Relocating - questions about buying new house

We are relocating. Our current house is on the market. We should be able to clear about $50-60,000 from selling our current house.

We both work now and our annual gross income is $110,000. In our new town, I will not have a job right away (and not sure when I will). My wife will be making $65,000. We want to buy a house as soon as we can since we will be staying with her parents, so that's pretty good incentive to find a house.

Do you think we'll have problems getting approved for up to $150,000? We plan on using most or all of the money we make on our current house as a down payment, and would ideally like to not have to borrow more than $100,000 over 30 years fixed rate (and then we'll pay extra each month when we can).

How will banks view us as far as giving us a mortgage? Should we get preapproved now while we are both working and our income is still $110,000?

A little background: we are moving from Buffalo, NY to Binghamton, NY. We've owned our current house for almost 7 years. We have good credit and have never missed a payment of any type or been in any financial trouble.

Thanks for the help.

Mark

Mark,

As long as you don't have a lot of debt you can borrow way more than $100K on just your wife's income.
If you used just 25% of your wife's gross monthly pay, which is $5400mo that equals to $1354 for a house payment. $100K @ 6% is $600mo amortised over 30 years. Add in a property taxes and insurance and it shouldn't be a problem.
If you think your credit is fine, I'm sure it is. You can run your credit through several websites for $15.

You must have built up quite a bit of equity in your home because I've heard the Buffalo market has been bad for 15 years.

I dont know how old you are but you may only want to put 20% down on the new house and invest the rest for you retirement.

Thanks for your feedback. We're both 32 and have a 22 month old daughter.

As far as the Buffalo market, it's actually pretty good. We never had the huge appreciation like other places, so now we're not going through the huge corrections. More slow and steady here. We built our current house in 2001 for a real good price. The new home prices went up right after we built, so our timing was good.

As far as putting some of our earnings in retirement, maybe we could. The main reason we're making this move is for one of us to not have to work full time so we can spend more time with our kids (we hope to have more). So that's why we're looking to keep our mortgage low.

Thanks again for the help. Your response makes me feel better (as long as you know know what you're talking about :D)!

I've been a Realtor for 15 years so I better know what I am talking about. LOL.
If you guys are only 32 I would definitely only put 20% down and save the rest.
I didn't go too much into what your property taxes are in Binghampton but I've heard they are high. A $200K house in Charleston SC would be less than $1000 a year but I've heard property taxes up North could be $5K for a $200K house.
Even if they were $5 or 6K you could still do a $150K house on her gross monthly pay.
And I am being conservative with the 25% of the gross pay. A few years ago people were doing 50%!!!. And many of those have been or are being foreclosed on.

We're really up in the air about what to do. We went and saw a model home today here from a builder that also builds in Binghamton. So we could go anywhere from a <$100,000 fixer upper to building another new home. Once we sell our current house and know how much money we have, then we'll be able to figure things out.

Taxes are high here in NY. That's what's killing us now. Our current P+I payment is only $890/mo, but then our taxes are $5600/year on our current house, and it's appraised way below $200,000. So our escrow payment is another $450/mo. Why do you think there are so many ex NYer's in the Carolinas???

Thanks again for all your advice (and I'm glad you didn't take any offense to my comment about you knowing what you're talking about).

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Um... what?

I don't think you will have a problem with the new mortgage. The question is do you really want to buy in market that is still going down?

We got qualified for a mortgage WAY over what we want to spend just on my wife's new income, so I guess I was worried about nothing.

As far as buying, it beats living with the in-laws (our short term housing) and apartment living.

We got qualified for a mortgage WAY over what we want to spend just on my wife's new income, so I guess I was worried about nothing.


What you're approved for and what you can actually afford are two entirely different things. Take note that in the last real estate crash, a lot of people were put in homes they really couldn't afford, even though they were "approved" by mortgage lenders.

Here's the scoop -- your mortgage and home-related non-utility expenditures (mortgage payment, insurance, and taxes, essentially) should be no more than 25% of your take-home pay, so that you can afford other things in life, like a car, some food, and medical care. Now, what can you safely afford?

What you're approved for and what you can actually afford are two entirely different things.

Agreed. In 1997 I got a mortgage that meant that almost 50% of my take-home pay went to housing expenses (including taxes). A co-worker in a similar position (thus, probably similar income) said his bank was willing to loan him $100K more than what I borrowed. I don't know how high my bank would have gone- I was at the limit I'd set for myself. I managed it because I was in a high COL area and housing in a decent school district cost a lot. I kept the one car I'd bought in 1992 the whole time (I was a single mother) till I sold the house in 2003. My son and I lived decently but simply. Borrowing another $100K would have been a killer.

Run the numbers (including property taxes and insurance) and make sure you're comfortable with the payments. And if it's an ARM, make sure you're comfortable with the possible increases.

All good advice, and I'm well aware of how so many people ended up in foreclosure these days. Needless to say we will not be doing that. Our gross monthly income will be $5400, so 25% of that is $1354. I'm hoping our monthly mortgage payment and property/school taxes and home owners insurance will not be over $1000. And that's just my wife's salary, once I find a job our monthly income will go up.

I'm pretty sure that once you get back into work, you will be fine, Indiana627.

You stated you haven't had any financial trouble in the past, which is really good, and something that financiers will look at when considering approving you.

No approval problem - buyer's market

Follow your heart!

Yes absolutely I am agreed with the above mentioned you must go with it.

You really shouldn't have any problems at all with getting approved for that much. If you haven't missed a credit payment and your credit rating is high, even if you're currently out of work it shouldn't be a problem. Do you have a long history of employment?