How much house can we afford?
December 17, 2008 · Print This Article
First time mom! asked:
My husband and I would like to buy a home. How much of a house could we afford if we want our mortgage payment to be about $1200?
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My husband and I would like to buy a home. How much of a house could we afford if we want our mortgage payment to be about $1200?
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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.
It all depends on you intrest rate. Remember taxes and insurance go into your house payment. I am in a similar situation as you. Google mortgage calculator and you can type in a price such as $150,000 with interst rate and it will tell you.. A guess I’d say about $140,000 - 150,000.
Iwould lower my payment to 1k because the price of utilies especially oil, is climbing all the time. We pay 943 for 132k at present it was 164k. this includes insurance and taxes.
In this case I’m assuing you mean your “all in” payment needs to be $1200. A good rule of thumb with houses is that they will cost you approx 1% of the house value each month to own. This is adding mortgage payments, taxes, insurance, repairs, utilities etc. So, in your case you would be looking in the 120k-150k range to keep your payment at that level.
YOu can check some online mortgage calculators, but those are not precise.
There are a number of factors at work. Your credit scores, down payment, employment history, among other things. You could check with lenders in your area for programs that are available to you.
I know I could go to a lender today and get pre-approved for way more mortgage than I could afford comfortably. Know your finances, and only purchase what you can manage.
A rule of thumb is typically your payment is going to be about 10% of the loan amount including taxes and insurance. Also it depends on how much you are going to be able to put down (usually 5 - 10% of the selling price). I would look in the range of 120K - 130K. You should be able to get the payment down to your target,maybe even a little less depending on interest rate, taxes and insurance on the property.
You need to discuss this with the bank. They will work out your finances and advice you from there. Make appointment.
Morgage payment is PITI which stands for Principal, Iterest, Taxs, and Insurance and to this you need to add any HOA fees, and the other costs of living in the house such as avg. electric bill, heating bill, water, sewer, trash, phone, cable, and anything else that you think you need to live there like the cost of driving back and forth to work etc.
Since you asked for $1200 then the answer is for just Principal and interst on a 30 year loan with 6.25% fixed rate interest the laon amount would be $194,894.67. If your credit is not that good and you have to pay 7% interest then that PI would be $180,369.08. But this does not take into consideration how much property tax is on the house, what home owners insurance will cost you or if you vary the length of the term. Also we are overlooking what other debt you currently have, what other monthly expenses you have so this is a waste of time.
If you realy want to know how much house you can qualify for then you need to be talking to a lender who can look at your TOTAL income/ expense situation and tell you what THEY can do for you.
And I haven’t even got into the pre-tax/post-tax thinking that needs to be done.
Not much to say the least. but then again it depends on where you live. It does depend mainly on the interest rates. but there are city incentives to help first time home buyers purchase a home. Some cities give grants (not loans. Grants do not have to be paid back) of up to $150,000 for the purchase of a new home. talk with a lender about the opportunities in programs there are for you