A score of 664 is not great, but it isn't terrible either. Since you are already paying $750 a month in rent, I'd say you are being reasonable in looking for a home priced under $100,000. Your income might be looked at negatively though (in spite of the fact that you are handling $750 a month just fine). Based on your income, you may have to settle for a loan of about $60,000 to $70,000. That isn't a BAD thing though. If you spend time shopping around and not get into a hell fired hurry, you should be able to find a decent home in that price range (especially in this market). Obviously that's going to depend on where you're looking though. In some places, it will but you an older, sturdy, charming 3 bedroom home.....but in others, it wont even buy you the mailbox!! A mortgage loan in that range will cost you a good deal less than what you're paying in rent, but how MUCH less depends on your credit and down payment. If you have good credit, it's possible to get a loan for no money down but your interest rate (and monthly note) will be a bit higher. Still less than what you're paying on rent though, I'm sure. BUT be warned----the closing costs can eat you alive!! Sometimes you can ask the seller to assist you with them but they wont do that unless they got a good price for their house and, of course, your objective is to get the house for as cheap as possible. On a house of 60-70 thousand, your closing costs will likely be around 2 thousand....maybe a little higher. When you go to a bank to begin discussions, all you need to do is walk in and ask for a pre-QUALIFICATION....not a pre-approval. Don't even bother with a pre-approval because it isn't a guarantee for anything. The lender will pull your credit and let you know in a day or so if you definitely are approved for a loan or not. Then the loan will just kind of be sitting around waiting on you to find the perfect house. (You wont be making loan payments yet, of course). The lender will give you a pre-qualification letter, which is like gold to the sellers!! When you find a house you want, whip out that letter and they will immediately know you HAVE the financing and are a serious buyer. You can ask the lender to check you out for pre-qualification on a $100,000 house, AND an $80,000 house. He'll run the figures and present you with the findings to see which loan you can best afford. When you chose, he'll provide you with a "Good Faith Estimate", which will be an itemization of all the closing costs involved, and how much money will go into escrow for taxes and PMI. When you find a house you like, one of the first things you need to do is to simply CALL your insurance agent (usually the one who carries your car will be the cheapest) and ask for a quote on the yearly homeowners insurance cost. You'll need to take that cost into consideration too when figuring out what you can afford. Buying a house can be fun, but usually only after it's all said and done with!!
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03-28-2009, 06:49 AM
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