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How did they get so much house for what they make yrly?
My cousin and her new husband just got a house built and the total for their house is $170k. They pay $1200/mo. and they are on a fixed rate first time buyers program in which they didn’t put ANY money down on top of that their middle credit score was 600! How is this possible?
My husband and I too make $50k together and our scores are around the same but only got approved for $130k AND we were going to end up paying about the same mortgage as them.
Do you think my cousin left some important details out that I should know? Keep in mind that we did NOT go through the same company, but I’m thinking about going to where they went. The people they talked to were the preffered lenders for the subdivision and we talked to a loan officer/real estate agent.
There are several KEY points that you did not provide in your post that will affect the TOTAL cost of thier house and yours.
1.How much other debt; like credit cards and car payments do you or they have? This will affect your debt/income ratio and affect the size of loan you can qualify for.
2.What are the property taxs and insurance costs on each of the properties you are looking at? Principal and interest is ONLY PART of your house payment so was $1200 PI or PITI on their loan?
3.Does it realy matter how much they got or that they THINK they can afford or how THEY structured THEIR deal?
You should NOT be focused on what “they” got or what THEY bought; you SHOULD not even be forcused on teh MAX you qualify for, or even how “cute” the NEW house is.
HERE IS WHAT YOU SHOULD BE LOKKING AT……”What is the best INVESTMENT we can make with the funds that we can SAFELY afford to spend on keeping a roof over our heads?”
Everybody NEEDS a place to live but NOBODY NEEDS a new house; nobody needs to keep up with their cousins. Nobody must spend the max amount they qualify for or strech themselves to try and get a bigger house to impress somebody else. Warren Buffet has lived in the same house for 30 years.
Instead of focusing on what somebody else is doing why don’t you focus on making the best INVESTMENT you can. It may be a new house that a builder is selling at a discount because of the current market; it may be a foreclosure house at an auction; it may me a short sale house tht somebody else is losing because they tried to keep up with their cousins.
It WOULD be a good idea to talk to the lender who did your cousins loan AND every other lender in town to see who provides the best rate and terms for the loan you are looking for.
But instead of “shoppingfor a house” where you make you purchasing decision based on paint color, staging, or cuteness; try comparing houses by what the numbers say. What is the lowest cost per square foot you can aquire a livable property? Maybe one house is new and movein ready while another would require some repairs that you can do yourself or hire a contractor to do before you move in.
Do yo know that as a married couple you can claim 500K TAXFREE gain on the sale of a house you have lived in for atleast the last 2 years? Why not make a goal of trying to maximise this tax loophole and put the money taxfree into your retirement account or college funds if you have kids? I would rather put money in my pocket taxfree then worry about what my cousins are doing with their money.
Make the purchase based on the NUMBERS and how you will make a PROFIT on the house and not on how much you THINK you can afford.
