Overhaulin'

Can a couple making $62,000/year afford a $155,000 house?

We are getting an offer through the bank for a 30 year fixed Rural Housing Development loan. Our loan officer tells us that there would be no PMI through this loan and it would not require a down payment. We have 2 car payments totalling about $366, student loan payments of about $80, and credit card debt of $15,000. But we have $14,000 in the bank. Plus, from what I've been reading we will get a $7500 credit from the government on this year's tax return (which I understand must be repaid) You think we will be ok with this payment? I calculate it will be about $1100 with propert taxes and hazard insurance.

Public Comments

1. Yes, you should be able to afford it. General rule of thumb is that you can afford two and a half times your annual salary. Why are you carrying that much credit card debt when you have so much savings in the bank? I'd pay off about $10K on the credit card and then cut the card into shreds so you're not tempted to run the balance back up again.
2. Well, have you been coming up with an extra $1100 after paying all your bills for the last 6 to 12 months? If so, you will probably be okay. If not, the money will not magically appear now. As a matter of fact, you are likely to have larger utilities, upkeep on the house, furniture expenses, etc. You know much better than us if you can afford it. Generally, if you can finance for 15 years and your payment is no more than 1/4 of your take home, you should be safe.
3. You should pay off the credit card debt and come up with atleast 10% for down payment and closing costs. What are you paying right now in rent? or do you have a house you would be selling?
4. Your income and debt ratios are good. You should pay off those credit obligations and concentrate on the mortgage. If you make one extra payment each year, with the understanding that you are making a principle payment only, your mortgage will be paid off in 16 years....Yee Ha! Best of Luck!
5. Have you thought this thru? Will you be getting a fixed rate mortgage or an Adjustable Rate Mortgagge--ARMs can jump your monthly rate really up there. The 30 year mortgage at a minimal rate of interest may end up costing you $350,000 because of interest--interest is the hidden killer. It would be bettter if you shop more and get a lower priced home.
6. depends upon ur budgeting skills! read Robert Kiyosaki its really helpful
7. You need to pay off the credit card debt first at your income level. Otherwise you will not get approved for a loan. If you do get a loan they will end up taking a huge slice of your income. With that debt load the home owners insurance will be tremendous. With that even your car insurance is costing you more. Pay down the cards and you can call the credit card companies and get the APRs lowered as they don't want to lose you. Everything is costing you more. 15K at 62K in means you are bleeding money everywhere right and left. Do though keep some of that as cash backup. You should have ultimately a few months cash reserve just in case.