Current lease monthly (until June 2017): $270/mth = $1620
Bank Savings: $32,000
Total family income (gross): $38,000
Intended house value: $200,000 (I live in NJ, so a paltry value)
Intended car value: $30-35K
Intend to Drive until 80-120K ODO
I drive 8,000 miles per year
$0 debt = no credit card debt, no student loans, no charge-offs, nothing.
Phez: You make too little to afford a $30-$35K car. I suggest you buy a more affordable car if you want to get approved for a mortgage next year. You would need $40K for a 20% down payment on a $200K home or you would be required to buy mortgage insurance. That is an expense you can avoid if you put 20% down. With $38K gross, you should only purchase a $20K and under car.
You should not be thinking about buying a house and a car. You may need a car but you can always rent a house or apartment. You should also consider a good used car at around $12,000 to $15,000 dollars.
Remember with a house you have to pay insurance and taxes. If you rent you don't have those costs.
You can't afford a $200,000 mortgage. Tops if you used the $32000 for downpayment and closing costs is about $140K.
If your annual income is $38K per year, why would you spend $30K-$35K on a car? Do you really want to go to work every day for a year to simply buy a car?
Here are the numbers a loan officer will be looking at to qualify you:
Cash on hand to cover down payment, closing costs and prepayment of first year property tax and homeowner's insurance policy – $32,000
Gross monthly income = $38,000/12 = $3,167
Current monthly debt load – $0 (This is good).
For your total monthly mortgage payment to include principal, interest, taxes and insurance (for both of those two, 1/12 of the yearly amount is escrowed and the lender pays the future incoming bills out of those funds, as you must prepay the first year insurance and escrow the first year taxes at closing), you are allowed up to 28% of your gross monthly income.
$3,167 x .028 = $887
You are allowed up to another 8% of GMI for other debt.
$3,167 x .08 = $253
You will need to know, approximately, how much the annual property taxes are on properties you are interested in. You must deduct the monthly amount (1/12 of annual) from your maximum mortgage payment of $887, then deduct 1/12 of the homeowner's insurance. That will let you know how much house you can afford. Figure on $40 per month for insurance. I don't know what the taxes are like in NJ but I'm guessing they are fairly high, and this alone may price you out of that market, but for my example, let's assume they are a reasonable $200 per month ($2,400 a year – mine, in western NY on an assessed valuation of $150, are $500 per month, $6,000 annually, one the highest rates in the country).
So, $200 a month for taxes and $40 for insurance. That leaves you at $647.
Interest rates are starting to rise. Expect that to continue in 2017. Currently, the APR on a 30 year loan is around 4.3%, up from 3.5% only a few months ago. So let's go with 4.5% (though I think we could be looking at 5% by spring).
You are looking at a maximum loan, for 30 years, of about $128,000. Setting aside $10,000 to cover closing costs and prepayables, you have $22,000 for a down payment. That would bring you up to a maximimum purchase of $150,000. And because you do not have the full 20% down ($30k), you will be paying private mortgage insurance, which will add to your payment. So your actual purchase price may be in the $148k range.
That's going to be it. If you want a house that costs more, you need more income.
As for the car, the kind of car you are talking about will KILL any chances you have of buying a house. To have a car loan not affect your purchasing power, you need to keep your monthly payment below $253 (on income of $38,000). Anything over $253 comes directly off of the house payment numbers.
And, any car loan you do go for MUST be held to three years or under. No 48 month or longer terms – that is the way to put yourself in a financial hole that's tough to get out of.
not only won't you be buying a car, you won't be buying a $200k house, even though it is a 'paltry' value.
38k income – so a max mortgage of around $135k. so deposit of at least $65k – so you need at more than double your savings to get a deposit and have spare money for surveys, legal fees etc.
Sorry but you cannot afford this house. The maximum mortgage you can get is three times your income ($114,000) so you will not be able to get to $200,000 with your savings.
There will be a lot of expense involved with buying a house that you haven't forseen.
Buying a car at the same time would be lunacy.
Do NOT buy the car before you apply for the mortgage! Years ago, I was selling my home, the deal was closing. The buyer qualified for his mortgage. Then he bought a new car. As soon as the bank found out, he no longer qualified for the mortgage. The deal fell through. He couldn t buy my home. FWIW, it's much easier to finance a car loan than a home mortgage.
No, your family income doesn't support a mortgage and a car payment with any room to spare. Wait until after you purchase the house to purchase the car.