I Can't Believe The Bank Qualified Him For This...

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[stayntune]

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.

[BAMMEDIA]

This bro gets more handsome every video!

[irvgotti]

Glad I found this video
I almost took on a $4100 mortgage on a $6200 net income😮‍💨

[funtechu]

My lender preaproved me for 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.

[Billothy]

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.

[daddytaz]

Realtor and lender is happy because the bigger the house price, the bigger their percentage paycheck they gonna get.

[XennialGuy]

"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!

[Pisperdiem]

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%.

[Detached_AZ]

Are Mom and Dad helping with the payment?

[dungphan]

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!

[SCIGS]

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.

[pennytine]

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.

[SCSC-qzrr]

I’m in the same situation, making $80k, no debt, excellent credit, just started the process and qualified for $300k only.

[belindawilliams]

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.

[Markrtsoon]

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.

[DavidM-hc]

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.

[mars]

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.

[Omar_Zazzle]

his parents are going to need to pay rent.

[joeyyoung]

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

[ElMenorLatino]

I am currently under contract. I am looking at about 37% of my net income.