How true are the “how much house you can afford calculators”?
June 23, 2007 · Print This Article
SJP asked:
I filled out one of the calculators and it says I cannot afford a mortgage payment more than 57,0000 or 300 dollars a month, which isn’t true as my rent is $860. So how true are the how much house you can afford calculators true.
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I filled out one of the calculators and it says I cannot afford a mortgage payment more than 57,0000 or 300 dollars a month, which isn’t true as my rent is $860. So how true are the how much house you can afford calculators true.
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Josh Dunaway has been a certfied Realtor in the suburban Chicagoland area for over 20 years. Aside from starting his own real estate company, he also owns a mortgage company as well.
figure 28% of your take home pay as a maximum house payment.
If you bring home $5,000 a month, then $1400 including taxes and insurance.
Forget about those type of calulators.
If the max that you can afford for a house pmt each month is $860 then you can get a house for around $90,000-100,000.
At 6.5% APR, a $90,000 house is $568 a month according to the Ditech mortgage calculator. You then have to add on about $300-$350 a month for taxes, home owners ins. and PMI (which is required if you put under 20% down pmt).
What you should do is figure out how much you can afford a month then mess around with the #’s on mortgage calculators. (I usually look it up on Bank of America and Ditech). They will usually only tell you how much you’ll be spending on prinipal and interest a month. Then you need to add on the $300-350 yourself. The PMI (Private Mortgae Ins) will have to be paid for about 10-15 years on a 30 year loan.
To find out the rates on everything for you area, pick a mortgage company with a low rate and call to get pre-qualified over the phone. You just give them some basic info. They can tell you what you’ll prob expect to pay each month.
I know that me and my hubby can afford 115,000 to 125,000 house. I just tried one of those calculators and it also gave me a # of about $55,000. I know for sure that we can afford more b/c I’ve spoken with a bank and they’ve qualified me for more.
My sister lives in Ohio and has a $181,000 house and only pays $1210 a month for everything.
I live in Texas and was quoted $1050 a month for $125,000 house.
Doesn’t that just stink.
Hope this helps.
You need to understand that those calculators do not incude your taxes, homeowners insurance, pmi, gas/electric, water/sewage, cable/internet & general living expences.