Met with a mortgage broker last night

[Safeway]

Why push the debt/income ratio to its limit? With within your means, man.

 

[daveshel]

My pusher tells me I should be spending 55% of my income on heroin.

 

[Miramonti]

If you buy a house for $400k instead of $200k, and housing prices increase 10%, you make an additional $20k. Free money, since housing prices never go down.

 

[BigToque]

Originally posted by: jjsole
If you buy a house for $400k instead of $200k, and housing prices increase 10%, you make an additional $20k. Free money, since housing prices never go down.

The only way you're going to see any money is if you downgrade to a lower priced house. Pretty useless unless you're moving to a new geographical region where a lower priced house doesn't equal a degredation in the size/quality of the house.

 

[spacejamz]

were you going to get pre-approved or pre-qualified??

pre-approval is an informal process where they crunch some numbers based on income, etc...

when you get pre-qualified, you need to turn in paycheck stubs, W-2's, etc...this process will give you a more accurate picture of what you can afford...

 

[dakels]

55%? I don't know jack about credit but everything I been told is if your mortage+dept payments will be that high, you will not be approved for a loan let alone encouraged to do so...

 

[Whoozyerdaddy]

Was he actually pushing you toward buying that much house or was he just saying he could qualify you for that much? If he was pushing you, you should drop him immediately. A good mortgage broker should always tell people their max but he should never tell them to go out and spend it.

"Here, I can probably qualify you for this much"
"Thanks"
"I look forward to working with you"
/conversation

 

[memo]

Originally posted by: spacejamz
were you going to get pre-approved or pre-qualified??

pre-approval is an informal process where they crunch some numbers based on income, etc...

when you get pre-qualified, you need to turn in paycheck stubs, W-2's, etc...this process will give you a more accurate picture of what you can afford...

We were just generally getting an idea. We gave him our income and debt status. We didn't provide any paperwork at all.

 

[memo]

Originally posted by: Whoozyerdaddy
Was he actually pushing you toward buying that much house or was he just saying he could qualify you for that much? If he was pushing you, you should drop him immediately. A good mortgage broker should always tell people their max but he should never tell them to go out and spend it.

"Here, I can probably qualify you for this much"
"Thanks"
"I look forward to working with you"
/conversation

He wasn't really pushing us. He was just saying we could "afford" alot more. It's up to us to decide what we can afford though ;D

 

[Vic]

Originally posted by: dakels
55%? I don't know jack about credit but everything I been told is if your mortage+dept payments will be that high, you will not be approved for a loan let alone encouraged to do so...

It depends on the program. Theoretically, one can get approved for a conventional/conforming loan all the way up to 65% back-end DTI of gross income, even today, but this is going to require some very strong compensating factors, like a combination of large down payment/low LTV, superior credit, and several months' worth of documented liquid assets.

And yes, there is a big difference in being told that you are pre-approved for X and being told to take X. The former is a professional courtesy, "Good news, we can get you more than you were asking for if you want." The latter is unethical.

 

[spacejamz]

Originally posted by: memo

Originally posted by: spacejamz
were you going to get pre-approved or pre-qualified??

pre-approval is an informal process where they crunch some numbers based on income, etc...

when you get pre-qualified, you need to turn in paycheck stubs, W-2's, etc...this process will give you a more accurate picture of what you can afford...

We were just generally getting an idea. We gave him our income and debt status. We didn't provide any paperwork at all.

if you guys really think that you will be buying a house in the next few months, you should go ahead and see how much a lender will actually let you borrow. This way there is no guessing when you find the house that you want.

If it was a seller's market, showing a propestive seller that you have your financing already lined up would be a big plus for you.

 

[EagleKeeper]

Originally posted by: BigToque

Originally posted by: Vic
Lenders are not allowed to calculate on the basis of net income. That would be a violation of ECOA, because your net income involves calculations based on the borrower's marital status, number of children, etc etc.

I guess that's pretty good justification

Originally posted by: jarfykk
One reason some folks use gross income is that with our tax system, you get a tax deduction from mortgage interest paid, which lowers the effective income tax you're paying. So if your take home is $3600/month (Grossing ~$70k in a state with income tax, like California, NY, etc.), it is fairly doable to take out a mortgage costing you 50% of that because you'd effectively pay much less income tax with the mortgage deduction, essentially 'increasing' your take home. Now EVERYONE should reconcile those very rough percentage guidelines with your real world situation and take home *is* a good starting place for doing that.

Do you really get tax deductions from the interest on a mortgage? I didn't know that... and it sounds awesome

Canada may be different than the US.

 

[Kelemvor]

You can always get approved for more than you can afford. You need to do your own math to decide what you can really afford and not go over that or you'll regret it in the long run. Especially if anything happens that hurts your income...