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Old 04-09-2015, 02:21 PM
 
11,972 posts, read 26,849,693 times
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Quote:
Originally Posted by raggedjim View Post
Just remember that the numbers you get on online calculators will generate a MAXIMUM amount, not a required amount. The banks will loan you more than they should, a realtor will sell you the most that they can. It's up to YOU to say No, I don't NEED that much house.
I have to agree with this. Which is why I say to look at your budget to see what you can afford, not the maxed out bank calculations.

Of course in some cases you may think you can afford MORE than what the bank will lend you, but in that case the choice is made easier for you.
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Old 04-09-2015, 07:26 PM
 
103 posts, read 123,918 times
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Anyone advising that 10% is OK really has no clue. Loans are not free money.. They do need to be paid back, with interest. You want to build equity as fast as you can, not be a slave for eternity to a jumbo mortgage.
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Old 04-09-2015, 08:11 PM
 
861 posts, read 1,057,600 times
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Quote:
Originally Posted by zizu View Post
Anyone advising that 10% is OK really has no clue. Loans are not free money.. They do need to be paid back, with interest. You want to build equity as fast as you can, not be a slave for eternity to a jumbo mortgage.
So what do you suggest?
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Old 04-09-2015, 08:45 PM
 
103 posts, read 123,918 times
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20%, preferably 25%. Follow the 1/3rd rule for payments.. Spend no more than 33% of monthly take home pay on home carrying costs (taxes, mortgage, insurance).

I read SO many posters here requesting advice on moving to the suburbs with a budget of around 600-800k... Based on statistics and probabilities, I HIGHLY DOUBT most of these posters are being reasonable given their income. It's more about keeping up with the Joneses, which is taken to an extreme in some areas. Unfortunately, this means financial doom at some point down the road.
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Old 04-09-2015, 09:07 PM
 
861 posts, read 1,057,600 times
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Quote:
Originally Posted by zizu View Post
20%, preferably 25%. Follow the 1/3rd rule for payments.. Spend no more than 33% of monthly take home pay on home carrying costs (taxes, mortgage, insurance).

I read SO many posters here requesting advice on moving to the suburbs with a budget of around 600-800k... Based on statistics and probabilities, I HIGHLY DOUBT most of these posters are being reasonable given their income. It's more about keeping up with the Joneses, which is taken to an extreme in some areas. Unfortunately, this means financial doom at some point down the road.
You must have a high paying career with no children and a bus pass, because there is no way most people would be able to afford putting that much down.

My home cost nowhere near that amount and I only put 5% down and have a very reasonable mortgage that can be paid on one income in case my Wife or I ever lost our jobs.

I think most of you guys have issue with people who aimed for that amount of property.
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Old 04-10-2015, 07:28 AM
 
11,972 posts, read 26,849,693 times
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Quote:
Originally Posted by zizu View Post
Anyone advising that 10% is OK really has no clue. Loans are not free money.. They do need to be paid back, with interest. You want to build equity as fast as you can, not be a slave for eternity to a jumbo mortgage.
This post makes little sense. You do realize that a larger down payment benefits the banks, not necessarily the homeowner? And it has little effect on how quickly you build equity, unless you do have a jumbo with a higher interest rate. Assuming interest rates are equal, larger loans build equity faster than smaller ones in terms of total dollar amount, as the payments are larger.
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Old 04-10-2015, 07:33 AM
 
11,972 posts, read 26,849,693 times
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Quote:
Originally Posted by zizu View Post
I read SO many posters here requesting advice on moving to the suburbs with a budget of around 600-800k... Based on statistics and probabilities, I HIGHLY DOUBT most of these posters are being reasonable given their income. It's more about keeping up with the Joneses, which is taken to an extreme in some areas. Unfortunately, this means financial doom at some point down the road.
Most of the people I know who are young and live in $600-800k houses have very high incomes. I am unsure about how they financed their houses, but they are far from over-extended. Your assumptions above are kind of nuts, though I'm sure they do apply to some people.
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Old 04-10-2015, 11:15 AM
 
835 posts, read 637,599 times
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Quote:
Originally Posted by zizu View Post
20%, preferably 25%. Follow the 1/3rd rule for payments.. Spend no more than 33% of monthly take home pay on home carrying costs (taxes, mortgage, insurance).

I read SO many posters here requesting advice on moving to the suburbs with a budget of around 600-800k... Based on statistics and probabilities, I HIGHLY DOUBT most of these posters are being reasonable given their income. It's more about keeping up with the Joneses, which is taken to an extreme in some areas. Unfortunately, this means financial doom at some point down the road.
This post cracks me up. What statistics and probabilities are you referring to?
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Old 04-10-2015, 12:12 PM
 
Location: Chicago
3,260 posts, read 4,505,593 times
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Quote:
Originally Posted by Lookout Kid View Post
Most of the people I know who are young and live in $600-800k houses have very high incomes. I am unsure about how they financed their houses, but they are far from over-extended. Your assumptions above are kind of nuts, though I'm sure they do apply to some people.
Yeah, I agree. Believe it or not, my husband and I spent more than that on our house. Crazy, right? Of course, we did have 20% down. But, the point is that some people earn enough that a house in that price range is not a stretch. Such people probably do more research online and probably are over-represented on a site like this.

Of course there are people who spent way more than they should have on their homes, but it isn't just people who bought expensive homes that did that. I've seen foreclosures at all price points.
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Old 04-10-2015, 12:21 PM
 
28,383 posts, read 67,919,335 times
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Default Precisely!

Quote:
Originally Posted by Lookout Kid View Post
This post makes little sense. You do realize that a larger down payment benefits the banks, not necessarily the homeowner? And it has little effect on how quickly you build equity, unless you do have a jumbo with a higher interest rate. Assuming interest rates are equal, larger loans build equity faster than smaller ones in terms of total dollar amount, as the payments are larger.
People that tune in to loudmouth like Dave Ramsey do not understand that despite all his "down home / help the little guy" cornpone the advice he gives DOES NOT WORK in costly areas with high housing prices! I mean sure, I lived in the affluent western suburbs to say that I've known a handful of people that "spent themselves to ruin" but I also know FAR MORE unfortunate souls that have done nothing "extravagant". They've had frankly kind of crummy little houses in nice towns with great schools. Then maybe they lose their job or get super pissed off at their cheating spouse. The divorce lawyers take too big a cut and both the cheat and the angry spouse eventually file for divorce...

LK is spot on -- borrow as much as you are comfortable with! Find the most value priced home in the nicest town you can and don't listen to fringe advice from a guy that would rather live in a bunker in the desert than actually use credit wisely!
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