Can you help us figure out if my son can afford this condo?

nanmeadeNovember 18, 2009

Before he goes to get pre approved, we are trying to figure out if it is even worth it to inquire. He is a first time home buyer. Are there any websites that can help us with calculating income and expenses, downpayment, interest rate etc? Any advice would be really appreciated.

Thanks,

Nancy

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cindyb_va

Nancy,
This is a pretty good one. It allows you to input not only your income, but other monthly expenses as well and gives you affordability based on various interest rates.

Be sure to include any association fees in the "housing costs" section, with some condos, they can pack quite a financial punch.

Hope this helps!

Here is a link that might be useful: Link

    Bookmark   November 18, 2009 at 8:46PM
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nanmeade

Thanks Cindyb. That was very helpful!

Nancy

    Bookmark   November 18, 2009 at 9:24PM
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manyhosta

Just one more thing to keep in mind. ... Besides building and liability insurance through the association, he will need a policy for his furnishings and personal property ("renters insurance"). Association policies vary in the amount (if any) of coverage for interior damages.

    Bookmark   November 18, 2009 at 9:29PM
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nanmeade

Thank you manyhosta!! Very good advice that should be passed on to all. (I am an insurance agent!) :)

Nancy

    Bookmark   November 18, 2009 at 9:37PM
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Billl

Calculators are fun to play with, but they are very misleading. They give an estimate of the maximum amount of money a bank will be willing to lend you. That is very different from what you can really afford.

    Bookmark   November 19, 2009 at 9:25AM
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pamghatten

I agree with Bill. Use the calculator as a tool .. it is calculating off GROSS INCOME. That's a lot different than the Net Income people actually have to live on.

Use the calculator, and then have him create a budget based on what he actually brings home ... see what he can really spend on housing.

    Bookmark   November 19, 2009 at 12:33PM
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kangell_gw

Uh, no he won't need renter's insurance. His homeowner's insurance will cover the loss of his furnishings and personal property.

    Bookmark   November 20, 2009 at 12:16AM
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cocontom

Kangell, but this is a condo, so he'll have a Condo Contents policy, which is much more similar to a rental policy instead of a Homeowner's policy. The association will have a policy to cover the building (depending on the association/type of condo, of course).

One other thing to note though- if he's just buying to avoid paying rent somewhere else, and isn't buying his dream house, he may come out ahead to rent and bank the difference. My MIL convinced my DH that he had to buy instead of moving out and renting, and we're stuck with a house in a mediocre neighborhood that's worth about half of our mortgage amount- even after 10 years and a complete remodel. If he had rented, even in a nicer neighborhood, and banked the difference, he would have $24,000 in the bank- and that's without calculating any interest over the last 10 years, which would increase that number. When you add in the $20K+ we've spent on remodeling (and that was mostly DIY), and that we're faced with either staying in a house and area I really hate, and he doesn't love, walking away from his mortgage, or being long distance landlords for a 60 year old house in a not-great neighborhood (that we'll be lucky to rent to cover the taxes and insurance), that banked $44K looks like a much better path.

    Bookmark   November 22, 2009 at 6:05PM
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