Can I get a $450K mortgage?
After taxes I bring home $4700 a month. My wife and I just got married. Because of relocation, she is able to collect unemployment, which is $330 a week. She has 6 months to find a job with unemployment. Her job will obviously pay more than unemployment, when she gets it. I am getting a 20% pay raise in January as well. Lastly there is a tax abatement for 5 years for the property we are looking to purchase. Do they take all of this into account when applying for a mortgage. And could I get a $450K mortgage with the information I stated above? According to mortgage calculators that's around $2650 a month.
Thanks!
We bought our home two years ago with a $2550 payment and we had to show income of around $11,000 per month .
If you put 20 % you can probably pull it off. If you put 10 % possibly , and doubtful if you put less.
It also depends on your credit score and outstanding debts . Good lord I could not sleep a wink nights knowing I was so tightly obligated.
Unless you have a huge down payment and excellent credit you will never get that loan. Without benefit of a calculator that is over 4 times your annual salary and you can not count on one dime coming in until it actually does. Not having your gross income is not good but if you have good credit and a healthy down payment min 10% or more you most likely could get a mortgage for $450k. But please don't until your wife is working full time. Her unemployment will only last 26 weeks then it's gone. With a 20% raise without her income your payment would be almost 50% of take home pay. That's a tenuous position to put yourself in and still intend on having a life until she has a steady income. With the turmoil going on in the mortgage industry, most lenders will now be requiring a 20% cash down payment. If you have that, and more than 2 years on your job, you should be golden.
But, and this is a huge but, are you prepared for the added cost of taxes (after abatement), insurance, upkeep, heating, electric and food? Your $4700 a month begins to shrink very quickly.
Also, how secure is your job? No really. Unless you work for the government, job security is a pipe dream. If my deductions are correct, and with the current trends in our economy, we Americans are going to hit a huge recession. How would you make your mortgage/tax payment if you were laid off or otherwise terminated? How long would it take you to find another similarly paying job? With the market being what it is, are you sure your house would still be worth $450k in a few years?
Have you thought about how you are going to save for retirement? Kid's college? Anything else other than mortgage & utilities?
I really believe that the old-fashioned way is best. Buy a home that is much less than what you can "afford". Buy the worst house in the best neighborhood and then fix it up. Live there 5-10 years and then sell, take your equity and put down on the dream home.
I cannot tell you how many times I have seen friends and family overbuy, because they think they can afford the mortgage, then end up working 2 or 3 jobs and eating dinner off cardboard boxes covered with a tablecloth because they can't save the grand to buy a decent dining room table.
It really boils down to this choice: do you want to work to be secure in your future and live a decent life, or do you want to work to make a house payment?
Good luck with your decision. here's a site i can highly recommend for you. give it a shot! You cannot buy a house if your wife is unemployed. Go down to the largest reputable bank in your area and sit down with a mortgage specialist. I say reputable because many of the gents on chat rooms and sites like this are what are called "predatory lenders". They will get you a loan all right, however if they don't explain the impossible "legal-eze" to you about the exact terms, you could be in for a ride. The whole mortgage problem going on right now is because people were getting loans that converted after a few years and bankrupted them with higher payments. Perfectly legal too. No one reads the find print. I recommend Wells Fargo as they don't push these crazy loans, and will try you keep you in a responsible loan to fit you, but any big bank should do. Watch out for the little guys since you are not familiar with the mortgage products out there. Think "30 year conventional".
Only investors and financial savvy types have any business getting any other type of loan (except a 15 year version of a conventional). There are no obligations to speak with a reputable lender, in fact go see two or three and pick the one you think is best. By the way, the worst guy is the one who says "let's see how much home you can afford", because anyone can TEMPORARILY afford much more house than they normally could, but at some point that loan adjusts it's rates or needs a very large payment. If you think you can just refinance later, you simply cannot if the housing market is slow and that house now appraises the same or less. That is why today the foreclosure rates are breaking records.
Look for a mortgage specialist asking "what you would like your payments to be less than" (don't forget home owner's insurance, property taxes, private mortgage insurance if required, home owner's association fees, etc.).
To actually answer your question: most banks take two years of your average income to determine your gross income and then apply 9 million formulas to see if you qualify-seriously. A good lender explains the situation every day and will be MORE THAN HAPPY to have you walk in the door with mortgage applications as slow as they are right now. Good luck!