U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 02-06-2018, 06:47 AM
 
Location: Cleveland, Ohio
10,813 posts, read 12,851,968 times
Reputation: 7048

Advertisements

Right? You can buy a mansion with an indoor pool in Cleveland for $600K.

Status: "Why don't people use the LOCATION field?" Edit (set 7 years ago)
Reply With Quote Quick reply to this message

 
Old 02-06-2018, 06:51 AM
 
Location: The Triad (NC)
26,833 posts, read 57,830,396 times
Reputation: 29215
Quote:
Originally Posted by MDrenter223 View Post
$180k after state, federal, and FICA leaves me around 11,500 net
and a 600,000 mortgage after closing costs and PMI will run me about $4,100/month.

If I’m debt free, making 3x median, I don’t think I should be just squeezing by.
You're starting too high.

That $180,000 gross (x2.5) puts affordability in the ~$450,000 max range.
Less an appropriate 20% for down & closing leaves you a ~$360,000 mortgage.

Your $180,000 less pretax contributions (IRA/401K/HSA/etc) leaves you how much?
(these contributions are more important than home ownership)

That taxable number... less payroll deductions (Taxes/FICA/HI/etc) becomes the budget basis.
Is that enough to carry that $360,000 mortgage of ~$1700 (+tax +ins) ... or $2100/mo?

How much mortgage WILL it let you carry (and still have a life too)?
---

from the other end:
The $180K GROSS ų52 comes out to $3461/month for housing (on the 12/52's model)
Less pretax contributions & payroll deductions... is it more like $125,000?

$125,000 ų52 = $2400 per month which is still close to a $400,000 mortgage.
Reply With Quote Quick reply to this message
 
Old 02-06-2018, 07:56 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
4,110 posts, read 3,400,520 times
Reputation: 5633
So the op wants a 600k mortgage on a 600k house?
It just seems like if they have 11k a month the mortgage should not be that hard if putting down 20 percent.
Reply With Quote Quick reply to this message
 
Old 02-06-2018, 07:58 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
28,382 posts, read 50,562,503 times
Reputation: 28610
The median is the amount that is in the middle, with the same number of homes costing more than $600k and less than $600k. Same with income, the same number of incomes above and below $60k. Then there are many people that bought before the prices went up so high. In our case for example, the median price is $947k, but we paid only $190k in 1993. Our median income is $164k, and though we are below that we still live here in a home worth $800k. Those people buying now are moving up from a $500k "starter" home or moving with equity from another state.
Reply With Quote Quick reply to this message
 
Old 02-06-2018, 09:07 AM
 
1,162 posts, read 1,266,139 times
Reputation: 1629
Quote:
Originally Posted by MrRational View Post
Your new area isn't the Los Angeles suburbs... right?

Look harder at your information sources.
Something is missing.
I looked up the median income data after spending a few weeks going through zillow and trulia seeing nothing but expensive homes, meanwhile the local schools were still reporting high percentages of students in poverty.
Reply With Quote Quick reply to this message
 
Old 02-06-2018, 09:10 AM
 
4,542 posts, read 11,542,319 times
Reputation: 3063
Quote:
Originally Posted by MDrenter223 View Post
That is an interesting take on it.

I have credit a bit north of 800, not perfect, but it should be good enough to get the best possible rate from what Iíve seen.

$180k after state, federal, and FICA leaves me around 11,500 net and a 600,000 mortgage after closing costs and PMI will run me about $4,100/month.

The thumbrule of keeping your housing costs st 28% makes it seem like Iíll be over extended at $600,000.

Iíll still have about $88k (but even with no debt) after modest household expenses, an annual vacation, and funding retirement accounts plus 529ís for the kids thereís not much left.

It just doesnít seem like this is how itís supposed to be.

If Iím debt free, making 3x median, I donít think I should be just squeezing by.

What does that leave for anyone else?
The 28% rule is based on gross income, not net. So based on gross you would be right at the 28% mark.
Reply With Quote Quick reply to this message
 
Old 02-06-2018, 09:11 AM
 
1,162 posts, read 1,266,139 times
Reputation: 1629
Quote:
Originally Posted by GeoffD View Post
Why donít you have a down payment if youíre making 3x a median of $60k?
Will be making.

My household income isnít anywhere near that yet. Compared to my cohort Iím just lucky to not have a negative net worth.
Reply With Quote Quick reply to this message
 
Old 02-06-2018, 09:23 AM
 
1,162 posts, read 1,266,139 times
Reputation: 1629
Quote:
Originally Posted by MrRational View Post
You're starting too high.

That $180,000 gross (x2.5) puts affordability in the ~$450,000 max range.
Less an appropriate 20% for down & closing leaves you a ~$360,000 mortgage.

Your $180,000 less pretax contributions (IRA/401K/HSA/etc) leaves you how much?
(these contributions are more important than home ownership)

That taxable number... less payroll deductions (Taxes/FICA/HI/etc) becomes the budget basis.
Is that enough to carry that $360,000 mortgage of ~$1700 (+tax +ins) ... or $2100/mo?

How much mortgage WILL it let you carry (and still have a life too)?
---

from the other end:
The $180K GROSS ų52 comes out to $3461/month for housing (on the 12/52's model)
Less pretax contributions & payroll deductions... is it more like $125,000?

$125,000 ų52 = $2400 per month which is still close to a $400,000 mortgage.
Yeah, I get how much house I can actually afford, there just isnít much inventory of them within 20 minutes of where I have to be.

Iíll rent and save $1,200/month.

I totally agree that funding the future is important.

This isnít meant to be a pity party, itís a WTH moment.

I could afford the median home on my soon to be 3x median income, but only because Iím currently debt free, and even then I wouldnít be saving much outside of Retirement and 529 accounts.

I guess my spouse or I need a side gig.
Reply With Quote Quick reply to this message
 
Old 02-06-2018, 10:00 AM
 
8,711 posts, read 8,906,804 times
Reputation: 12181
I live in a similar HCOL area. I guess I might be one of "these people" who is buying that type of home. Our household income is 3X that of the state median and houses here are in the $500-600+ range. Inventory is low, and the bidding is competitive.


You need a down payment, pure and simple. That's the only way to bring mortgage costs down enough to be able to comfortably live. Many people obtain such a down payment through the sale of their first starter home, and roll the proceeds over into the purchase of their next. I don't have hard numbers, but I'd say 20%+ down is pretty common for this particular area.


So, in order for us to do it....I had to write a pretty big check up front.
Reply With Quote Quick reply to this message
 
Old 02-06-2018, 10:04 AM
 
11,304 posts, read 5,834,479 times
Reputation: 20949
Quote:
Originally Posted by MDrenter223 View Post
Yeah, I get how much house I can actually afford, there just isnít much inventory of them within 20 minutes of where I have to be.

Iíll rent and save $1,200/month.

I totally agree that funding the future is important.

This isnít meant to be a pity party, itís a WTH moment.

I could afford the median home on my soon to be 3x median income, but only because Iím currently debt free, and even then I wouldnít be saving much outside of Retirement and 529 accounts.

I guess my spouse or I need a side gig.
Why do you ďneedĒ a 3 bedroom house? I own a 2 bedroom house. It cost 1.25 x my gross pay in 2009. 28% of your gross for mortgage, taxes, and insurance might be ok if youíre on the raise & promotion ramp of your career. I did that in my 20s. 4 or 5 years later, the mortgage was chump change.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top