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FIRST TIME HOME BUYER, WHAT CAN I AFFORD?

I am new to this, I have never purchased a home, but want to. I am 27yrs old, make $70K a year. I don't have any debt, I own both of my vehicles, I don't have a long credit history, bc I pretty much follow in my daddy's foot steps and try to pay cash for almost everything I do own. I don't have bad credit, just not a lot of history. I only have two low limit credit cards that usually go unused. I am just curious as to how much I may be able to afford in a house. I haven't talked to any banks or anything yet, but I know that we live in a credit world, which personally I think it like modern day slavery, which is why I am even asking to know what to expect when I do go apply for a loan. It might seem silly to some, but I want to take a poll first before I do start speaking to banks and lenders. Thoughts and opinions?

How old were you when you purchased your first home?

I am just tired of paying rent for something I will never own.

Answer Question
 
Fidelita

Asked by Fidelita at 12:43 PM on Oct. 31, 2013 in Home & Garden

Level 5 (90 Credits)
Answers (6)
  • I haven't bought my own home yet, but I think you're pretty set up to get a home loan, just go into your bank and talk to them!
    cassie_kellison

    Answer by cassie_kellison at 12:56 PM on Oct. 31, 2013

  • The laws have tightened up since the crash, but there is usually some good deals for first time home buyers. The more money you can put down up front, the better your options are. Many lenders use an 80/20 rule where they want to see about 20% equity to get the loan.

    Really, your best bet is talk to a lender in your area. I suggest starting with a credit union.
    anng.atlanta

    Answer by anng.atlanta at 1:02 PM on Oct. 31, 2013

  • From what I read, the rule of thumb is that you usually can afford a home about 2 1/2 times your annual income, so that's about $175k, but you really figure out what you are comfortable with paying. What kind of house you can afford with that amount is entirely dependent on your housing market. I've also read that's it's in everyone's best interest to get preapproved. GL
    mommy_jules

    Answer by mommy_jules at 1:15 PM on Oct. 31, 2013

  • Go to you bank or the lender you might want to use and ask them to preapprove you for a home loan.
    This is actually the smartest way to purchase a home because you know exactly how much you will be able to afford and what your down payment would be (upfront) as well as your approximate payment plan. DO NOT GET A FLEXIBLE MORTGAGE
    The second reason to do it this way is that when you make an offer on the home you have more flexibility. Sellers are more willing to work with someone who has the "cash in hand" rather that waiting o find out if the person qualifies. Location, location, location.
    Dardenella

    Answer by Dardenella at 1:29 PM on Oct. 31, 2013

  • How much do you have for a down payment? I think you would be safe in the $150,000 range, leaving you extra for repairs (and trust me there will be repairs).
    2kids2dogs2cats

    Answer by 2kids2dogs2cats at 1:29 PM on Oct. 31, 2013

  • You should begin to use those small credit cards and pay them off over the next few months.

    Your mortgage lender will pre-approve you for a certain amount based on your credit and income. If you are pre-approved for $250,000, that doesn't mean you HAVE to buy a house that is that expensive.

    Don't go "house-broke". That's when you buy a big fancy house that pushes your financial limits a bit, and you'd better like it because you'll be spending a lot of time there when you have no extra cash to go to dinner or the movies or on vacation.

    Think about the incidentals. Utility costs, repairs, insurance, etc.
    PartyGalAnne

    Answer by PartyGalAnne at 2:15 PM on Oct. 31, 2013

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