Additional Costs to your mortgage payment

Lately things have been quiet on the home searching front.  We initially got a quote from 5th Third Bank for a mortgage loan and were qualified at $103,000.  Essentially that means that our mortgage payment each month would be around $700.  But that was just the mortgage payment and didn't include the monthly mortgage insurance payment we would have to make, or the taxes that we have to pay into an escrow account so that when property taxes are due we can pay those.  

When we added the rest of that stuff up... and don't forget interest because you have borrowed this money... it was closer to $1100 a month.  Now this we cannot afford.  Unfortunately we are dealing with banks that don't take in to consideration all the other bills that a homeowner has to pay when they are approving loans.  I guess they figure you can live with out electricity and cable TV and internet.  All they care about is how much they can get you approved for because then the bank makes more money.  

Isn't this the same reason that people are in such dire straits and houses are being foreclosed on?  I wish that mortgage loan officers would act more like advisors and consider all the other payments you have to make when you are a homeowner.  They say they are on your side but really they don't take into consideration some of payments that we make every month.  The way they side step this issue is tell you it is not mandatory to borrow the full amount you are qualified for.

So now this is where we are at.  We thought that we could afford a home that costs $100,000.  Now we are looking at homes that are between $70,000 and $80,000.  The TOTAL monthly mortgage payment for these homes is closer to $800 (what we could afford).  Most of these homes are nice but need to be updated.  Which means that even if we do find a home for this amount we will probably want to borrow the remainder (up to $100,000) for updating.  Pretty frustrating.

Oh well, we are in no rush, maybe prices will drop again, maybe we will find a diamond in the rough.

Some helpful articles/Home update

I recently read these posts at the Metro Detroit Homes blog.  The topics include:

New information on the first time home buyer tax credit, now at $8,000 and you don't have to pay it back!

New information that first time home buyers should know like how to pick a realtor and what kinds of questions you should ask them.

We are working with a realtor that was suggested to us by a friend.  She lives in the area where we are looking and has been able to point out important things about houses that we didn't even think of like the roof, ceilings, windows and furnace.  Just make sure you are comfortable with your realtor.

Home Update

We are headed out again this Friday with our realtor to check out the dream house and some others that she has found.  

We also went to another bank to get a second opinion on interest rates and possible closing costs.  I found that different banks name their fees different names and so it has been hard to compare the two estimates we have got.  But basically we are looking at at least $4,000 up front.  Which means we have got to start saving NOW!