I agree with her, if you have too many credit cards cancel all but a select few (2-3) a few months before applying for mortgage. And the rest as Larki-NY said.
As to the main topic, buying property is not just about mortgage or affordability. Its also about where one is planning to be in the near future, geographically, careerwise, marital status (which has been touched upon) etc. A 21 yr old, fresh out of college person should give themselves a few years to figure out the above points before making such a huge commitment. Ofcourse there are exceptions like if it is for purely investment purposes.
...well to add to your original question Sara, what i used to do is put a third of my salary aside for a house i had my eye on, although it took me longer than i expected it became a reality back in 2001, but yeah nowadays it's becoming extremely difficult for first time buyers, but impossible certainly not.
My advice is if you plan on buying a home in 2/3 years or 4/5 years in your example, now is the time to establish a good/strong credit record, because not only will it help you to qualify for a loan, it MAY also get you a lower rate....what creditors like to see is that you can and have managed credit well.
You'll look even better if you have experience with revolving credit, which in itself allows you to decide how much or how little you pay each month....if you don't already have a credit card, i would suggest you get one and charge some items, but be sure to pay off the blance each month so you don't incur any interest.
Lenders/creditors also taken into account and look very carefully at your debt-to-income ratio when figuring out how large a mortgage one/couple can afford. For any of yuo here who are in debt, my advice is that your debt should not be no more than 20% of your pretax income and no more than 40% when you add in your mortgage and if it is take measures now and begin paying off any loans/outstanding credit you have.
Median single family house in the Bay Area costs $734,000. And thats median price, not high-end. So what is the 40% again?
I mean, I am not disputing that debt should be under control, but these advisory percentages should be adjusted for the geographic location. New York, like the Northern California Bay Area, is extremely expensive. Limiting anyone to 40% of their gross is impractical.
Keep in mind that islamic financing requires a greater down payment than conventional mortgages. So, if you go that route, you will have to start saving money now.
yeah and please ask the islamic financing ppl how their financing approach differs from traditional fixed mortgage. You dont want to pay higher rate and a higher downpayment for no reason.
I mean, I am not disputing that debt should be under control, but these advisory percentages should be adjusted for the geographic location. New York, like the Northern California Bay Area, is extremely expensive. Limiting anyone to 40% of their gross is impractical.
Well i did say what i added was an example, of course one's budget, financial position and of course location are a factor, it's no different here, to my knowledge an average median 3 bedroom semi in london can range from £300,000 - £375,000 (550,000 - 700,000 USD) so Sara, start saving. :D
I still don't understand that 40% thing. Does it mean that if your annual pre-tax income is $100k, that your total debt (including mortgage) should be less than $40k? That doesn't make sense.
I think what you meant to say was, and which I also indicated in an earlier post, that your monthly payments for mortgage should ideally be less than 40% of your monthly gross income. Previously the recommended ratio (and that which banks would focus on) was about 25-33%.
Now, with higher property prices and banks getting more aggressive in their lending practices, they give a loan even if that will make the mortgage payment about 50% of the monthly gross income. Certainly not recommended, unless you expect a windfall in sky-rocketing real estate prices.
There are various Islamic financing organizations available. Check http://www.ameenhousing.com/ as an example. For whatever reason, interest-free financing (as Islamic financing should be) are more expensive than traditional home mortgages in terms of down payment as well as monthly payment. Go figure!
Alright so a girl I know was telling me that she bought this house in Brooklyn.. it was almost on foreclsoure, and whatever mortgage the previous owners had was transferred to her.. she paid off the house in 4-5 years and now is renting it out and is earning a pretty decent amount per month..she told me that now, the houses worth is in the millions..
So my Q is… is this common [buying house on foreclosure]? And what xactly is forclosure? Is transferring mortgages possible? It almost seems too easy/too good to be true.. i’m not sure if she was BSing me or what… any light shed on this wud be appreciated:)
It seems like its getting really difficult to buy a home in NYC.. :hinna:
anyways, I bought my 1st house when I was28- 29.. :( Here in UK it's like US that you can 40 -50 yrs Mortgage, here its upto 30 yrs..
There are many type of mortgages, if you are concerned about repayment (you want the monthly instalment less), then you can always get Interest only mortgage... in the mean time you can payback the ACTUAL amount as well, but in sum cases they put a limit ie. you can't payback more then a certain amount.
Here in london it's becoming a good investment and ppl are making really good money.
My suggestion for anyone is to get a house BEFORE you turn 30.
Its good to have financial goals but you're at a point in your life when you're life will change tremendously in the next 6 years. Set some money aside monthly and establish credit. Like most people said, start off with having a credit card and having at least one utility (power, water, gas, etc) in your name to establish credit.
I got a credit card when I was in college and I didn't have a job during the school year. I only worked in the summers, I used it for all of my expenses but the card wasn't an excuse to indulge in things I couldn't afford. Having a credit card won't get you in trouble as long as you're realistic as to what you need and what you can afford. I pay for everything using my credit card because its more convinient than carrying around cash but I pay my entire bill when its due so I don't pay any finance charges.
Don't spend too much energy and time figuring out whether your future husband will like or not like if you have a house. Do what feels right to you. I'm certain most guys are reasonable. If one isn't then, I'm sure you wouldn't want someone like that.
Yasmine, I’m not worried about the husband stuff. Besides, where I’m looking, I doubt I’ll be able to afford a house on my own anyway, so at this point I’ll be happy buying it with him.
As for credit cards, I’m still scared of them. I know how I am and I know that I need to grow up and learn some self control before I get a credit card. :halo:
