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Trying to figure out what we can afford.

60k saved for down payment and closing costs.
8k in debt.
2k left on car note.
108,000 plus 15,000 bonus income.
tax rate is 1.35 percent

I have googled and use two calculators but they seemed way off. If there are any moms in lending if you could give me an idea I would appreciate it. We are going to the bank on Wednesday and finding a realtor on Friday.

Answer Question
 
Anonymous

Asked by Anonymous at 10:13 PM on Apr. 27, 2009 in Money & Work

Answers (8)
  • If I may make just a small recommendation, perhaps you should use $10,000 of what you have in savings to pay off that debt and car. You will be able to take those monthly payments and apply them to your mortgage paying it down faster, or sock it away for when the water heater explodes or the furnace needs to be replaced (because that happens and it's best not to be caught off guard by it) Have you read the book total money makeover by Dave Ramsey? I highly recommend reading it before making this decision. However if you are looking at purchasing a starter home I can tell you that $50,000 is a more than sufficient down payment . Generally they want 10% of the cost of the home up front and monthly payments will vary depending on how long term you are looking. Shoot for 15 years or less. The average 30 year home loan will cost $80,000 in interest alone, which is enough to purchase another small home. Read the book it will help!
    humaniterian87

    Answer by humaniterian87 at 10:19 PM on Apr. 27, 2009

  • I can show you how to save on ALL the closing costs!
    nanaevelyn

    Answer by nanaevelyn at 10:21 PM on Apr. 27, 2009

  • Pay your debt first too! READ Dave Ramsey's "Total Money Makeover"
    nanaevelyn

    Answer by nanaevelyn at 10:29 PM on Apr. 27, 2009

  • I agree - you should take $10,000 and pay off your debt. It looks better to lenders, plus it just doesn't make sense to be paying interest on loans you can afford to pay off.

    I would also recommend aiming to put 20% down on your home, which would mean you could afford a home valued at $250000. If that's not reasonable in your area, then you'll have to pay PMI. The good news is it'll be deductable on your taxes, but the bad news is it's around $100 a month that is just wasted, IMO.

    There are lots of calculators online (google "mortgage calculator") that can help you decide how much house you can afford. Good luck and have fun shopping!
    goldenfox

    Answer by goldenfox at 10:31 PM on Apr. 27, 2009

  • Oops - just saw that you already googled and used calculators! haha! :)

    With your income, you can afford a decent sized house payment.
    goldenfox

    Answer by goldenfox at 10:32 PM on Apr. 27, 2009

  • I wouldn't get in over your head with the economy the way it is. Get something that you could afford with half of your income. I've seen so many of my clients from a few years ago who bought houses that were extravagant but worked in their income range and they have unexpectedly lost their jobs and now are back trying to get me to sell their homes. Just advice but take 10k and pay off your debts and buy a house that you can afford easily and take at least 30% of your monthly income and put it in savings. Worst thing that could happen someone would get laid off and you'd have a safety net. Best thing that could happen is you keep your jobs happy as can be and in a few years time you refinance with the money you saved or put a deposit on the huge house! GL!
    Anonymous

    Answer by Anonymous at 11:20 PM on Apr. 27, 2009

  • I would use $10k and pay off ALL of your outstanding debt first. You'll still have $50k to put down, which is still a nice down payment. I also agree that you should read Dave Ramsey's The Total Money Makeover. Dave recommends buying a home that is only going to take 25% of your income when you take out a 15 year mortgage. So keep that in mind when you start looking for a mortgage. Also the easiest way to know what you are going to be able to afford is to have the bank pre-approve you for a mortgage. You tell them what you want to be paying and they will tell you how much of a house you can afford. With your income I wouldn't want to go over $2000 a month and in most states that will get you a pretty nice home....especially with a $50k down payment. OR you could save for a few more years and pay cash for a house! You have already done a superb job saving money, you could do it and never have a mortgage.
    slw123

    Answer by slw123 at 9:18 AM on Apr. 28, 2009

  • Pay off all of your debt before you buy a house. Then go to two or three lenders, and see what they say you qualify for. When we were house hunting, we made sure that we would be able to make our mortgage and property tax payments (now over $4000 a year) on half of our income. We could have bought a more expensive home, and are so glad that we didn't.
    rkoloms

    Answer by rkoloms at 3:23 PM on Apr. 28, 2009

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