Can they afford a $350,000 Home with $4000 monthly income?

hey everybody it's javier your home buying coach and welcome to another episode of should you buy a home with me javier i hope everyone has their pink drink out because you know what time it is it's time to shatter some home buying dreams just kidding it's all about education here today's email comes from somebody once again i don't know if i should share names or not so if you guys are going to email me here's my email and let me know ahead of time hey you're allowed to use my first name um because you know i don't want to dox you you know what i mean i don't know if your grandma's watching you i'm like oh that johnny sent an email to javier about all this money and he hasn't paid me back my three hundred dollars i let him borrow right so i don't know i don't get into your grandma's business hello javier we're a family of six we live in we leave live in westerville ohio westerville no not really not an original name huh they were just like yeah it's west and it's avail westerville um we are currently looking to buy a home this year we're looking new construction uh she wants to stay in westerville blah blah blah looking to buy between three to three fifty i have about thirty thousand dollars save for a down payment and ten thousand for closing costs adding up to forty k currently paying fifteen hundred dollars in rent and our lease ends in october thank you for including your timeline because i'll actually be able to help you with that too credit score is about 670 we have no car no debts one accounting collection it's been in collection for about four years and eight months job history um uh four years uh okay uh looks like we have a gross monthly income of about 59 well annual income 59 520 and i have their take-home income as well so let's see what's going on in westerville huh i'm not saying too much but he's saying or she's saying there's new construction in place so you know we'll see um first and foremost i like i always like to start off and see what the taxes are holy smokes five thousand dollars what is up with property taxes being so freaking expensive in all these states man arizona like maybe a thousand or two thousand but geez united states of america i'm about to become one of them conspiracy theories 5957 so we're going to do just a quick little monthly cost estimate here for the email they had i think it was like 40k or 30k so it's about 10 um but let's just say they're gonna go with five percent down let's say interest rates gonna be 3.8 interest rates are crazy right now um and let's just assume they're to probably have to spend a little more to get the house so let's just say 350. uh we'll just keep that 340 whatever we'll keep mortgage insurance 264 is kind of on the high side however that credit was lower so i'm assuming it'll be around 264. probably going to be just slightly cheaper than my opinion property taxes were what was it uh 5 000 bucks so how we do is we get 5 000 we divide that by 12. that gives us a more accurate tax number so 4.416 bucks we're gonna play with the tax rate number two we get about 416 home insurance um 120 is not bad so i believe that it is and there's an eight to eight dollars of five bucks a month whoop-dee-doo fun so estimating a monthly payment is going to be about 2 300 so that's the one that we're aiming for and uh it's not not a coincidence that our previous uh person that we did this for also was about 2400 it looks like an average monthly payment for a house nowadays in the united states is between you know two thousand to twenty four hundred dollars i remember back in the day when it was only twelve hundred so kind of crazy right all right now it's everybody's favorite part let's pull out the ipad and draw who would know that i would this would be what i make a living on is just drawing on an ipad it's like a kid's dream come true well i didn't have ipads as a kid but anyways let's move on uh instead of focusing on the price range we're gonna focus on the monthly payment because that's the important part here right 2300 looks different for other people in different states so we are going to simply just put 2 300 and we're going to focus on credit savings budget and since they were gracious enough to give us a timeline timeline so in the future please i recommend to do it because it helps other people kind of figure out theirs okay cool let's start off with i think the biggest discrepancy is going to be the credit according to them is 670 right now 670 is not bad but it's not amazing either okay the good news is you will be able to go fha and maybe conventional but that's debatable um probably you won't be that favorable with conventional so normally this would not be good news to just be able to go conventional but here's an exception they are going with the new construction and and most of the time you know the new builders are notorious for a lot of things but they're not notorious for their loan discrimination they don't care as long as you're paying the price you're qualified you have the down payment and you have a pulse they'll give you the house so that's the good news if you are going the new construction route probably expect less resistance but if you're going to go to resell market you really want to make sure to work on that credit to bump it up to that 700 now you do have that it doesn't surprise me that you haven't been able to get to 700 with that collection that's almost like five six years old you have enough savings honestly it should have just been taken care of already but in this case i'm going to defer for you to make sure to talk to a lender first because maybe you're at that period now where it's about to drop i don't know there could be a lot of factors leading to it it's not just as always five years and it's done right when we talk about the timeline i'll tell you when to do it but i really really highly advise you talk to a lender to see how you'd filter out that collection if you are able just to frickin take care of that collection you're probably going to be bumping this up pretty highly so it'll probably start escalating quickly but um i would not give it time with credit you need time okay so uh you can fix the problem but if you don't have enough time then it's not gonna fix itself so it's like a wound right if there's a big gashing wound you can't just patch it up okay it's done no it needs days weeks months to heal fully or more like emotional trauma so for credit i'm not going to give this a check mark no an x i am simply i'm going to give this a caution because it is something that you're going to have to work on work on it for sure because that 670 might not be enough to make it happen so the next situation is going to be the savings so the savings situation i think you said you had 30 000 for down payment and 40 000 let me send 10 000 for the closing costs in total you had forty thousand dollars the ten thousand dollars is probably more than enough for closing costs so you might have an extra one or two k extra or you know because your taxes are higher you might just be fully it so either way the closing cost situation is it don't spend those 10k if they have extra grade if you don't then that you'll just need just slightly little more so you really only really have 30 000 for the down payment situation so with fha being three and a half percent down you only really need 12 250 bucks which you have plenty of now if you are able to work on your credit to just slightly bump it up that's going to really give you a lot more options you're not going to be able to do 20 down um maybe just maybe you might be able to do 10 down if you spend the extra next few months saving um and you look like you're really good to go for three percent uh and fha three and a half percent so off the bat i'm going to suggest you really just focus on using some of that money because if you go with this route you're gonna have like what twelve thousand five hundred dollars extra you can use some of that money to better that credit situation and you can get yourself into a five percent down conventional which is a bit more if you have more time than you think you needed or you're able to save at a rapid rate i would just really push for that 10 percent um you didn't mention if you had emergency savings so if you don't if you do have like an extra 5 10 20k separately then try to push for that 10. if you don't have any emergency savings you should not consider the ten percent um and since you didn't mention it i'm assuming you don't so in this case the five percent works because you have that extra 12k maybe you use 2500 to pay off your credit so your credit starts you use that extra 10k to save it into an emergency savings account because you definitely need that so overall i would say you're pretty solid for savings i mean um you have enough it's is it amazing no but it's technically enough a lot of people will always think that they need a lot more than than what they really need so the next one is going to be the budget so how does the budget look like well for our trustee budget we're going to go to our my budget affordability sheet which is available once again in the link in the description so go ahead and check that out um there's been already two updates that we made our lovely viewers we know they we've already i think there's been already like a thousand downloads so thank you guys um but you know as you guys are like hey we're using this i recommend do this we are i am making updates to whatever you guys recommend and i'm naming it out for you guys so maybe this might be one of you guys if you have any uh don't go looking for stuff though just in case you happen to find something okay so um so for the budget he or she makes 4960 and their take-home is 3997. no card notes no debts one accounting collection so um that's man says seventeen hundred dollars literally could have been like a 200 payment or something but um so you have no debt that's a good thing so good for you that needs to get worked on and the thing about uh collections guys is you don't need to get rid of them like you can buy with collections but they just have to be like being worked on you know what i mean i mean you could even have a hundred dollar payment you know what i mean if you just call them up and try to make it work so anyways it looks like you qualify for 23.80 which this is a perfect scenario that people run into all the time technically this person qualifies for what they need it to but their affordability is not nowhere near it so with the current situation if you buy a house for twenty four hundred dollars that's going to be approximately 70 percent of your monthly take-home income well i think the number i think the numbers that were given to me maybe weren't accurate because according to this let me see they are being taxed 32 percent um [Music] um i mean that's high so but once again i'm using the numbers given to me so according to this they would be 70 of your monthly take-home income and you should only really be buying under this limit so right now if we're playing with the numbers and even if you buy something for two thousand bucks two thousand bucks will put you at sixty percent of your net income meaning that sixty percent of like if you get paid bi-weekly your first entire check would be dedicated to paying your mortgage and only forty percent of the second sorry that would be eighty percent of the following check would have to be not for it so you only left to live with 1297 now we don't even have their budget here like you know your non-essentials and if all that was in there then it would actually be a lot more you know things joe it it is too tight i'm sorry um if this is the numbers that you're giving me and that is truly what the monthly payment is going to be you know when where you're trying to buy um maybe i'm hoping the situation is is you didn't include maybe your partner's income because with your partner's income we can you know let's say even if even if they make an additional i don't know three thousand dollars so maybe their another their net is another two thousand so that goes to 53.97 like even with that that small part-time income being increased that's already putting you in a place where technically you could buy it'll just be the budget would be tight it's your common situation of yes they can buy technically if they talk to a lender they will be able to pre-approve for the amount they need but that budget is going to be really tight they should only be really buying 1400 so that way their their net is gonna be a lot more solid so um first time i mean there's a first place in everything unless there's a number that wasn't given to me and i'm hoping that's the case the budget just does not make sense once again i'll reiterate this over and over again you can buy you could technically buy if you go talk to a lender right now they will qualify you this is not a pre-approval they should not replace you talking to a lender if you got to buy you got to buy right but from what you're giving me it just doesn't make sense now let's assume that you maybe just forgot to include your partner's income and now you're like okay what do i buy well this person did say that their uh lease ends in what was it according to them their lease ended in october so what we're going to do here is we're going to actually use another oh my god another google sheet i know i get it so these aren't just google sheets that i have made for like my clients because when i do these consultations i go i go through all of this together like everything we're going to right now i do all these in my consultation so um i was just tired of doing it on freaking pen and paper so i just made these um so this is the one i was going to show you today so here's the thing if your lease ends in october okay you always want to close a month beforehand why well the way it works the month that you close on your house and you get possession so say it's december so let's say in this case they wanted to close by october and get possession of the house in october well their first payment isn't actually due to december 1st so if they were to close in october they would have an extra one or two months of move yay right but the problem is you're you're really you're really playing with fire here because you're expecting that everything is gonna go nice and smooth that you're gonna find your house by a certain time and you're gonna be closing for sure in october and there is no room for error there because you you have to be out according to that lease and not only that but you have to leave the house the rent or apartment or house clean so you get your deposit back so i personally always recommend you close the month after your leases before your lease is over why well your first payment is until the first november so you shouldn't have that double payment and you get to possession of the house you're buying a month sooner so therefore you have 30 days hopefully a little more but you know sometimes a little less um to move out slowly make sure you leave your place clean and you will not have that double payment because you're closing and of course if things run late you have that wiggle room of hey it can close on october maybe right so if the so if by if that's the goal you want to be closed by september um and depending on if you want to you know let's say you're a little picky or not picky all this does is it adds an extra month of home showing so if you want to start researching for your real estate team in june you want to be pre-approved by july so you can start looking for august now obviously the beginning of august you can be under contract by the end of august should only take two to four weeks to find a house if you think it needs more add extra time here um but just know that if you find something in july and you actually make an offer and it gets under contract in july everything gets moved a month before and now you're at risk of making that double payment so start looking in august to be under contract by august closing in september with your first payment novembers but you know we're now in february um i would suggest because the lending situation so unique is you actually start your pre-approval sooner i think you should start your pre-approval in march just because you need to work on some things you need to work on bumping up that credit sooner so i would say for sure for the timeline lender now close in august the budget really only makes sense for you to go 1400 which isn't enough for that 2200 so maybe hopefully there's some cities that are nearby that are a little cheaper but i mean we're talking a thousand dollar difference i do see here that you're you're also looking in black lake ohio so um black lick ohio has houses under 3 300 ish taxes are still on the higher side but maybe maybe you have to go to black lick route maybe go a little farther out like you know pat [Music] ohio um nice snow what is snow i'm in phoenix i don't know what snow is taxes taxes are still a little more expensive but i mean hey it's a house and it probably works better with your budget so that's my final recommendations for you if you're looking for an agent referral everybody make sure to go to home money.com javier links in the description get yourself a tear with a nice agent and the our team will follow up with the agent and you to make sure so when you talk to them make sure you let them know javier sent ya appreciate you of course we got all the goodies that we talked about in the description as well if you guys want to be considered for a future video just go ahead and email me and i appreciate your time everybody hope you enjoyed your pink drinks thank you so much i hope you guys go eat some nice tacos this weekend some good ones don't go to that don't go to taco bell get some good tacos

Channel: Javier Vidana

Views: 84,649

Keywords: Javier Vidana, First Time Home Buyer, Real Estate, Housing Market, how much house can i afford with 60k salary, javier vidana, first time home buyer, real estate, housing market, how much house can you afford?, can i afford to buy a house, how much house can you afford, buying house, buying a house for the first time, how much mortgage can i afford, how much house should i buy, dave ramsey, buying $350, buying $350000 home, can you afford a house

Id: AZQgKn6aA8A

Length: 16min 31sec (991 seconds)

Published: Tue Feb 15 2022