For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

When someone is pre-approved for 300K, for example....does that mean they are pre-approved for a 300K LOAN and not for the value of a 300K HOUSE?

Put it this way: I always thought when someone was pre-approved for 300K, that meant they were approved to buy a 300K house. My MOH tells me that no, you are approved for a 300K loan and you add your down payment to that. So if you already have 60K in the bank, and you are 'pre-approved for 300K' that means technically you can afford a 360K house??

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

yes - you qualify for the loan amount (although you should never spend the maximum of what the bank says you can). you can qualify for a $300k loan and have $200k aside for a downpayment, and you can buy a $500k house

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

I agree with Karen. But I wanted to add as well, remember to include ALL of your expenses when looking for a house. We were approved for a high amount for a loan, and when we sat down and crunched the numbers for all bills and the mortgage, we would have been living paycheck to paycheck. Of coarse the more money you spend on a house, usually the nicer it is, but you don't want to live for a house either. You will want to be comfortable with what you spend, and have a life outside of the house sometimes as well.

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

We were pre-approved recently and it was for the price of the home. But we had said this is what we are looking for and they gave us a pre-approval based on exactly what we told them. However, last year when we were toying with the idea we were pre-approved for a loan amount, so it may depend on who who doing the pre-approving.

And I thought your heading was very tantalizing

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

Definitely take into consideration all the costs. Our closing costs look like they're going to be much higher than what we were originally told and if I had known, would have gotten a higher mortgage.

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

A pre-approval is also NOT a mortage committment. Very often banks will pre-approve you for A LOT more than you can really afford to pay every month and before they do a complete credit history check. Pre-approval should be used as a guide-line, not a definate mortage.

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

OK - so assuming one needs 14K for closing costs (? I have no clue how much a closing costs) you subtract that from your 360 and get 346K you can afford...then leave out 5K for new furniture....and if the house needs work, etc...amd I getting it here? Or am I way off?

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

Rachel, leave out the furniture!!! That's your budget, not the mortgage budget. The furniture is not part of the loan collateral.

It may be easier for you to figure out the MAXIMUM monthly payment that you can afford and work backwards to the price of the home. Also, don't forget that you'll also need to pay insurance costs for the house too.

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

Here is an example

Total mortgage:300,000
6% fixed interest rate
10-years

Total monthly payment (only for the mortgage, not counting utilities/insurance/food) = 2,508

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

Holt sheeit! No wonder FH is so freaked out by the housing market right now!!!!

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

Sorry, I didn't mean to scare you

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

Is it legal - and is there a way - for a married man to buy a house in his name only if the wife has crappy credit?

Further, can you still use her salary when configuring the loan amount, but leave her name off? Thanks.

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

sorry, don't have those answers!!! Perhaps he can claim you as a dependent

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

Rachel .... If you are going to be on the loan b/c you need to figure in your income, then your credit gets assessed also. If you both don't meet the criteria (ie credit score), then you won't get the loan. That's according to CONVENTIONAL MORTGAGE rules.

We went through a similiar issue. My credit was better than his. We found a few ways around it.

1. Find out from a mortgage broker what the 'problems' are in your credit report ... that a bank would have issue with. Sometimes you can clean up your credit easily & increase your score w/o too much hassle.

We found out that if we waited a few months ... with good payment history (most banks like 2 years), he'd be in better shape.

2. If its not going to work b/c of a serious problem, then you can get a nonconventional mortgage. They have programs where they won't check your pay stubs or your bank records, BUT you pay more in interest for these loans. Possibly 1 1/2 points higher, plus at least a point (that's 1% of the mortgage loan) as a fee at closing.

Anyway ... its confusing ... but if you have questions fm me. I can talk you through it!



PS .... where have (if you have!) you started looking?!

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

not sure about your credit question, but just wanted to reiterate that you should be careful not to 'max out' on the line of credit that they give you. Things WILL come up after you buy a home, especially if it is an older home. not to scare you. but we ended up spending $15000 on our home within the 2 months after we purchased it. (this is not for furniture or anything, this is just for repairs and stuff that we ended up needing!) we are definitely not the norm (since we bought the money pit! ) but i have heard people say they spent about $10000 after purchasing their home just on stuff they didn't budget for!

on the good side, right now is an awesome time to buy a house and get a mortgage because the rates are so low. we are actually refinancing at a 5 3/8 rate, for a 30 year and our mortgage payment is going down $800 a month! YEAH!

Good luck!!

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

also...don't forget to add in any repair costs...does it need a new roof, oil heater, etc...

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

I am so glad Thrilled asked this question too.
Does anyone know if there is a specific ratio that your mortgage amount is not supposed to go over (i.e. 30% of your income or something like that)?

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

I have to agree with the post work backwards. Calculate how much you can afford monthly. We did that and when we got our loan the preapproval was way above what we know we can affored.

For some reason they don't factor in that homeowners like to eat and go out from time to time.


Also don't forget the TAXES. Thats a nice couple hundred dollars a month.

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

Rachel, on the flip side, if you have a longer mortgage term, you will have a lower payment, so you may be able to afford the house with a 30-year, but not a 10-year, for the same mortgage balance.

Re: For those of you buying a house - Mortgage Question pls read even though this is not a tantalizing header...

Irene ... a mortgage broker will calculate the MAX at no more than 29%, but you shouldn't ever really be near this on your debt/income ratio. That is really high & you'd wind up living paycheck to paycheck .... AND they only calculate using the MINIMUM PAYMENT on your credit cards.

So if you are close to that number, you may not have enough money left over after your mortgage payment to pay MORE THAN the minimums each month.

The other thing they don't factor in when they are pre-approving you is the PROPERTY TAXES. This is part of your mortgage payment along with your homeowners insurance AND your ESCROW ACCOUNT. So your payment will never be just the loan amount + interest.

When you find a house, then go back to the bank or broker & ask them to calculate the payment again so you have a better idea of how much you'll be paying each month.