Skip to main content

Cash is the limiting factor with this loan

Q.  I am in my early 20s and have been at my current job for 3 years now. I make $57,500 a year plus bonuses (usually around $2,500 per year) and have $15,000 in savings for a down payment. I have young but good credit, in the low to mid 700s with oldest line of credit opened 3 years ago. My questions are: can I get approved for a home mortgage loan, how much would I likely be approved for, and how much is reasonable to spend on a property at this point in time? I work near the Spectrum mall in Orange County and would want to be located somewhere within a 20-minute drive.

Thank you for your feedback.

A. This is not a substitute for selecting a lender and getting them to get you a pre-approval letter.  I will take a rough cut at it, however, making assumptions about Homeowners Association dues, taxes, and PMI.  You are borderline qualified for a loan of about $265,000, which would mean that you could buy a home of about $280,000 in value.  Again, you need to sit down with a professional with your documentation and run it through Fannie Mae’s Automated Underwriting System.

Your limiting factor is going to be cash as you are just a bit short. It will be important that you save all that you can to make sure that you have enough. Here’s a hint. Have the seller pay your non-recurring closing costs. Say that’s $5,000. He will want you to pay $5,000 more for the home but that is all perfectly legal and above-board. That way you can devote all your cash to down payment and reserves.

Q.  I just bought a house in April. I got 5% fixed for 30 years with a Fannie Mae loan. Am I eligible to refinance to a lower rate? How much will it cost to switch? Is it worth it?

A . The measure of whether a refinance is worth it or not is how quickly you get back the costs of the refinance. That depends largely on the size of the loan. The fixed costs of title and escrow, processing, appraisal are almost the same regardless of loan size. If you have a $400,000 loan, it would make sense. But if it’s only $200,000, it would take longer to recoup the costs.

You need to contact a lender to see what the actual numbers might be in your case. If you can recoup all costs in less than four years, then it makes sense.

Posted via email from Newport Beach California 92663

Post a Comment

Popular posts from this blog

Bottled Water Carries Hidden Cost to Earth

Good for You, Bad for Mother Earth? | $1.79 might seem like a small price to pay for a bottle of water. But it costs the Earth far more than that.

Compared to a liter of tap water, producing a liter of bottled water requires as much as 2,000 times more energy, according to the first analysis of its kind. The study also found that our nation's bottled water habit sucked up the equivalent of 32 to 54 million barrels of oil last year.

"The bottom line is that we should understand better the implications of our choices," said Peter Gleick, president of the Pacific Institute for Studies in Development, Environment, and Security in Oakland, Calif. "It suggests more ways to reduce energy use than maybe we otherwise think of."

Bottled water is a big business that is rapidly getting bigger. From 1976 to 2007, the average amount of bottled water drunk per person per year in the United States jumped from about 6 liters (1.6 gallons) to 116 liters (30.6 gallons).

In 2007, …


Air pollution can cause serious health problems. Rarely, it can even kill people — and we’re not exaggerating. That’s why we care so much about the laws that protect us from air pollution. Read on to learn more about the specific parts of our bodies that are affected by air pollution. Air pollution can be made of tiny particles or gases, and these get into your body when you breathe. Different types of air pollution do different things inside your body. Air pollution can directly irritate the eyes, nose, and throat, before it even gets into the lungs. It can cause runny nose, itchy eyes, and scratchy throat. LUNGS When you breathe in, air moves through your nose or mouth, down your throat into your trachea, and then into your lungs. Pollution can irritate the airways. When that happens, muscles around the bronchi get tight; the lining of the bronchi swell; and the bronchi produce excess mucous. When the airways are constricted, it b…

Hazardous Waste

A hazardous waste is a waste with a chemical composition or other properties that make it capable of causing illness, death, or some other harm to humans and other life forms when mismanaged or released into the environment. PLEASE NOTE This new page is part of our Hazardous Waste Management Program web page update process and is under construction. The links to the left will take you to the main Hazardous Waste page, as well as the general category pages, and the Related Links are those links related to the content on the page.  longer be available.  DEFINING HAZARDOUS WASTE A waste is a hazardous waste if it is a listed waste, characteristic waste, used oil and mixed wastes. Specific procedures determine how waste is identified, classified, listed, and delisted. TYPES OF HAZARDOUS WASTE Hazardous waste is divided into different types (e.g., universal waste) or categories, including RCRA hazardous waste and non-RCRA hazardous waste. Properly categorizing a hazardous waste is necessary f…