House buying Calculation

Go on Zillow or another house hunting website and pick out a house that you would like to purchase.

Recall the activity with the salary and debt ratio used to determine prospective mortgage rate. Attempt to accomplish the debt to income ratio calculation for your own personal finance, remember to include your other personal expenses. Once you have calculated your mortgage rate post on this thread in response to the following questions.

Did your perspective mortgage rate surprise you? Were you able to buy the house you choose? What factors could influence the cost of the house?

I could get a mortgage of up to $5500 a month based on a $220k house. Monthly payment at 4% for 30 years would be 614 principal, taxes 333 and insurance 129 for a monthly payment of 1076. My budget could probably handle the monthly payment. Other costs affecting affordability: closing costs and downpayment and establishment of an emergency fund. Downpayment would be 44,000. I would have to save for a long time to accumulate the downpayment.

Income = $2000 / month, no debt

$2000 * .36 = $720 theoretical maximum monthly payment

$720 * 12 months * 30 years = $259,200 theoretical maximum home value (and of course not taking into account interest and various other fees and costs)

This means that I could qualify to borrow this adorable cottage in Oregon for $244,900... as a single income-earner getting $12 an hour. I'm actually not that surprised because I know mortgage companies encourage home-buyers to take out as much debt as possible, but it still feels ridiculous to be able to get that much house, even theoretically. (Excuse me: borrow that much house.)

What factors could influence the cost of the house? - Normal things, I guess. Location, mostly. Size, quality, upgrades, local schools, and crime rate.