ducatiandy

In the UK we can work out the sort of mortgage we can afford on our salary by doing a simple calculation is there a simple calculation for the same in the US?


We intend renting for approx 6months and then trying to buy a house in an area we want, will we be able to get a mortgage because we will only have 6months credit history if any.

Thanks
Andy

Englishmum

We were able to get a mortgage from Day 1. The mortgage broker just did an International Credit Search (although we did provide 12 months worth of bank and credit card statements).

We also put down a 20% deposit (if you don't you are often required to get PMI which is an insurance which is of no benefit to you - just to the mortgage lender if you default).

It's easier to get a mortgage than a credit card as if you default, then the 'bricks and mortar' will be seized by the loaning institution (your mortgage will usually be 'sold on' within a day or two of you taking out a house loan!!! They don't seem to have 'building societies' as we know them in the UK).

You can look at sites such as www.realtor.com which has a mortgage calculator to work out loans and how much you can borrow.

The biggest shock I had was for the housing taxes (ours are for $10,700 per year!). It varies greatly according to your locality; ours has an excellent school system with more than $10k being allocated per year per student. All local towns have to pay for their own school systems, unlike LEAs in the UK. However, if you live in an area with a poor school system or/and very cheap taxes in relation to neighbouring towns, then you may find it difficult to sell your house in years to come.

I strongly suggest you go to amazon.com and get the US edition of "House Buying for Dummies". We found it to be very useful - you will need to learn about 'points' for example, and the importance of location.

Patrick

The calculation is based on the percentage of debt to household income. They look at how much debt you are in now and add it the amount of debt you will be in when you are paying a mortgage. It has to be between (depending on the lender) 27 - 37% of your income.

If you earn $3000 a month your total monthly debt payments can be around $1000 (around 30ish%).

They are very strict, its not like the UK where there is a lot of leaway - your monthly outgoings can only be a percentage of your monthly income.

Patrick

Pulaski

In the lower left corner of this page there is a "Home Affordability" tool, just below the mortgage calculator.

ducatiandy

Thank you, great help.