I Can't Believe The Bank Qualified Him For This...
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- เผยแพร่เมื่อ 21 พ.ค. 2024
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I'm in the same boat. I make $80k, no debt, great credit, and can probably qualify for a $400k home in my area (upper midwest). Just because I'm qualified/approved for that amount, financially I know it's not a smart move. Property tax are not fixed, buying an old house come with a lot of maintenance and unforeseen repairs. You HAVE to consider worse case scenarios, especially during these times.
And it’s insane to spend 50%+ of your income on a mortgage that size in the first place, especially if you’re a first time home buyer with no equity
My wife and I qualified for almost 600K with no debt making over 120K a year combined. We spent 272K and even though we have to put work into our house we love it.
Very smart
@@adamjfishIt is more insane to throw money at renting
So why dont you buy a multi family and have the tenants pay off your mortgage?
Don’t ignore your feelings
Realtor and lender is happy because the bigger the house price, the bigger their percentage paycheck they gonna get.
My lender preaproved me for waaaaay too much when I was house shopping. I asked the lender to write up a preapproval letter with a lower amount (based on what was comfortable with my budget) so that when I got a real estate agent, they wouldn't be tempted to go to high because they wouldn't be aware that I qualified for more.
"Qualifying" and actually being able to afford are very different things. A person making $80k definitely cannot afford a $400k mortgage after 20% down. No money left for taxes, insurance, and maintenance. DON'T do it!
This bro gets more handsome every video!
I think we need to get rid of percentages and look at the budget working backwards. You hit it on the nail, you must start with your net income "bring home" after taxes, deductions and retirement savings. For most people these days that also includes having no debt. This would be my budget in a moderately priced region. 6 months net income in savings, 1K month added each month to savings from my net income. 2K month for food, entertainment, gas, house hold supplies and personal needs, this is for just 2 people. Next, 1K month for bills such as utilities, cell phone, car insurance, life insurance. This would add up to 4K month before a mortgage payment. For us, 4K month is plenty of money and the budget it not tight. I am sure others can live on less and others would want more. The sad truth is in most areas home prices are expensive and wages are not keeping up. So yes, I can see how people are spending 50-60 percent of their net income in a mortgage payment. My parents bought in 1978, after paying their mortgage they only had 700 left over each month. After adjusting for inflation, that 700 would be 3200 today.
To Javier's point, it sounds like you're pretty young and very successful already by having no debt and a solid starting income. If you live in a market where $500k gets you a really nice single family house, then there are likely townhomes or older/smaller homes at half the price and that's really where you should be focused. Obviously, you'll need to be more patient with listings and diligent with inspections, but there are plenty of people successfully navigating similar situations. Finally, don't let other people's expectations pressure you into a position where you're house poor. With no debt, you're in a position to really start focusing on investing for your own retirement with compound interest being your friend vs losing all that money to the amortization schedule of a 30yr mortgage at 6-7%.
I would rather be house poor with a mortgage than be poor from debt and renting.
@@SCIGS30 my thoughts exactly. I'm already housepoor with an apartment so having a house would just be the same but with more freedom and more space.
@@Billothy69 and an asset that is YOURS, not your landlord's asset
@@williamcathcart387 exactly
Trust your gut. You will be a slave to that house and you will end up hating that house and regretting your decision every day. Buy something you can easily afford and life will be easier with far less stress and your parents will be even more proud because you made a smart decision.
I’m in the same situation, making $80k, no debt, excellent credit, just started the process and qualified for $300k only.
Everyone is making 80k….
82k here
I paused the video to tell you sir, that weird feeling in your tummy is your instinct telling you that a half a million dollar house is not what your 80k income can handle. Your lender & realtor are over the moon because they’re thinking they’re about to make a commission & get interest payments on a 1/2 million dollars and mom & dad are excited for their free $500k home they’ll inherit when you marry. They’re about to find you a lovely young lady to hang out with here shortly 😂
Not gonna lie. As a person who already lives paycheck to paycheck, and my rent is close to half if not more than half of my net income (and that's with having relatively low rent for the area), I would definitely rather be in that same position in a house than in an apartment. Is it the smartest financial choice? Definitely not. But I've been living how most people would call "housepoor" for basically my entire adult life and I've still made it work every time. I've basically accepted that if I do ever own a house one day, it's gonna be more expensive than I "should" pay but it's the only chance at home ownership I realistically have.
Thank you for all you do
Thanks so much for your help and advise for this case qualified by lender. Absolutely calculate on net income and follow strictly to ratio about 28% -33% applied for mortgage, property tax, insurance, HOA.If not it is very risk!
Don’t do it!
Follow your gut feeling!!!
I completely agree with you. It’s frustrating to look through closed loans and see that the buyer will have close to nothing left after the bills are paid. I’m worried that many people will end up accumulating unnecessary debt down the line when they encounter the inevitable setbacks in life.
This is what will cause a crash.
I remember our first 4 bd 2.5 bath home was $95000. At the time, we were making $85000 combined salaries. It is surprising to me a $80k income could buying a $500k house.
Are Mom and Dad helping with the payment?
I make 72 and I’m trying to keep my mortgage under 1800, granted I have my girl to help me but I’m NOT trying to be 🏠 poor 👎🏽. I wouldn’t want a home for a half an M until I hit that 115-135k bracket.
Not sure where you live but I am telling you 135k is not a lot of money…. I make ~122k and could not afford more than $2,300 payment at current prices /rates ( average home is around 375k-400ish…. Half a mil is house poor at 135k/year. Assuming this is gross income. But you may be comfortable now, wait til you have kids and life happens… but if advice. Save. Save and don’t inflate your lifestyle as your income increases. Best of luck
@@anonyghost7422 Absolutely house poor at 500k w/ 135 gross, unless a massive down-payment. I'm looking at 600k w/ 180k/yr and it's honestly a lot. 4k/ month is a lot for a home.
As someone that makes $120k and only has a small car payment, let me tell you a 400k single family home still hurt me to even think about.
I ended up getting a 3 family for 460k but the other two families cover the mortgage and this situation actually feels good and comfortable.
@tradejak similar here.. crane operator in central NJ, make $135k/year with a 7% DTI.. no wife or kids, so it just me.. and I'm not even bothering with looking at anything over $380,000 .. anything under $400k around here that is half decent is slim pickings.. and property taxes on average in my area are around $10k to $14k a year for those houses I mentored. Trying to be patient to find the right house with my budget.. not easy these days even with making $135k which is decent by America's standards
@@tradejakmight have to do what you did and get a multi unit property at first and maybe have it as investment property long term.
He isn't even taking home that much, I make the same amount and my take home after all deductions is only 4500.00.
Asking a bank for a loan is like asking a dog if it’s hungry.
There’s a lot of good feedback in the comments section. Here’s a few comments and questions that I have when hearing this:
I agree with setting a comfortable budget first and then choosing a house in the price range that reflects the budget you set. Take into account housing expenses like property taxes, HOA, maintenance costs, home insurance etc when calculating your budget. Also include any other financial goals you want to save for and a rough timeline on when you want those goals met. Examples: Saving for a down payment on another future house like you mentioned? Retirement? Vacations? Future wedding?
Also, this is a question for the future, but good to consider now if the goal is to give this house to the parents later. When you say that you plan on giving the house to the parents some day, does that mean you sell it to them or gift it to them? Would the parents be able to afford to buy the house from you? Can the parents afford the amount of maintenance /taxes/insurance/HOA etc that this kind of house will need on their income? I guess my point is, if a goal of yours is to make sure your parents have this house someday, make sure that it is also sustainable and practical for their situation. Otherwise, you might be supporting your parents with the mortgage, maintenance, or whatever else comes up. However, Im not sure I would discuss this with the parents because you don’t want to promise them this house if your situation does change in the future. Just something to think about.
Such a great point about gifting the home! It’s like when HGTV gifts the homes to winners and then the occupants go broke and have to get rid of the house because while the purchase was free, the taxes, insurance & maintenance on these mansions eat them alive! Most of those winners lose the home the first year.
I am currently under contract. I am looking at about 37% of my net income.
His lender and realtor will be so sad they won’t make money
Glad I found this video
I almost took on a $4100 mortgage on a $6200 net income😮💨
My wife and I had a similar situation, the bank approved us for almost $1million. We knew we couldn’t afford that, so thankfully, we didn’t make a bad mistake. However, the banks are just trying to get you to sign a contract and take all your money. It doesn’t matter to them whether or not you can pay the mortgage. They’re gonna get the house back or the mortgage, either way it’s a win for them
What a handsome fella
Don’t do it. What happens if he gets married and the wife wants to move? Or they have kids?
his parents are going to need to pay rent.
Even if you qualify for a loan you should have in mind what you're willing to accept.
Don’t forget unions in the past. Banks and credit unions were way more likely to lend to union members. They knew their pay rates were set and had great job security = safer lending. Nowadays, nobody’s job is secure and pay can fluctuate so banks have to use random ideas on how to get loans out to people in an economy where jobs just aren’t secure. Then you get crazy situations where people are paying 60% of their income to a mortgage and a bank can gaslight them and say “yes! You qualify! We know the economy is not secure nor is your job but you qualify!”
To work 40 hours one week and 20ish the next week full time just to barley cover the mortgage, ouch!!!
I am really upset about all the selling out there they are not helping anybody, its all up to you to be viggelent and know what you canafford and STAND YOUR GROUND even the most good mortgage lenders still push for a highwr loan they make it sounds easy but you know what, you are the one who will be paying it back not anyone else!
We spent way under what the lender approved us for.
I’m a little late but, if he is thinking on “leaving” that house for his parents and moving out once he finds someone to form a family, brother, you’re better off just staying there and letting your parents babysit your kids. I think it’d be a good idea to have a multigenerational family living in the same home. Privacy is important, but if YOURE the owner and head of the household, I think you should be fine, just make sure the woman you settle down with isn’t a party girl.
The bank is setting this person up for failure.
Ok, here are the facts. Yes, if we see a major financial down turn, home owners will not be able to afford their homes. With that it will not be like 2008, sorry. Just look at what the government did during the sickness, nobody lost their homes. The is a vehicle in place to prevent mass foreclosures. You will see home prices come down because there is no vehicle for second homes or investment properties. Freddie Mac is now creating a vehicle for secondary loans without changing interest rates so stand by for higher home prices if this passes. When this all comes tumbling down, people will refinance into low interest rate mortgages if they own a home. So get use to spending 40-60 percent of your income for mortgages and rent. Times have changed and it is not good. Don’t believe people that we have a strong economy.
If you want a decent house these days you’ll have to take some risk. The 30-40% of gross income to mortgage isn’t exactly realistic. If you want a nice house, you’ll need to spend more than that in these market conditions. You literally can’t get a mortgage under $2k right now, especially in California.
Given how people are laid off left and right and anything can happen I think renting is a better choice if that is your context.
@@BrookeKnits it’s all circumstancial. I personally just bought a $420k house at 6% interest rate. Looking at a $3k mortgage. No kids. No debt. That’s roughly half of my take home pay. I’m talking the risk because I have steady income and I can afford the payment although I will definitely have to budget. I have 4-6 months reserves in the savings. But to say somebody shouldn’t buy a home if the mortgage isn’t between 25%-35% is just unrealistic in most places.
First of all, I want to say Young Person, you have a beautiful, generous spirit and it was nice to hear that you want to do something so generous for your parents. I am certain that your parents will understand if you explain that you cannot afford such a large mortgage, and they might have even discussed it amongst themselves but didn't mention it because they didn't want to discourage you. People without a lot of money may not have the best financial education but lack of money teaches one to be careful, and I wouldn't be surprised if they are concerned but haven't mentioned it.
Young Person, please talk to your parents, I am sure they will understand. Please DO NOT sign up for more than you can comfortably afford. As Javi said, do the math and determine what you can comfortably afford under your budget and stick to it.
But in 2024 folks will use all they were approved. then tax yr, insurance, maintenance spike; realize they will have to foreclose on their dream for lack of financial literacy.
I would say 40% is a stretch but doable IF..... you have 3-6 months emergency savings, 20% down payment, no/ very low debt, stable income, you live below your means on the daily, and you plan on staying for while. Anything more than that is financial suicide right now, especially 66%... that's a recipe for family struggles and your home becoming a curse more than a blessing of a golden jail cell.
Well pyramid schemes can't pyramid without a flow of suckers buying in... errr i mean "qualified buyers" 😂😂😂😂
A mortgage is NOT a loan on your house. It is a loan on your INCOME. That is SECURED by your house. So young man I think your income will only go up as the years go on. It’s rare someone has the same income at 25 years and 50 years old. Its mortgage forbearance and lots of other HUD, FHA, VA loans programs that will help you out if you go through a rough financial patch. I suggest not living your life on worst case scenarios. My advice would be just don’t overpay and get a house under market value.
We Make 60k a year have no debt. credit score in 700s have NO BILLS none no cell phone no car payment or car insurance nothing no bills no rent either but deff cant afford to buy a house cuz have 2 kids so we just keep staying out of debt while trying to up our income an save money
I'm curious how you'd factor in retirement savings and employer insurance into the Net Income?
We bought at 400k with 5% down, 6.375% interest. Monthly payment is just over 3k including escrow and PMI.
Net after taxes, insurance, and 15% pre-tax retirement savings is 7700. Which puts our payment around 40% of net. No other debts. 6 months savings.
I feel really weird being anxious about that at our income but it feels very tight, especially with child care.
Ain't no way a 80k income will get approved for a 500k loan so let me stop u right there
What are these emurjencie fundz you speak of lol
When I bought my first house it was $640k and I made $85k. Wife made $90k. I was terrified. We struggled too. But I got a much better job. I now make twice what I made then. I refinanced at 3% Apr. we removed PMI.
Had I listened to my gut I would be locked out of home ownership.
So it’s not always the best idea.
Do it and then buy yourself a 500,000 dollar house for yourself, in 60 years you will be done working overtime
make 20k more and u should b fine
Me and my wife make 100k with minimal debt and there's no fkin way we could afford a 500k mortgage, unless interest rates magically fell to 1%
@@yepdontcarebud how much u guys spend ?
@@lionheart93I make 120k with a small car payment, most of my spending is on food which ends up being $10-$20 per day, the money I save is still barely enough to afford a 500k house. It would be signing up to live paycheck to paycheck for 30 years.
It's a common fact rn that just to barely afford the median home you need around my salary... But who wants to buy something they can just barely afford?
@lionheart93 a lot.. why? Because you have to lol gas, insurances, groceries, and other necessities ain't cheap. We ain't drinking Starbucks and going on lavish vacations, haven't had a vacation in years actually.
Part of it is probably because we live in NJ, though some of this doesn't change much anywhere. 100k just doesn't go nearly as far as you would think it does.
And all of my friends will tell you I'm one of the cheapest mfs you'll meet, and my wife is very low maintenance as well.
But a 500k house at current rates is gonna put you at MINIMUM 4000/a month lol idc if you're riding a bicycle and eating bread crumbs.. that's nowhere near possible at 130k salary. You will default and lose that house in months.
Everyone is saying there will be no crash because banks tight lending standards lol. They are very wrong