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That would make their payment around $1062 including escrows on a $192,000 purchase (I used $1400 on taxes)..... that would be a 40% housing ratio, which is way too high in my opinion and will not fit most program guidelines.I always try to keep folks under 30% unless they have other income that is not being used to qualify. That would put your mortgage somewhere around 120k and a 145k purchase. This should keep your total payment under $800 per month. I used $130 for taxes and insurance.This is the same as your rental payment. Are you comfortable making this rent payment every month?
Orange,My response is intended to add to the very helpful financing info you have already received.There is more than one way to become house poor. The cost and payment aspect of your new home will not change over time as you own the home.On the other hand, the cost to maintain and upkeep the home will change.If you do not take into consideration the cost to heat, repair, and maintain the home then you will begin to break your budget in ways outside of the realm of your mortgage.How many gallons of oil or gas will the home consume in one year?What is the current price per gallon? Will this price increase over time? Will your home heating budget increase over time?How many years left in the roof? What is the cost today to re-roof it? If it has 10 more years then what do you anticipate the cost of re-roofing it in 10 years will be? If the roof will cost 8k to replace now it will cost 8560 in 10 years at %7 inflation, 8k x 1.07 =8560 / 120 months = $71.33How many people put $71 aside every month in anticipation of a new roof that will keep their $200k "investment" dry?It does not matter how excellent your mortgage rate is if in 10 years you need to put $8560 on a credit card to keep your house dry.
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