Should I buy a house that costs $197k (Garland, Richardson: foreclosure, HOA)

[aexchange]

I question why you would ask for advice if you are so set on buying a new home? The advice you've gotten here is sound and solid, don't buy anywhere close to $200K. You don't make enough on one income. Practically, you need to wait. Could you buy a new home? Yes. Should you? Absolutely not.

It's not even that debatable.

If you insist on buying, drop down in your price range to $150K-$170K. Stuff happens and you need to be prepared for the unexpected. Assuming you won't have any unforseen expenses with a new build isn't realistic.

My wife and I combined to make $80K on a $183K mortgage around 8 years ago. It was extremely tough sledding then on just that income. The utility bills alone ate up a large amount of expense. Trying to rationalize $63k on a $197K mortgage is dooming yourself to a foreseeable future of ramen, instant oatmeal, and clearance tv dinners from wally world.

[Frank Crabtree]

Originally Posted by aexchange

I question why you would ask for advice if you are so set on buying a new home? The advice you've gotten here is sound and solid, don't buy anywhere close to $200K. You don't make enough on one income. Practically, you need to wait. Could you buy a new home? Yes. Should you? Absolutely not.

It's not even that debatable.

If you insist on buying, drop down in your price range to $150K-$170K. Stuff happens and you need to be prepared for the unexpected. Assuming you won't have any unforseen expenses with a new build isn't realistic.

My wife and I combined to make $80K on a $183K mortgage around 8 years ago. It was extremely tough sledding then on just that income. The utility bills alone ate up a large amount of expense. Trying to rationalize $63k on a $197K mortgage is dooming yourself to a foreseeable future of ramen, instant oatmeal, and clearance tv dinners from wally world.

I don't understand your question or know if you actually understood mines. I'm not dead set on spending $197k on a house. That one house made me wonder If it was something I could afford, which is why I came here... for input, which is greatly appreciated. It's been established that I cannot afford a house that costly and still maintain a comfortable lifestyle.

I mentioned another builder in the $175k range which also has USDA. Is this something more fitting for my salary? We'll weigh all options, including used homes, but is a new build, 2300sq ft at $175k doable on my salary? I appreciate all advice and I guess it's better to have some cushion for expenses.

[TurtleCreek80]

The rule of thumb is to not take out a bigger mortgage than 2X your income. With absolutely no debt, you can stretch to 2.5-3X.

That means a $125k house is what you can safely afford and a $155-180k house is what you can stretch to afford.

Have you even talked to a mortgage broker? I can't imagine you'd qualify for a 3.5X mortgage @ $200k.

[Hacker1234]

If you went with LPMI with really good credit scores, or went USDA he could go 3.5X.

FHA is a maybe, all depends on the backend ratio. If little to no debt you can pump it up.

[ajacksb]

If you insist on buying, drop down in your price range to $150K-$170K. Stuff happens and you need to be prepared for the unexpected.

This. Nobody is entitled to a new, spacious house. It's a luxury good for people who have "made it", and to be honest, at your income level and savings, you haven't made it yet. Even at $150k, keep in mind houses come with a lot of overlooked expenses which often put your monthly housing costs above apartment rents.

Enjoy the flexibility and low-stress of renting. Sq. footage isn't everything. My $0.02: I think home ownership in the U.S. is an anachronistic by product of a more stable, middle class economy which no longer exists.

[Frank Crabtree]

Originally Posted by TurtleCreek80

The rule of thumb is to not take out a bigger mortgage than 2X your income. With absolutely no debt, you can stretch to 2.5-3X.

That means a $125k house is what you can safely afford and a $155-180k house is what you can stretch to afford.

Have you even talked to a mortgage broker? I can't imagine you'd qualify for a 3.5X mortgage @ $200k.

Yes, I've spoken to a mortgage broker. I've been approved for OVER $200k already, it was easy since we have no debt. But I know not to spend the max I get approved for.

[Frank Crabtree]

Originally Posted by ajacksb

This. Nobody is entitled to a new, spacious house. It's a luxury good for people who have "made it", and to be honest, at your income level and savings, you haven't made it yet. Even at $150k, keep in mind houses come with a lot of overlooked expenses which often put your monthly housing costs above apartment rents.

Enjoy the flexibility and low-stress of renting. Sq. footage isn't everything. My $0.02: I think home ownership in the U.S. is an anachronistic by product of a more stable, middle class economy which no longer exists.

I'm not saying I'm entitled to a spacious house. TBH, the houses we're looking at are rather modest. When driving around the Dallas area most "made it" homes begin at $300k. I mean you have your pickings in this city for that price. I just want a decent house for my family, like any father would want. The apartment we live in now is horrible, but it's what we had to do to save money for a home. Moving to a 2 bedroom in this city that's fairly decent where we won't have to worry about the stuff we're going through now costs upward of $1700/month.

The average HHI in the US is around $53k for an entire family. And we're a debt free family living off of more than that. I have a hard time believing $150k would be a back breaker on my salary. It's not like I never lived in a house before and I'm well aware of the expenses. People told me the same thing about having a baby. There are unplanned expenses, but we managed to overcome them and still have money left over for leisure and this is all while paying rent, unexpected expenses, one car note, and Dr bills. The latter two are things we no longer even have to worry about. I can def see $200k being an issue, which is why I came here for advice, but I never expected people would suggest I go as low as $150k. I mean at this rate, I'll be a renter for life.

And trust me, renting is not stress free. We live in a decent area in the city, but still have break-ins (as recent as last week), cars stolen, aggravating/disrespectful neighbors, and our neighborhood rat can be heard crawling in the ceiling since there's a small hole in the roof that the office can't locate. Not to mention the rent increases almost $100 everytime a new lease comes up. Of course I could move somewhere better, like we have in the past, but then I'd be paying way more for half the space.

[octo]

The discouraging feedback is probably because actual homeowners experienced the additional costs besides mortgage of a house.

I won't go through the math but when I bought my first house (260k with a 160k mortgage on a similar salary as yours. I paid down $100k), it felt like I tripled my monthly expenses (PITI, utilities, HOA fees, furniture expenses, maintenance etc) coming from an apartment. That was 16 years ago.

Everything in a house can be potentially expensive. The $$$ will fly out the window and you'll be left wondering where all that money went. Something goes wrong with the mechanicals and you'll look at a $500+ bill. You want to buy window blinds and there go another $3k+. It's summer and instead of $65 in your apartment you may look at a $400+ electricity bill (for 4-5 months each).

If you don't have a solid financial cushion, it can spell doom on your happiness. Be very careful!

[TurtleCreek80]

Since this is the only answer you want to hear, YES you can afford the house. Good luck.

[Frank Crabtree]

Originally Posted by TurtleCreek80

Since this is the only answer you want to hear, YES you can afford the house. Good luck.

I guess you didn't read where I said I'm no longer interested in a 200k house and the price of the house in my original post raised to $214k anyway, which is def out of my range. The price increase happened today. You may be sincere, but come off as bitter regarding your past experiences.