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Unread 05-31-2008, 04:24 PM
 
Location: Aviano Air Base, Italy
28 posts, read 85,686 times
Reputation: 37
Question What is the percent of your monthly income spent on your mortgage

Hey everyone...In the latest issue of Money magazine on page 93, they share with the reader the average Median Mortgage Payment (% of Income) that a person is paying per month to live in their home. Admittedly, they're referencing the Wilmington area but it does make me ask the question ...what is the average in the Dover area? According to the magazine, the average Joe is paying 20% of their monthly take home pay to finance their home. I can say this, with the Air Force giving me a housing allowance...without going into my pocket that amount will represent 29% of my monthly pay. So naturally, I'm curious if I am alone or if this really is the average.

Thanks everyone. Mike
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Unread 05-31-2008, 04:37 PM
 
Location: Nashville, TN
957 posts, read 2,117,607 times
Reputation: 388
I know three people who are over 60%. One of them just qualified for a mortgage with those numbers. He said they figured it at 61%. There's a foreclosure waiting to happen. He had to go through one of those national mortgage companies. Local banks wouldn't touch him. Another good friend is over 50% with a first mortgage, a second mortgage and an equity line of credit that is maxed out.

I would guess that 20% is on the low side for an average.
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Unread 06-01-2008, 08:49 AM
 
Location: Aviano Air Base, Italy
28 posts, read 85,686 times
Reputation: 37
Default What is the percent of your monthly income spent on your mortgage

THREE PEOPLE AT 60% Holy cow! That's beyond imagination. I originally asked the question because much like you...20% seems to be on the on the low side. If you have read any of my other posts you know that I am active duty and the amount the Air Force gives me represents 29% of my monthly take home. When you consider our children's 529 plans, our IRA's and our pittance of a savings...delving into the 30 percentile range makes me weak at the knees. Admittedly, our particular situation is better than most...fortunately we're debt free. But we're that way because we've learned to live within what we perceive is our means...obviously, my goal is to stay that way! The challenge is when people are allowing themselves (with the help of shady lenders) to run into the 40% percentile range in order to pay for their home they are effectively pushing me and my family into a smaller home unless I am willing to put me and my family into the same level of risk. Not entirely bad, but if we assume that most people are in the 40 percentile range then the people that live in the homes that cost $240K should be living in homes that cost $220K. The people that are living in the $270K homes should be living in the $250K range. From the outside looking in, it appears that it the housing market has become an out of control game of keeping up with the Jones'. Consequently, my worry hopefully unfounded...but a concern nonetheless, is that if I am correct then I could (no insult to anyone) live in a bad neighborhood simply because I am trying to live within my means. God knows I am probably wrong but I haven't lived in the States in a LONG time and I am trying to understand how all of this works through the use of this forum. Thank you for taking the time to answer my question. If there are others reading this let me know what you’re seeing out there….

Respectfully, Mike
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Unread 06-01-2008, 10:42 AM
 
5 posts, read 19,429 times
Reputation: 16
Check out this web site from CNN: Affordable Home Calculator from CNNMoney

The basic rule is 28% of gross income is safe for most people for housing costs and 33% is the high end of the range. Keep in mind they are talking gross income and also this should include all housing costs (to include property tax, insurance and PMI), anything that goes into the mortgage payment.
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Unread 06-01-2008, 05:04 PM
 
Location: Nashville, TN
957 posts, read 2,117,607 times
Reputation: 388
The problem is that the average wage here is very low and an average house is around $250k...Very high in relation to the average wage. The ratio gets better the further North you go.
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Unread 06-02-2008, 05:59 AM
 
Location: Aviano Air Base, Italy
28 posts, read 85,686 times
Reputation: 37
Default What is the percent of your monthly income spent on your mortgage

I understand and that probably does factor into the equation but ultimately, the housing market will reflect what the housing market can bear and thereby what people are wiling to pay.

Also of note, I recently found out that the standard for purchasing a home is generally a total debt-to-gross income ratio of no more than 36 percent. Furthermore, the current housing payment-to-gross income ratio of 28% is considered conservative, and 33 percent would be considered aggressive. So the 20% quoted by Money Magazine must have been really conservative or...they were referring to 20% of net income.

thanks for the reply. Mike
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Unread 06-02-2008, 06:41 AM
 
Location: Nashville, TN
957 posts, read 2,117,607 times
Reputation: 388
I believe 36% as a national average, but I think in DE the average is higher, especially in Southern parts of the state. Lots and lots of people are stretched mighty thin here so they can have a roof over their heads. With the high cost of real estate here, they have no choice but to get into a high mortgage that they really can't afford or live in a cardboard box.
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Unread 06-03-2008, 12:20 AM
Status: "Irish as the day is long!" (set 24 days ago)
 
Location: Delaware
902 posts, read 2,306,510 times
Reputation: 341
Sad to say, one angle that may not have been covered in the article, is that even rents are out of whack here in DE as well. Even before we moved here late last summer, we found rentals hard to come by. And the rent we pay for the house we live in is pretty high for the average wage in this area.

So rossc, while you have made a VERY good point about people stretching their budgets thin for a mortgage payment, even those not purchasing are having to do the same thing for a rental. I believe housing costs is a hot topic around most parts of DE... for those folks considering moving to this state, and those that have been here most or all of their lives and have seen these numbers change so drastically over the last 20 years or so.

Mary
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Unread 06-06-2008, 05:09 PM
 
Location: Mid Atlantic Coast
51 posts, read 112,447 times
Reputation: 50
Default too many homes sit empty

I am on the southern side of the state and we have at least 1000 empty homes in the next community over! They are all new homes & condo's. The local roads are not able to accomodate all the cars now. I can't imagine what it will be like when people live in their homes. It can take 10 to 15 minutes to get from a side street on to route 54. It's horrible.
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Unread 06-06-2008, 07:30 PM
 
Location: Aviano Air Base, Italy
28 posts, read 85,686 times
Reputation: 37
Default What is the percent of your monthly income spent on your mortgage

Wow, that's a shame. Do you happen to know what the city commission is doing about the problems in that county? Also, what country is it that has all of these empty homes?
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