I just got back from my meeting with a mortgage broker, and the news was mixed (which is exactly what I expected). Basically, with my assets, and credit score, I was only eligable for a $270,00 loan (which won't buy much in this area), but with a little work I could make myself into a much more attractive Lendee for the banks. He outlined 4 steps which would put me in a good position a year from now.
1. Pay off your back taxes
2. Clean up the student loan listings on my credit report
3. either pay down my (small) credit card or get a bigger limit, in order to reduce my balance to under 50% of the limit.
4. Get another, larger credit card.
Yes, I know this stuff is obvious, but talking to a professional who could also prioritize what steps to take made all the difference in the world.
The other good information I picked up was the 'ballpark' figures I would dealing with on a loan for $480,000 (which is right about what we are looking at for a quasi-decent 3 bedroom in Santa Rosa). One thing that has had me flummoxed was the online mortgage calculators that talk about $3300 monthy payments on a loan about that size. I simply can't afford that kind of money. But, he pointed out, you can write off a large portion of those payments (which I knew), and what you should do is talk to a tax accountant and have them revise your W4 to take that into account. Then end result is that instead of getting a fat check from the IRS at the end of the year, you break even, but your take home pay is much bigger throughout the year.
He said that a $3300 mortgage payment (once the W4 has been adjusted) is akin to a $2300 rent payment (note, my figures are even more ballpark than his, because I don't have my notes in front of me, but you get the idea). Now I *could* afford a $2300 rent payment so it does look like it will be possible, at some point, to buy a house. Phew! Waiting may be good as house prices are likely to come down a little more over the next few months. I just hope I will be in a good position to buy before prices and interest rates rise again.
Now comes the hard work: Saving (you've got to squeeze every penny!), paying off debt, and being patient.
PS. Given that it will be awhile before we're ready, I suppose I can divulge which house we are currently in love with as it will be sold long before we are ready to buy. I think it's a great, great buy. It's certainly the nicest thing we've seen anywhere near the price. The bad news? It'll need a new roof within the next 5-10 years.
This weeks House we'd buy if we could
Sources:
Clark Rosen, Realtor: http://www.clarkrosen.com/
Brent Blaustein, Mortgage Broker: http://loans.princetoncap.com/brentblaustein/
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1 comment:
oh sweet and beautiful little house!
maybe it will still be there when we're ready.
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