What is the highest mortgage I could afford on a small home?
I generate with my fiance about $500 a week (well, its more but I am rounding it down quite a bit). We are looking to get a small home, 3 bedroom one floor house. We are in Michigan and plan to stay in our current area. I have fairly decent credit, not excellent, but certainly not bad. With utiliy cost in Michigan (winters mainly) what do you think our mortgage should be like? Whats the highest we can go on a loan? We are first time home buyers, and will likely try to find a foreclosure home to get us started for a good price.
Any opinions and help would be appreciate, its our first steps out into ownership!
- loanmasteroneLv 77 years agoFavorite Answer
Buying a house is a step by step process, this is the first step you should take in order to purchase a house. The rest of the steps will fall in place, no matter the type of property you are purchasing.
In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, you can find one in your local telephone book.
Make sure this mortgage broker or mortgage banker is able to do government loans such as USDA, FHA and VA loans if you qualify for one. With a VA mortgage loan you are not required to have a down payment, this will save you on closing cost.
He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.
The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.
When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.
#1 One month of pay stubs for each person that will be on the mortgage.
#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.
#3 Two years of federal income tax along with the W-2 that match.
Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.
Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.
Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.
If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.
You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.
Make sure your mortgage broker explain all your options so you may make an intelligent decision.
What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.
So select the best option for you and your financial situation.
You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.
Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign. Your mortgage broker will now order an appraisal to show proof of the property value.
The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.
After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.
Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.
I hope this has been of some benefit to you, good luck
- rtfmLv 77 years ago
If you're earning $25K a year, you could be approved for a mortgage of approximately $62K to $75K. You'd also need to have 20 percent of the price of the home in cash for a down payment, so you're talking a total cost for the house of about $88K. Can you get a 3-bedroom house for that little where you live?
It also depends on how long you've both been working and what your credit ratings are like. Talk to a mortgage officer at your bank to find out for sure how much you would qualify for.
- rangeLv 43 years ago
Simply be certain and unfold the chance evenly. Individuals who made these loans in error must even be left to founder in our free market. To support the organisations and not the character just isn't handiest a mistake and a miscarriage of justice - however a very silly political move.
- Go with the flowLv 77 years ago
I just don't see how anyone can afford any home on income of
$26,000 a year.
Maybe, just maybe if you put 20%+ down.
And if you have no debt.
Then maybe a 70K home.
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- 7 years ago
You make about $26K. So your max loan you could borrow is about $75K. You'll need downpayment and closing costs saved up.
- David14Lv 77 years ago
Since we are not psychic, we can't answer. WAY too many variables in there like debt, credit score, type of loan. etc