foreclosure bay area
Can I afford a $475k mortgage on a $525k townhouse?
Givens:
I make $9750/month. Fico score > 800.
Jumbo loan rate is 4.875 with 0.5 points
asking price is $525k for a 2/2.5 townhouse.
Available down payment is 10% or $52.5k
I’ll need PMI ($290/month) and the HOA is $250/month. Hazards and Home owners Insurance will be around $150/month.
I think the payments will be around $3700/month but with the tax break it will be around $3000. I currently pay $1700/month in rent but am wondering how I would change my dependents on my W-4 to make it work.
I’m also wondering if I should bid 10% lower in light of the current S&P predictions of housing to fall in 2011 due to so many short sale and foreclosures on the market. I live in the Bay Area.
Any experienced advice would be appreciated.
My calculation of $3700/month does include property taxes of $546/month (@1.25%).
After the tax breaks I think it will be around $3k/month.
The property is a short sale so it will be a crap shoot. Thanks to all who responded!
What you can afford is a highly personal question.
What you may be asking is how much will a bank or lender lend you to buy a house.
They’ll generally let you borrow a loan that on which the payments will be 30% or 40% of your total income for Principal, Interest, Taxes and Insurance. Your payment is almost within that range.
As for what to offer on the house: What’s it worth? You haven’t told us that. If it’s 20% overpriced, offering 10% below asking would be overpaying. If it’s fairly priced and in demand and well-marketed, your offer may well be too low.
Determine the value of the house NOW, based on similar sales in the neighborhood, and similar properties for sale; If you can’t do this, consult a professional. If the seller won’t sell the house for a fair price, move on.
Some homes are way overpriced, others are underpriced, others are fairly priced. It pays to know the difference.
bests,
-rsr-
Ron R
Exclusive Buyer Broker
