If income is $3,500 and debts about $30,000, interest about $400/month and a car leased $400/month..??

Question

Will inherit $60,000...could i aford a $400 condo?

How should i spend the money.

10 points for wisest answer

Answer 1

If your income is $3,500 per month, and interest on your debits is $400 per month and you're leasing a car for $400 per month. You want to know that when you inherit $60,000 if you could afford a $400 per month condo.

If you just spend that $60,000 on $400 condo payments, after 150 payments you'll be back at square one. That's not counting any interest you get on it, so it'll probably be a few months more.

I would not buy a condo. I would look for a house. I don't want to live in a place where  I have to share the surrounding property and do not want to have to deal with a condo association.

Good luck.

Answer 2

No..some things you don't have to get a calculator out for.  

Not even close to being able to qualify for a loan that size.  

Answer 3

Stan S thought you meant a $400 a month condo, but I suspect you mean a $400,000 condo.  

Anyway, you make $3500 a month, is that net or gross?  It actually doesn't matter, because the answer is the same either way.  No.  You can't afford a house/condo that costs $400,000.  Not even close.  The guideline is that a home mortgage shouldn't exceed between 2x and 3x your annual income.  Even with a $60,000 downpayment, you'd owe $340,000 on the condo which would take a minimum of $113,000 a year in income to support.  

The next layer of detail says that you shouldn't exceed 28% of your gross income for a housing payment and that all debt payments need to fit within 36% of your gross income (this includes personal loans, car loans, mortgage, student loans, etc.).  Your debt payment of $800 a month are close to 23% of the $3500 of income you told us about.  

A $400 a month condo would be affordable though :-)

The best thing you could do with the inherited money would be give yourself a fresh start financially.  Pay off the $30,000 in debts.  This will free up $400 a month in your life.  Save that $400 a month until the lease term for your car is up.  Use the cash you have saved to buy a car for cash (at a minimum you now have a downpayment for your car).  Think that doesn't buy much car?  You are right, but it'll be paid for.  

Use the remaining $30,000 from the inheritance on a down-payment for a place to live.  Make the $30,000 be 20% of the purchase price so that you avoid PMI.  This would make your price range up to $150,000 which would be managable on an annual salary of between $40,000 and $60,000.  This will help you avoid PMI (private mortgage insurance) and will help you get the loan since you have a downpayment and are in a reasonable range for your income.  If this doesn't buy you a place that is up to your standards, you have two choices...  Lower your standards or save a lot of money for a downpayment.  

good luck!

Answer 4

You should first pay off your $30,000 in debt.  If your monthly interest is $400 your average interest rate is about 16%.  Paying off a 16% debt is the equivalent of making a 16% return.  

If the condo is $400,000 to purchase you cannot afford it on your salary.  If you put down the remaining $30,000 and finance $370,000 your monthly payment will be $2278 for a 30 year fixed rate mortgage at 6.25%.

If the condo is $400/month then you certainly can afford it.

Beyond that advice, I don't know enough about your personal finances to really go any further with the remaining $30,000.  You could buy out the lease on our car, invest the money, put it down on a a cheaper house/condo, or simply put it into the bank as an emergency fund.