit you the best, seek free consultation from the community lenders. Hopefully they'll have something good to offer you.

Take Care

atulagarwal

Hello Guest,

I did some basic Math and in my opinion you are Stretching your numbers a Little. Per my math I would recommend you searching for a $500,000.00 property and put 10% down with a 90% 1st Loan without PMI or a 80/10. Taking into account all the info you provided I feel you need to invest as little as you can (10%) and keep the other funds for a Reserve. In my 4 years at Bank of America I see a lot of people spend all the savings to either try to get a Lower Loan amount or increase purchase price. And then they have to Charge Accounts in the 1st year either on the house or otherwise.
Everybody needs to have a Cash Cushion. You will also likely incurr heavier expenses due to moving and setting up your new Home in the 1st year of purchase. While its nice to be able to afford a bigger house in anticipation of a income increase, I still would like to recommend Budgeting your Home at no more than 33-38% of your current income. You should also have a 6 month Cushion on expenses in reserve if you can

larry · Joined: 27 Jun 2007 Posts: 3328 473.51 Dollars($)

Hi Atul,

Welcome to this forum.

Good to see more and more mortgage professionals like you are joining this community. Why don't you introduce yourself and let the world know about yourself at http://www.mortgagefit.com/introduce-yourself.html

Hope you will enjoy participating in this forum.

Best of luck,
Larry

kenl314

I agree with Atul; that's good financial planning advice, not just a loan officer trying to make a few dollars.
Most experts say you should shoot for 6 months of reserves/ living expenses "just in case". But a minimum of 2 months.

Keep in mind that most houses/ properties, even one that is brand new or just a year old, can and will have some problems and maintenance costs that you won't expect to deal with.

It's always good to have a little extra fluff sitting around for those expenses. On that note, unless the home seller or the real estate agent is paying for it as a perk, I would stay away from one of those homeowner warranties. They almost always are not worth the money and/or aggravation when and if you do have a claim....
Better to just have $5000 on the side somewhere- just in case.

Good luck,
Ken

0.10 Dollars($)

Thanks for the advice. I decided that we would keep a little money aside as an emergency fund. I am new to this owning a home and I don't to get stuck right after we move in. I will post more in as we get it.

Thanks for the advice.

evolovik26 · Posted: Mon Mar 31, 2008 7:17 am Post subject:

Here is what you should keep in mind this being your first home go for something affordable that wont strap your cashflow. I whould even suggest going with 300-350k home and putting 20% down as you will get the best rates, programs and options for yourself. Or you can stay under conforming loan ammount which is currently 417k.

As far as your above example here is the math that was being discussed.
With a 570k home you are able to put down only 10% for downpayment
as you will need reseves, closing costs, and insurance for a year upfront. You could strech for 15% but then you whould need the sellers to pay closing costs.
So that leaves you with a loan of 570k - 57k = 513k at around 7% if you want a 30yr fixed Jumbo loan. Thats a $3413 payment + 750 taxes/mon + 200 insurance = 4363 / mon + 550 (student loan) + 298 car loan = $5211/mon. With your current income its doable but its cutting it pretty close.

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