I’m a 1st time home buyer and not sure how the interest rates are right now. I understand you can go to a lender or a mortgage broker, but not really ha.
If I make 50 thousand salary right now would I be approved for a loan of 300k?
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Yezeo Your Friendly Shopping Info Buddy
First of all with an income of 50K a 300K loan does not seem very possible. I guess it depends on the value of the house and how much money you are putting down but a 300K loan will result in a pretty large monthly payment depending on your property taxes.
For example…lets say you are putting 10% down on a 330K house…and take out a loan for 300K. I would guess the property tax of at least 5K (though this is very dependent upon your area). You must remember it is not only the loan repayment that will go in your monthly mortgage but also PMI (if you put less than 20% down), property tax, association fees, interest, etc… Your monthly payment will be somewhere between 2500-3000 dollars. That is ~36K per year…that is probably equal to all of your take home pay. No way you will be able to afford that. Typically a lenders limit on loans will be around ~50% of your take home pay. It is also dependent on your credit score.
Here are some places to get started:
http://www.bankrate.com/ – you will be able to find the current interest rates here. A lot of really great articles on home buying. Mortgage calculators so you can figure out exact payments and how much you can realistically afford.
http://www.lendingtree.com/ – you can apply for a loan online or get preapproved. You should be able to find out how much lenders are willing to give you. They also have tools to figure out how much you can borrow.
I think these are your two best sources and should get you pointed in the right direction. Good luck.
It sounds to me like you could use the assistance of a financial advisor who can help you with the process of finding a good loan and can explain many of the details. You really shouldn’t just go to a mortgage broker or loan company without some more education … buying a house is a major financial decision and committing to a bad loan can cost you literally hundreds of thousands of dollars.
I have used Primerica Financial Services and they were very helpful; they don’t charge for their advice or services directly, so it costs you nothing to just sit down and talk with them. They will make sure your are financially squared away and in the right place purchase a home. They probably have offices in your city if you are in the US. You don’t have to follow their advice but I think at the least you should talk to them or a similar company. Take your time and make sure you understand what you are doing … don’t start looking at houses until you know how much you can afford.
I would also suggest reading a good comprehensive book on personal finances. I have suggested one below, but there are many others.
As far as being able to afford a $300K house on a $50K salary, it depends — your credit history, the amount of other debts you have, the amount of a deposit you have saved, the size of your other savings, and the value of the house you intend to buy will all affect whether you can get a loan or not.
Wow, thats a lot of house for your salary.
I would go for half that amount in house at most.
Google "how much house can I afford" – please don’t go by the max they tell you if you ever want to eat dinner out or take a vacation once a year.
Interest rates – at 5.11% – go to bankrate.com to check. bankrate has been around for decades.
Banks are still pushing variable rates – don’t get eaten up by the sharks.
Fixed for 15 or 30 years only – don’t let them scam you – they want your house especially since we are near bottom of the market.
Get your credit reports at
annual credit report. com
They are 100% free and only site approved by the feds.
If your reports are perfect, get your score from Equifax.com for about 8 bucks.
This is to guide you. 750 and higher – you may only put 10% down.
Don’t get scammed into paying for reports.
Don’t make any new loans or open any new credit cards.
Do not close old credit card accounts.
Pay off credit cards in full each month if you have them.
Look at a realtors site and see if you can find out how much home insurance and property taxes will be per year in your area.
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You do not make enough money for a 300k loan. You only make enough for about $175k at the ABSOLUTE most.
Get your paperwork together…usually 1 year of statements.
You want to prove that you have income, savings and assets..
Copies of pay stubs, interest income, investments, bank statements, tax returns and savings info.
Get copies of every bill or expense you have…
Rent, Insurance, car loans, child support, alimony, credit card statements and balances.
Make an appointment with a loan officer at your BANK.
Bring all the copies of your income and expenses with you.
The loan officer will go over all of your numbers with you and tell you exactly what you can afford for a mortgage payment…called PITI…Principal, Interest, Taxes and Insurance.
This week, the interest rate for a 30 year fixed rate mortgage is down again to 5 3/4% DO NOT accept anything but a 30 YEAR FIXED RATE MORTGAGE. Other rates and programs may look attractive, but they are financial Russian Roulette.
When you get your mortgage ‘approval’, get it in writing. This is very important.
OK, you’d like to by a home for $300,000. Plan on having a 20% downpayment of $60,000.00, with another $10,000. saved for closing costs.
Let’s say that your bank has approved you for a mortgage of $240,000….you have your $60,000. downpayment…now you’re ready to ‘power shop’.
Look on-line and in your local newspapers for homes in the $325,000. price range. If something catches your interest, CALL THE LISTING REALTOR to go and see it. This is important for negotiations.
Plan to look at a minimum of 12 properties…when you find the house you want…have your Realtor write up the offer for $290,000. Write him a ‘deposit’ check for $5,000. Give him a copy of your MORTGAGE APPROVAL…and send him off to the owner to present your offer.
The seller can ‘accept’ your offer, reject it (if he’s nuts) or ‘counter-offer’. He’ll probably come back at you with a counter-offer of 300K.
Let’s say the seller comes back with $310,000. You and the Realtor know your top figure is 300K…if push comes to shove, the Realtor can kick in part of his commission to put the deal together. (because he’s not splitting his commission with another Realtor)
Bottom line…
You knock 25K off the asking price
The seller knows you are fully approved to buy
The Realtor either takes a little less commission…or gets nothing.
Trust me, a Realtor for 22 years…follow these steps ‘to the letter’ and you’ll get a great deal.