| What would a North Carolina Home Buyer Qualify For? When buying a home for the first time, obviously the most important question to ask yourself is "How much can we afford?" Your mortgage company will have a simple mathematical equation to determine exactly how much home you can buy. However, you can calculate it yourself, right now, before you even speak with a mortgage company. (This is purely for the sake of illustration. When speaking to a professional loan officer, you may find that you qualify for more or less than this example shows-- but this will get you close.) When qualifying for your "first North Carolina home", your loan officer will ask you what your gross monthly salary is. For example, if you earn $48,000 per year, your monthly salary would be $4000. If you are married, or buying your home with another person, the loan officer would add both of your salaries together. So let us say that there are two first time home buyers and each earns $48,000 per year for a total of $96,000. (Of course you can earn less than this and still buy a home, we are just using these numbers as an example.) Okay, so now what? The loan officer will take the $96,000 and divide it by twelve months. That gives him or her $8000 per month to work with. FHA allows a borrower to qualify for up to 44% of their monthly salary. You are not qualifying for the total amount of the loan; you are qualifying for the monthly payment. |
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So we take the $8000 and multiply it by .44 or 44%. FHA wants all of your bills to total up to 44% (or less) than what you
actually earn. That gives us $3520 per month that we can spend on our first home. But hold on just a second! We still have to
subtract out other expenses. Remember, FHA wants 44% to include all of your bills. Let's say each one of the borrowers has a car
payment of $350 per month. We must take out $700 from what we can afford. That leaves us $2820.
Do you have student loans? Let's say one of the borrowers has a student loan payment of $200 per month. Also, let us say that
they have four credit cards between them and each one has a minimum monthly payment of $100. (Cell phones and utility bills do
not count. Only loans.) The credit cards and student loan brings us down another $600 per month, so we subtract that out and
that leaves us $2,220 to buy our new home. Not bad!
Are we there yet? Not quite. Everybody who owns a home has to pay yearly property taxes and insurance. There is no way for us
to guess how much either of those will cost for you. If you are a North Carolina first time home buyer, just call "JT" Prevatte at
(910) 494-5570, provide him the address of the home that you would like to buy and he can tell you the estimated property taxes.
As far as insurance goes-- just count on $50 - $100 per month. It depends upon your claim history, what company you go with,
etc. There are many factors. Whomever holds your auto insurance policy should be the first agent you call. Usually you will get a
discount for holding multiple policies (car, home, life, etc.). After that, call two or three others and just go with the lowest.
actually earn. That gives us $3520 per month that we can spend on our first home. But hold on just a second! We still have to
subtract out other expenses. Remember, FHA wants 44% to include all of your bills. Let's say each one of the borrowers has a car
payment of $350 per month. We must take out $700 from what we can afford. That leaves us $2820.
Do you have student loans? Let's say one of the borrowers has a student loan payment of $200 per month. Also, let us say that
they have four credit cards between them and each one has a minimum monthly payment of $100. (Cell phones and utility bills do
not count. Only loans.) The credit cards and student loan brings us down another $600 per month, so we subtract that out and
that leaves us $2,220 to buy our new home. Not bad!
Are we there yet? Not quite. Everybody who owns a home has to pay yearly property taxes and insurance. There is no way for us
to guess how much either of those will cost for you. If you are a North Carolina first time home buyer, just call "JT" Prevatte at
(910) 494-5570, provide him the address of the home that you would like to buy and he can tell you the estimated property taxes.
As far as insurance goes-- just count on $50 - $100 per month. It depends upon your claim history, what company you go with,
etc. There are many factors. Whomever holds your auto insurance policy should be the first agent you call. Usually you will get a
discount for holding multiple policies (car, home, life, etc.). After that, call two or three others and just go with the lowest.