For comp purposes, found a new home in Northbrook, Ill...
homeportfoliojunction.com
Since this is listed for $650,000, like the one your friend purchased, I will use this one for as an example of the property taxes, which are a mere $3,551.51
So, let's update the hypo:
$650k house
put $100k down from profit of old house (did they have any other equity in it?)
leaves mortgage of $550k depending upon other equity
Closing costs =? attorney fees, fees, points?
applicant makes $40k/year = let's say that this average joe with da two kids has a very low tax rate, so low, that he nets $36k/year, which leaves him with a cool $3600/month.
From this $3600, he has to pay his mortgage, taxes, property insurance, etc.
While a LIBOR loan is technically possible, a convential 30 yr loan, at ~6%, is approx. $3300/month by itself. Since the banks are a lot like Vegas in terms of calculating the odds (cf. 30/15/10), the ultimate cost of LIBOR loan, assuming the guy stays in the house for the next 30 years, will be far more than $3300/month. So, does Washington Mutual lend $550 large to this Ave. Joe? The answer, I submit, is No, No and No. |
