I need to purchase a home, are the mortgadge caculators accurate?

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I want to purchase a home for 359,000, The mortgage calculator says my payment will be around 1780 a month on a 50 year loan with 0 down and 7 percent interest rate, is this accurate. Or is this even possible. I’m a first time home buyer and am not too familiar with all of this. My credit isnt the best but its decent. I make around 33,000 a year. Please let me know if this can happen. i would like some advise before i get to serious and get a real estate agent and come to find out i cant afford anything.

I am looking for someone or something to answer this question for me. I have a home mortgage at 5.75% with 28 years on it fixed, and I also have a student loan at 4.125% with 25 years on it fixed. The mortgage is around $ 200k, and the student loan around $ 30k. I need to know if it is better to pay off the student loan first, and then use that extra monthly payment to pay off or down the mortgage, or is it better to pay down the mortgage since it is at a higher interest rate. Both payments are tax deductible, and I am in the 28% tax bracket. I have no other debt. I am working on creating a savings account to cover expenses in case of an emergency, and I contribute the max each year to my ira account. I can not get a 401k. I have 2 young children, that I need to start saving for their college, but have not done so yet.
Anyone know of a good calculator that will let me plug in my numbers to see where I can obtain the best results with any extra income? Thank you.

13 Comments
  1. Reply
    Gregg
    April 29, 2011 at 8:59 pm

    Not possible! 50 year, zero down, 7% with damaged credit? Not even last year when they were giving money away like chicklets. Save your money for a down payment and fix your credit. Plain and simple. don’t believe anything else … you are not ready to own a house yet.

    Ohh, and besides, $ 33,000 per year cannot possibly qualify for (nor afford even if by some creative program you could qualify) a $ 1780 payment.

    The industry needs a bit of tough love these days.

  2. Reply
    TheInquisite
    April 29, 2011 at 9:35 pm

    Stay away from loans. Its a blood sucker for humans. You will become a slave for 50 years

  3. Reply
    patrickandamie
    April 29, 2011 at 10:07 pm

    Forget all that, just contact a bank. They can tell you rates and numbers without you even telling a name.

  4. Reply
    Benham
    April 29, 2011 at 10:22 pm

    Gregg has given you a straight answer.

    Even if you were to pay interest only on that loan you would be looking at a payment of $ 2160 if you got a 100% product in one loan. With mid-grade credit, you would likely be looking at an interest rate near 9%. I haven’t seen this product in about 3 weeks though, and after last week’s shakedown, I doubt it still exists.

    Even if you have no other debt, you wouldn’t be able to cover the payment on the loan with your income alone. After withholding, you’ll be left with very very little beyond your payment each month.

    Be well, seek wise counsel from a good local mortgage specialist with a long history and good references.

  5. Reply
    Casey C
    April 29, 2011 at 11:00 pm

    50 year mortgages typically have higher payments than interest only.

    Your math is wrong on the 50 as well. Even if you had these numbers, your payment would be $ 2160. Interest only at that rate would be $ 2094.

    here’s some other things that don’t make sense here.

    Let’s say you have a $ 2094 payment, taxes are probably at least $ 3000 a year and insurance at least $ 1000. That’s another $ 333 the bank adds to your payment so you have enough to pay for your Home Owner’s Insurance and property taxes. This puts you at $ 2400 a month. Your yearly payments alone on your house obligation is $ 28,800. I’m assuming you get taxes taken out on $ 33,000. At that income level it’s about 25%. You only have $ 24,750 for everything the entire year.

    Unless you are buying this house with a spouse or with some other person in mind that will be making payments with you or taking care of you, you can really only afford $ 928 a month. This has to include taxes and insurance as well. this would put you around a $ 140,000 mortgage.

    If you are truly interested in a buying a place you need to be prequalified before you do anything else. You can call me or email me casey.x.casperson or visit my website caseycasperson.com. I’m a chase loan officer and licensed nationwide. I can provide you a letter for prequalification as well as a total cost analysis that will show you the best way to make this work for you.

  6. Reply
    walkinandrockin
    April 29, 2011 at 11:25 pm

    For accurate numbers – check out a mortgage calculator at http://www.fnmshome.com or call a GOOD broker. Your income does not qualify you for this type of home amount, and do not forget to add in the monthly escrow costs for taxes and insurance. Also, usually with home ownership is maintenance costs, sometimes can run very high for roof, a/c etc… as well as monthly and annual costs associated with ownership.

  7. Reply
    Patrick G
    April 29, 2011 at 11:35 pm

    call your cpa, or a financial analyst
    I would pay down the house first and keep the student loan current. I would also get a better job to afford to pay off both loans faster.

  8. Reply
    mldjay
    April 29, 2011 at 11:47 pm

    I have a good book that will give you a plan to get out of debt and what to pay off first, etc.
    First step, have a small emergency fund, then pay off all debt besides the house. Then fully fund your emergency fund (3-6 months of expenses), then put 15% of your income in retirement, then fund the college and then pay off the mortage and then build wealth and give!

    The book is: The Total Money Makeover by Ramsey. He explains in the book why todo it that order and why debt is not good and why interest rates don’t matter. He has been there done it, etc.

    We are using his system and getting out of debt faster than we ever thought possible.

  9. Reply
    May I help You?
    April 29, 2011 at 11:55 pm

    You have excellent rates.

    It’s better to pay down the mortgage first. This is the big driver for your credit report.
    They really don’t care about student loans unless you default – and the mortgage has a higher interest rate and the rule is to pay the higher interest rate – first and fastest.

    College – 529 accounts and all banks and credit unions can set them up for your and your invest the proceeds for education. You don’t pay taxes on this income that you put into 529 accounts.

    http://www.irs.gov
    forms, schedules and instructions, plus search section for questions.
    They have educational 529 account info, but your banks have it too and it’s not too late to make deposits based on 2006 income.
    If your line 38 of your 1040, (AGI) is less than $ 52,000 you can file electronically for free, http://www.irs.gov – click on free filing.

    GOD bless us always.
    CPA-retired

  10. Reply
    rain
    April 30, 2011 at 12:21 am

    Try this webpage: http://finance.yahoo.com/calculator/index
    Here is another webpage: http://www.kiplinger.com/tools/
    Another one is http://moneycentral.msn.com/home.asp, though I don’t like it that much.

    The other option would be to hire a cpa to do your analysis.

  11. Reply
    SmittyJ
    April 30, 2011 at 12:25 am

    I don’t think you need a calculator to make your decision. I know you want to pay down your debt but I think based on your scenerio you would be much better off funding your emergency fund and then opening up a brokerage account to supplement your IRA for retirment. If you have additional funds available the next thing you should do is to start funding a 529 plan for your children’s college education. Making additional payments on such low cost debt that could otherwise go to the options listed above considering your other obligations isn’t the best use of your funds. The only reason I put opening a brokerage account before the 529 plan is because putting away $ 4k into an IRA may not be enough to build a sufficient retirment account…if you’re 30 yrs old and continue to contribute $ 4k per year you would have about $ 750k when you’re 65….sounds like a lot but if inflation increases at 2%/year it will have an equivalent purchasing power of approx $ 350k in todays dollars so you’ll need to supplement your IRA contributions by investing in a non-tax advantage regular brokerage acccount. Your kids can always borrow to go to college but you won’t be able to go back in time and fund your retirment…hopfully you can fund both but prioritize your retirment first.

  12. Reply
    Josh
    April 30, 2011 at 1:25 am

    In general, you always want to pay your most expensive debt off first, however, in your case, you have excellent rates on both loans, and you’re not really in a position to be concerned about paying off the debt in a hurry. You have other priorities, so just pay the minimums. The last thing you want to do is tie up money you may need to use for retirement/childrens education in the equity of your home (which does not affect the market value of your home in the least) and then have to resort to a home-equity loan at a higher rate than you are currently paying for the mortgage if you need the money down the road. Additionally, both your rates are low enough that if you invest any money beyond what is required to make the minimum payment, you will come out significantly ahead in the long-term.

    As far as saving for the kids for college, you need a knowledgable financial planner to look over your total assets and income to put together some projections. Your income, which you didn’t mention, is what will have the most significant impact on anything you would like to do. Future inheritences can also play a role in long-term planning.

  13. Reply
    Sam Fisher
    April 30, 2011 at 1:44 am

    Pure debt reduction, pay down the mortgage first. Higher interest rate. 5.75% isn’t high, especially since you can deduct it. If you are planning on paying for or helping pay your kid’s college expenses, then your real challenge is to set aside enough to grow to what you anticipate you’ll need. Pay the mortgage & student loan down as scheduled, using the extra to set up the college fund.

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