Post # 1
Ok, so my husband just spoke to a real estate guy, and we got a pre approval amount. I KNOW, it’s just a number and doesn’t mean too much, but I’m astonished as to how high it was!
First of all – I never knew my credit score and never had it checked. I can’t believe what it is….801! OMG. And my husband’s is 773. Woots!
For houses, I feel like we probably cannot afford more than 200k…but he says 350k is what he thinks we can afford, but we should stick to 300k to be more realistic. Um yeah, that’s not gonna fly…wayyy to high. But still, that’s so crazy! I feel so anxious now.
So my question… If he says we can do 300k (which I know we won’t go up to)…in your experience…does that mean you can actually afford that for real? How accurate are these numbers?
Post # 3
Most people I know got approved for WAY more than they can comfortably afford. Most of our friends, us included, knew a range of monthly payment we could afford (including insurance, pmi, taxes, etc.) and stuck with that. Our first realtor actually kept trying to talk us into more expensive houses, and we ended up finding a new angent.
I know one couple that got approved for way more than they thought they could afford, and ended up buying a house for that much. It’s a huge, beautiful home, but they have almost no furniture, work overtime every week, and are struggling.
Edit: Congrats by the way!! Buying a house is super stressful, but the feeling of owning your own house is amazing 🙂
Post # 4
@luli29: exciting! And good for you for the awesome credit score!! I don’t know how much you make or what not but if they think you can afford 300k, don’t go above 250k because they don’t know what level you are comfortable at or what you like to put toward savings or life expenses like furniture, or if you plan on having kids, etc. It’s better to be safe than sorry.
Our lending officer said we could go up to 325k, we’re staying below 225k at around $1600 per month.
Post # 5
@luli29: Congrats! It’s so exciting isn’t it?! And good credit scores too btw! You should check it at least once a year to make sure there are no mistakes. My credit union sends me my monthly score for free by email(DCU which is probbaly in your area too). From what I’ve experienced the amount people are finacially comfortable paying each month is usually a lot lower than the pre-approval amount. In NH we don’t have a sales tax so our property taxes are pretty high compared to MA, ours are going to be $6k/year and will most likely goes up once the market is done crying. Take into account what type of heat, oil in New England is super expensive, my old place would be like $300/month.
Post # 6
I am a tad jealous because in my area 300K buys you a trailer… 🙁
Post # 7
@Heatherloveskenny: I was thinking we’d be ok with 200k, but 250 max..I’d like to keep it lower than that though. Maybe 200-225k? And we really don’t make a lot at all..I seriously don’t know where they pull this number from.
Where we rent, our rent includes everything, so I don’t have a feel for how much water, electricity, heat, etc costs. Could you guys give me an idea of how much you should expect to pay monthly for these things, ontop of that figure that includes morgage, taxes, etc?
Post # 8
It is important to remember that despite what everyone tells you you can afford, when it comes down to it, only you can decide what you are comfortable spending. Most people don’t realize that people with good jobs and credit are usually approved for 45 percent of their net income (before taxes) which is an insane amount to spend on housing for most people! So if I were you, I would determine how much you are comfortable spending each month and then work backward to determine how much house that will give you. As someone who works in the housing industry, my best advice is not to get in over your head.
Post # 9
Yaaaayyy!!! so excited for you!
Post # 10
@hoping:I definitely understand. I was initially thinking 150k is what we can afford, so I was amazed at the 350k!
Post # 11
Well the good thing is, its a great time for you to buy your first home! We are in the process of getiting a house in southern NH in 7 acres on a dead end street for less than $200k, granted we are going to throw $30k in for updates etc. Now, if only we didn’t have to sell the condo…
anyhoo, here’s a breakdown on average for our expenses. Mind you, the mortagge will include your property taxes and I hear Mass is less than NH b/c you have a sales tax, our propert taxes are $6k.
Trash pick-up: $50
I’m trying to think of what else we pay, if I think of more I’ll be sure to mention it.
We are probably going to swicth to Direct TV which will bring our cable down to under $100 which will be nice.
Post # 12
@nickels:Wow, adding $500 more for utilities is crazy. Man, maybe we should stick to 200k or less.
Post # 13
Congrats on the preapproval! I’m suprised they wrote a blank check almost. My lenders really wanted to know how much I wanted to borrow this time. Everyone else has great advice so far. I’m hoping our utility bills actually go down in a house because we have electric heating right now which is SOOOOO expensive! We heated our home in CO for less than it costs to heat here in AL!
I think the baseline for all home expenses is about 30% of income. We are trying to go less since we want to live off only one income and save all of mine.
Feel free to PM me, house shopping buddy!
Post # 14
We asked for a approval amount of 200K and I was able to get approved for that amount on my own. No way with one income you can afford a 200K mortgage plus other life expenses.
$150 is actually a good average of monthly fuel costs. Keeping in mind how efficient your home is plays a huge part in that number. There’s also property tax, school taxes, etc that for me in a top notch neighborhood in a cheaper real estate market is ~5K yearly.
I think the best way for you and your FI/husband to determine how much you can afford is to sit down, write down all your monthly expenses. Add in those estimated utility costs. Give yourself breathing and saving room. Then what are you left with? That would be a comfortable monthly mortgage amount for you.
When house searching my husband was not comfortable looking at 200K even though on both our incomes we can afford it. I looked at houses in that range -hehe- but they had to be absolutely perfect with no renovations needed, at all, for us to even consider a house in that price range.
Don’t forget also to factor in closing costs which for a 200K house can go towards 8K. And down payment as well if you are going for a conventional loan.
Also, quick question you mention the preapproval was through a real estate agent? I was not under the impression that agents were giving out pre-approvals? I thought it had to come from a bank/mortgage company?
Post # 15
@MrsSaltWaterTaffy: will do…check your inbox in a few
Post # 16
@Gerbera:I think that was his calculations..not sure if it’s through a bank. This is literally our first step in starting this process, so I think that’s just an estimate. We haven’t checks with any banks yet.
EDIT: Wait, I just looked at the letter, and it looks like it is a morgage company, not real estate guy. Yes, it is an actual pre-approval..but we asked to see if we’d be pre approved for 250k, so that’s what it’s for.