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4 Tips To Determine How Much Mortgage You Can Afford

By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget.

Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.

Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for housing based on your financial and personal goals.

Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree? Will a new child add day care to your monthly expenses? Does a relative plan to eventually live with you and contribute to the mortgage?

Still not sure how much you can afford? You can use the same formulas that most lenders use, or try another of these traditional methods for estimating the amount of mortgage you can afford.

1. The general rule of mortgage affordability

As a rule of thumb, you can typically afford a home priced two to three times your gross income. If you earn $100,000, you can typically afford a home between $200,000 and $300,000.

To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs.

2. Factor in your downpayment

How much money do you have for a downpayment? The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home’s cost, you may not have to get private mortgage insurance, which costs hundreds each month. That leaves more money for your mortgage payment.

The lower your downpayment, the higher the loan amount you’ll need to qualify for and the higher your monthly mortgage payment.

3. Consider your overall debt

Lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn’t total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like car loans, utilities, and credit cards, shouldn’t exceed 41% of your gross annual income.

Here’s how that works. If your gross annual income is $100,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $2,333 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don’t top 41%, or $3,416 in our example.

4. Use your rent as a mortgage guide

The tax benefits of homeownership generally allow you to afford a mortgage payment—including taxes and insurance—of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.

Here’s an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.

However, if you’re struggling to keep up with your rent, consider what amount would be comfortable and use that for the calcuation instead.

Also consider whether or not you’ll itemize your deductions. If you take the standard deduction, you can’t also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a “what if” tax return, can help you see your tax situation more clearly.

Hillsborough County Performing Road Work on Bayshore Boulevard

Hillsborough County Public Works Department will begin repairs on Bayshore Boulevard between Platt Street and Rome Avenue, starting this weekend (July 18) and continuing through the fall. The purpose of the project is to improve the rideability of the roadway, and will be performed on weekends only, from 8 a.m. through 8 p.m.
Intermittent lane closures will occur during this time, as crews alternate the closing of the northbound and southbound lanes. Motorists should expect traffic delays during construction, and are encouraged to use alternate routes when possible.

The repairs will include the grinding of faulted joints in the roadway and repair of some sections of curbing. The project will also include re-sealing concrete slabs where applicable.

The concrete slabs that make up this section of Bayshore Boulevard are in overall good condition, given the age of the concrete. However, some slabs have settled unevenly over the years and are now impacting the ride quality of the surface.

While Bayshore Boulevard is within the City of Tampa, it is a County roadway. Hillsborough County has an intergovernmental agreement with the City of Tampa to maintain Bayshore Boulevard, and is responsible for major repairs or reconstruction. The repairs are estimated to cost $400,000 and will be funded through the Public Works? County Roadway Resurfacing Fund.

920 Symphony Isles Blvd Apollo Beach FL 33572

If you are looking for great real estate deals in the Tampa Bay area, then you have found the place at eTampaRealEstate.com.  We will keep you informed on the latest properties that may fit your criteria.  Whether being sold on MLS, for sale by owner or through an auction, you will find the properties here on our site. Search Tampa Real Estate properties now. or Search Tampa Foreclosures.

Provide your name below if you want to be updated with some of the best deals in Tampa. 

Take for example a property at 920 Symphony Isles Blvd in Apollo Beach. 

This mansion will be sold to the highest bidder by Sunday Night on May 17, 2009!

Here are the details:

This Never Lived In Mansion WILL BE SOLD to the highest bidder on Sunday night for $349,500.00/OBO. Buyers need not be all cash. Financing is available. Inspections and Open House this Saturday and Sunday 10-5 so call for details!

- Luxury High End Home For sale on the Water with Direct Bay Access and private deep water dock.

- Apollo Beach, FL

- This home was last purchased for $1.8 MILLION less than 2 years ago!

- Brand New

- Appraisal from June 2007 on hand for $1,803,000

Features:

• 4 Bedrooms – roughly 3500 sq. ft
• Travertine Tile, Wood, and Carpeting
• Inground Pool with Screened Lanai
• Chefs Kitchen with Granite, and High End Stainless Appliances
• Elevator from Garage level to third floor
• Waterfront with deep water dock and direct bay access (no bridges)
• Gated, Guarded Community with Marina and Beach area
• This home is LOADED and has it all!

Home will be under contract by Monday May 18, 2009! Contact Marc Vitorillo now for more info.

What is The Homeowner Affordability and Stability Plan?

One of the many questions that come to my mind, “Is this fair for a homeowner that is paying their monthly mortgage payments on time?”   The value of their homes are plummeting at the same rate just like everybody else.

You have probably heard that the administration announced today the details of a home foreclosure plan.

The Homeowner Affordability and Stability Plan is designed to offer assistance to as many as 9 million homeowners making a “good-faith effort” to stay current on their mortgage payments. The goal of this plan is to make the modification available and to make bankruptcy a last resort for homeowners.

Overview:

Mortgages are at historically low rates, but millions of families can’t shed their original home loans and refinance to take advantage. That’s because home values hav dropped significantly, and current rules prevent most homeowners from refinancing if they owe more than 80 percent of the value of their homes.

Getting a new loan at a better rate and perhaps getting out from under an adjustable rate mortgage that might have ballooned to a much higher percentage could save homeowners thousands of dollars annually. Those savings translate to a monthly payment that could make the difference between foreclosure and keeping a house.

So who’s eligle?

Homeowners who sought loans through or guaranteed by Fannie Mae or Freddie Mac, two lending institutions that recently got a huge infusion of federal funds funds to keep them afloat, will be able to refinance under this plan.

How Does the Homeowner Affordability and Stability Plan Work?

The new, refinanced loan can’t be more than 105 percent of the value of the existing home. For example, if your property is worth $200,000, you may qualify as long as you owe $210,000 or less.

Homeowners with second mortgages are also eligible, but with certain restrictions. The 105-percent rule remains in effect. The lender of the second mortgage, however, needs to agree to keep the loan in the “second position” when it comes to monthly payments. And homeowners still need to prove they can meet the payment terms of the new first mortgage.

An Example:

The Obama administration gave this example of how the plan would impact a homeowner paying back a 30-year fixed rate mortgage of $207,000, with an interest rate of 6.5 percent, on a house worth $260,000 at the time of the purchase.

Today, that homeowner still owes $200,000 on the original mortgage, but the value of that home has fallen 15 percent, to $221,000.

The drop in the home’s value makes the homeowner ineligible to refinance under current low interest rates, because most lenders generally require the borrower to have 20 percent home equity.

Under this refinancing plan, the rules are relaxed and a homeowner could refinance to a rate near 5.16 percent, reducing annual mortgage payments by more than $2,300.

Whoa, Nelly! What do you think is wrong with this example? Why couldn’t they provide an example that is a bit normal like in our Tampa real estate market.  Let’s say a $207,000 loan on a house worth $207,000 at the time of purchase. Today that homeowner still owes $200,000 on the original mortgage but the comparables have fallen to $110,000. Notice how I said comparables as opposed to market value. Market Value is a relative term in this market, depending on what is currently for sale in the neighborhood. All else equal (condition, square footage, upgrades), a bank-owned or short sale property in the same neighborhood will sell first. Until we keep the inventory of distressed sellers at a minimum, the true market value of your home is up in the air. The lenders and appraisers are using these properties as comparables, meaning your current home value just decreased significantly.

Source: White House

Harbour Place City Homes Foreclosure Prices

If you’re looking for a condo in Tampa with a great location and unbelievable prices, then Harbour Place City Homes may be for you.

It is located in Harbour Island.  The residents are steps away from the world-class Harbour Island Athletic Club along with the banks, retailers and restaurants of Harbour Island, Channelside and downtown Tampa.

Some incentives from Harbour Place City Homes include FHA loans with 3% down payment and 30 year fixed rate at 4.75%.  Plus their condo prices are currently priced to match foreclosure prices. This is a great appreciation potential and best yet, why rent when you can own at a better price. It’s the best of the city life and it can all be yours.

Contact Us today at 813-756-4549 to view properties in Harbour Place City Homes in Harbour Island.

Free Homeowner Board Association Training Extended to Condos

The Hillsborough County Office of Neighborhood Relations has extended its first Hillsborough County Homeowners Association Board Training seminars to include Condominium Association Board Members. Condominium Association leaders can still apply through January 16.

The training sessions begin on January 22 and will be held the fourth Thursday of each month through July 23, from 6:30 – 8:30 p.m. The workshops will be held on the 26th floor of the County Center, 601 E. Kennedy Blvd., Tampa. Parking will be provided at the Pierce Street Parking Garage.

The interactive training program is designed to demonstrate the responsibilities of being an HOA board member. The goal is to have better informed board members who will bring their specialized knowledge of how to participate in constructive board meetings back to their respective neighborhoods and condominium groups. Successful neighborhoods depend on HOA board members who are knowledgeable leaders.

Both programs will teach issues such as community management; rule-making and enforcement; and financial matters, such as insurance, budgeting, reserves and audits. The condo training will also include reviews of state statutes affecting condominium governing and community rights. The homeowner board training will include collections and declaration of covenants.

For more information, call the Office of Neighborhood Relations at (813) 272-5860.

Hillsborough County Receives HUD Approval For Neighborhood Stabilization

Hillsborough County’s Affordable Housing Office can move forward with their plan to spend the $19 million Neighborhood Stabilization grant it received from the U.S. Housing and Urban Development (HUD). On Dec. 29, HUD Secretary Steve Preston approved Hillsborough County’s plan to recover from the effects of high foreclosures and declining home values.

“The Affordable Housing Department team worked diligently to complete and submit a strategic Neighborhood Stabilization Program plan to HUD that provides affordable housing opportunities for low and moderate income families, as well as sustaining neighborhoods,” said Valmarie Turner, director of Hillsborough County’s Affordable Housing Office. “Through a number of viable partnerships, our primary focus will be to acquire foreclosed or abandoned properties in the targeted areas and place eligible families into affordable housing units.”

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Daniel and Ebony Sampson

Happy holidays from Tampa real estate blog! Thought I would blog on Christmas day.  Merry Christmas and Happy Hannakuh to all!  I read a feel-good story on CNN.com today and thought I’d share it with you.  A family was facing foreclosure in Maryland and the kindness of friends and strangers unite to save the family.  I love hearing stories like this:

A family facing foreclosure is anything but a unique story in these troubled economic times.

But this is a happier story of one family whose financial ruin was averted by the actions of a friend, the compassion of strangers, the networking power of the Internet and the holiday spirit of giving.

“This is our Christmas story,” said Ebony Sampson. “It’s going to be told for generations and generations to come.”

Sampson, who lives in Aberdeen, Maryland, with her husband, Daniel, and their two young children, has overcome more hardship than one person should ever have to face. When she was in the 10th grade, she lost her entire family in a horrific car accident. Raised by a grandmother in New York, Ebony eventually used some life-insurance money from her parents’ death to buy the home in Aberdeen, near where she grew up.

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Why is NOW the Best Time to Buy a Tampa Home?

• It’s a buyer’s market. Price declines over the past year have made this the best time to buy.
• The inventory of homes for sale gives buyers incredible selection. The number of homes for sale is greater than it has been in 15 years.*
• Real estate continues to be a great financial investment. The average return on a five percent down payment over 10 years is usually three to five times greater than stock market returns.*
• The current favorable market conditions won’t last long. Research shows that prices are beginning to stabilize and price declines are over.*
• Mortgage rates are near all-time lows. Capturing these low rates now means your monthly payments are lower and much more affordable.*
• Recent voter approval of Amendment 1 allows Florida homeowners to transfer their “Save Our Homes” tax benefit from their old home to a newly purchased home. Upsizing or downsizing, this is the best time to buy.
  *Information courtesy of the National Association of REALTORS®.

Are Home Warranties Worth It When Selling a Home?

A home warranty pays repair or replacement costs for the mechanical systems and built-in appliances that break down in a home. Warranties can be purchased by either the buyer or seller. When the seller is paying for the warranty, it is usually paid for and goes into effect at closing. The coverage period is normally one year.

There are a lot of companies offering home warranties and coverage of individual policies can vary widely. Usually, central heating and air conditioning systems, electrical, plumbing and major appliances are covered. It’s important that you read the policy closely and understand what is and is not covered.  The cost for a one year home warranty typically runs between $300 and $500, depending on the size of the home and the specific types of coverage.  In addition to the policy premium, there is normally a deductible of $50 – $75 to pay when making a repair claim.   Read more

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