Step 1 of 1000

Ack. We're starting to get our ducks in a row to buy a house. I've had my eye on the MLS since we moved here (okay, since before we moved here), so I've just been looking more intently lately and filling in all those numbers on the mortgage calculator to see what is feasible and what is not. Our lease isn't up for about three more months, but with the flood of short sales on the market and the fact they can take significantly longer to close on now seems like the right time...

This week I called up our bank, who we have been using since we left my hometown over 10 years ago. The fellow in mortgages worked quickly and got our pre-approval letter ready in less than 24 hours. Here's the kicker--I gave him what price we were looking at as our cap and our pre-approval is for 30% more than we think we could possibly pay! Then he quoted me a number for a payment that sounded really feasible, BUT it didn't include the taxes or insurance (which, in my experience, add up to nearly 20% of the monthly cost of owning a house).

No wonder many, many people are left in ridiculous amounts of debt, wondering what happened. The bank said they could afford it, the real estate agent said they could afford it, the numbers sounded reasonable, but there was no way they could make those payments without making major changes or living on credit. I was really surprised though, I thought after all the short sales and foreclosures that are occurring that the banks would have tightened their loan qualifications.

If you are buying a house, please, please, look for a calculator that adds in the cost of the house, the taxes on the property, an estimate for your home insurance, PMI (if you are paying less than 20% down), and allows you to put in the proper amount of down payment and choose your interest rate.

On the upside, since we were able to pay the difference that we owed on the house that we sold in Kansas (rather than short sale) we qualify for a really good interest rate. Yay for excellent credit!

So here we go again!