Think you can’t afford a house if you make $40,000 a year? May 23, 2008
Posted by Patti Shawgo in First Time Home Buyers, Local News, Mortgage Stuff, Real Estate.1 comment so far
I’ve noticed in some comments that I’ve gotten on my blog about some of the down payment assistance programs that I work with and how it would be impossible to find a livable house if that is what your income is.
You can. No, you are not buying a 4 bedroom 3 bath colonial on a golf course, but that doesn’t mean all you can afford is a shack in a neighborhood where you worry about walking from your car to your house.
Let’s do the math here:
We are going to assume a single person making $40,000 a year and taking advantage of the Baltimore County MALP program. The program allows for your housing payment to be no more 31% of your pre-tax income. That would be $1033.
Then….let’s take a house that is $175,000. If you qualify for the MALP program, you’d also qualify for the FHLB grant I’ve talked so much about on here. That means you could have $35,000 for a down payment and $10,000 for closing costs. You’d also need about $2000 from your own pocket, so your down payment is really $37,000. This gives you a loan amount of $138,000.
With a 5.75% interest rate (because you can pay a point or 2 since you have so much money for closing costs), the principal and interest payment would be $817.41. Taxes for said property are $1800 a year which come out to $150/month, let’s estimate a high home owner’s insurance rate of $50/month. This puts the total payment at $1017.41. Did you notice what was missing? There’s no mortgage insurance because you have more than a 20% down payment.
And there ARE plenty of houses in Baltimore County in the $175,000 price range. Especially now, when it is a buyer’s market.
What you can’t have is a $500 car payment, $300 credit card payments, or lots of other debt. This will then make your total debt to income ratio too high and is what I see stopping a lot of people from being able to afford a house.
So this example is just to show you, don’t think you can’t be a home owner because you don’t make a lot of money! You can do it and home ownership can really put you in a better financial position.
SB 270: No More Stated Income Loans in Maryland May 23, 2008
Posted by Patti Shawgo in Local News, Mortgage Stuff.2 comments
With the passage of the Maryland Senate Bill 270, Stated Income Loans will be a thing of the past.
Great thing you say? Stated Income loans are what got us into all this trouble (well…and subprime loans and ARMS)? Not so fast. There really are good uses for stated income loans, mostly being when a borrower is self-employed. If you are self-employed the only usable income is you net, after deductions from your gross business income, or in some cases money is kept in the corporation which pays the owner a salary (I’m sure there are pleny of other examples, but I’m not a CPA).
Now, you can say that self-employed persons should not be deducting so much, and it’s their own fault that now they can’t qualify for as much, but let’s take a closer look. If you are a W2 employee and have a phone for business use, you might deduct this expense from your taxes and it will not effect your income. If you are self-employed you will claim this as a business expense and subtract it from your gross business income. This list could go on and on.
Ok…I’m stepping up on the soapbox now….
Frankly, self-employed people already get the short end of the stick when it comes to retirement savings and health care. Restricting mortgage loans in this way is just another way of hurting the small business owner. What does this teach us about what our society values? Large Corporations over the small business owner? Have we lost touch that much with the American Dream?
The better solution is no state income for W2 employees, which is already a policy of many lenders. This is just one more example of the markets over-reaction to current housing crisis…..in my humble opinion.
Wondering about BRAC? (Base Realignment and Closure) May 12, 2008
Posted by Patti Shawgo in Interesting Stuff, Local News, Mortgage Stuff, Real Estate.add a comment
For a while, everywhere you turned were people talking about BRAC and how the closure of other bases was going to be bringing this huge number of people to Maryland. The talk has died down some(for now), but time is actually finally drawing near for the big move of personnel into Maryland. There will be some 40,000 on-base jobs that are moving to Maryland, specifically to Aberdeen Proving Grounds and Ft. Meade. These jobs will begin transistioning to the bases in 2009 through 2013 (estimated).
Will there be a huge surge in demand for housing? Certainly, but time will tell the full extent of the impact. Certainly more people means more demand, but BRAC is staggered out over a few years to enable infastructure to be in place to support the transistion. More of these jobs are going to be in Harford County at Aberdeen than Ft. Meade.
So…curious about BRAC and how it’s going to affect housing? Check out the state’s site at: http://www.mdhousing.org/BRAC/
Besides having lots of good information on BRAC, it has a wealth of links to great local housing resources (many of which I’ve talked about on here).
Thoughts About Real Estate a Top 100 Real Estate Blog May 9, 2008
Posted by Patti Shawgo in Interesting Stuff.7 comments
Wow! I need to stop my blog break and get back to writing!! There is certainly no shortage of topics to be writing about.
I just wanted to give a quick shout-out to http://www.go-beyond-mls.com who listed me in their top 100 Real Estate Blogs list. It’s a national list people! Wow! I’m so appreciative of the recognition. Thanks so much! I started this blog to help people that are looking to buy or refinance get a better understanding of the local market, especially in these fast changing times.
Check out the full list here: http://www.go-beyond-mls.com/real-estate-blogs-top-100/
Maryland Department of Housing Report on Foreclosure May 9, 2008
Posted by Patti Shawgo in Interesting Stuff, Local News, Mortgage News, Real Estate.add a comment
Here is the link to the report: http://www.dhcd.state.md.us/Website/home/Document/Property%20Foreclosure%20Events%20in%20Maryland.pdf
Granted, the data is a bit out-dated, this is for foreclosures in the last quarter of 2007. It still does shed some light on the hot spots of foreclosures in Maryland.
What I wish there was more data on is what the market value breakdown is for foreclosures. Is a $500,000 property in Prince Georges County more likely to be foreclosed on than a $150,000 row home in Baltimore City. Both of those places have some of the highest percentage of foreclosures in Maryland, but their markets are quite different.
Maryland Housing Fund….Last Stop for 100% MI May 9, 2008
Posted by Patti Shawgo in First Time Home Buyers, Local News, Mortgage News.1 comment so far
As I mentioned in my previous post about the end of 100% financing, there still are a couple ways to get 100% financing. One of them is through the Maryland Housing Fund.
The Maryland Housing Fund is through the Maryland Department of Housing and Community Development and is connected to the Maryland CDA, More House 4 Less program we talk about so much on here. You can only get this mortgage insurance if you are getting a CDA loan.
While it’s wonderful that CDA has this option, it has one major drawback. The maximum debt to income ratio requirements are pretty low. Meaning most people I see trying to buy a home would not qualify for this insurance. This does make a lot of sense, the lower your debt to income ratio is the less strapped you will be paying your mortgage and the less likely you will be to default.
