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Old 02-23-2007, 09:55 PM
 
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 14,048,744 times
Reputation: 1032

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It is dangerous to recommend a house that could bankrupt them. I know a realtor who didnt care because she got her comission. Well she showed a couple who had a household income of $55k a house costing $199k. That was irresponsable of the realtor not to warn the couple that the $199k house wouldnt be affordable to them unless they got their money from other sources because a $55k household income can safely afford not more than $125k to $150k of house at the very most or you risk getting foreclosed on as the mortgage can exceed your income(after paying taxes, insurance, food, cloth, gas, utilities and other expenses and not having enough left to pay the mortgage)

I see alot of you on this forum recommending nice houses costing $200k, $250k, $300k and in some cases, even $500k! Are you assuming the OP is rich and has a very high income or stockpiles of money in the bank, stocks, funds or bonds? Even if the OP states a budget of such and such, it worries me because many people do not know the maximum safe limit to spend on a house in relation to their income. It is a fact that the average person makes around $35k a year and I know a friend who made $45k a year and she knew that the house she bought in Texas for $107k was just about the limit she could swing for without creative financing or otherwise getting foreclosed in a few years. Not alot of people make the $100k that is needed for those expensive houses costing around a quarter million. Please show courtesty and educate and inform people about this. I am concerned that some of those very people who post on city-data and were given the go ahead for an expensive quarter million dollar house could end upside down in debt and get foreclosed.
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Old 02-23-2007, 11:02 PM
 
Location: Waupun, Wisconsin
323 posts, read 1,965,324 times
Reputation: 136
Quote:
Originally Posted by Need_affordable_home View Post
I see alot of you on this forum recommending nice houses costing $200k, $250k, $300k and in some cases, even $500k!
Please realize that some of us live in a market where a $200K house is a fixer-upper shack. The nice part of that is that if you bought before the market went nuts you gained a lot of equity.

Quote:
Even if the OP states a budget of such and such, it worries me because many people do not know the maximum safe limit to spend on a house in relation to their income.
I wouldn't presume to tell someone what they should budget for a house. Possibly what they should budget for a loan, but if they're selling their current house the difference between their loan budget and their home budget can be substantial.

Quote:
It is a fact that the average person makes around $35k a year
Actually I think that's the median income (one form of average) nationwide so half of the people would be making more than that. In specific locales things can be substantially different - the median in Bellevue, WA, for example, is over $60k.

Quote:
Not alot of people make the $100k that is needed for those expensive houses costing around a quarter million. Please show courtesty and educate and inform people about this. I am concerned that some of those very people who post on city-data and were given the go ahead for an expensive quarter million dollar house could end upside down in debt and get foreclosed.
I certainly wouldn't want to see that happen to anybody, but I'm also not their financial advisor. The one thing that I would caution you about is assuming that a $250k home is going to require a $200k+ loan. My personal comfort level for a loan would be no more than 2x gross income, though many people seem to be comfortable up to 2.5x and others have found that 3x is livable.
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Old 02-24-2007, 07:00 AM
 
Location: Prospect, KY
5,284 posts, read 19,989,303 times
Reputation: 6656
NeedAffordableHome - you are assuming a lot with your statement. There are no $500,000 homes where we live - even little 900 square foot homes cost more than that and I live in a middle class simple little neighborhood by the beach in So. California. We live well but are certainly not "rich" compared to many here in So. Cal.

I belong to several public and private decorating forums - I see incredibly beautiful mansions that belong to other posters and I see these same people post their recommendations for certain high-end appliances, cars, vacations, clothing, make-up and electronics that are wonderful and expensive that I can admire but certainly can't afford. That is just part of life - no matter how many things you have, there is always someone around the corner with better and bigger.

Assuming we are dealing with adults here on this forum, I don't think it is our duty to worry about a stranger's finances or whether they can or cannot afford something...their purchases are their personal choice and responsibility. Also, aspiring for something nicer than what we now have can be a positive motivating force - this is a component of what is called ambition. If we have no ambition or our circumstances dictate that we will always have a minimal income, then we must teach ourselves to be happy with what we do have (the love of family and friends for example) and be content with our lives - count our blessings instead of complaining, coveting and criticizing - that makes for a bitter, unhappy little life.

Last edited by Cattknap; 02-24-2007 at 08:07 AM..
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Old 02-24-2007, 08:00 PM
 
Location: Marion, IN
8,189 posts, read 31,151,257 times
Reputation: 7343
It is not the Realtor's job to advise people on how much money to spend on a home. That is the lender's job. Ultimately, it is the buyer's responsibility to decide if they are making a wise decision.
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Old 02-27-2007, 10:27 AM
 
Location: STL
1,093 posts, read 3,787,828 times
Reputation: 601
Quote:
Originally Posted by Evey View Post
It is not the Realtor's job to advise people on how much money to spend on a home. That is the lender's job. Ultimately, it is the buyer's responsibility to decide if they are making a wise decision.
Exactly.
My husband and I are approved for almost 200k.
Can we afford that? No way.. we can BARELY approve half that.
What an educated smart buyer needs to do is figure out the exact payments for the home (including insurance, tax and mortgage payment)
put aside money for the closing costs as well as earnest money, and something for a downpayment.
you figure in your own debt (because that's not a LENDER, nor REALTOR's job)
Banks look at gross income. They don't figure in taxes and all the "nickle and dime" items that you have every month. So to blame other's for helping, and blame lenders and banks for approving too much money...is idiotic. Its YOUR fault if you throw yourself in debt.
People never want to take blame for their own actions... always find someone else to blame.
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Old 03-03-2007, 09:21 AM
 
Location: Missouri
6,044 posts, read 24,020,451 times
Reputation: 5182
It's not the realtor's responsibility to advise people about their finances. They are salespeople, not financial advisors. The buyer is responsible for determining what they can afford. The buyer tells the realtor what price range they are looking in, and the realtor shows the buyer houses in that price range. If I were to go to a car dealership or a furniture store, I would not expect the salespeople in those places to tell me what I could afford, either.
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Old 03-03-2007, 09:55 PM
 
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 14,048,744 times
Reputation: 1032
Because they dont care, they want to make a sale, not drive customers away. Most realtors dont care, they want to sell houses and get their 4% comission. Its the responsability of banks/lenders and doubly for the buyer himself. poprocksncoke got approved for like $190k but can only afford a house costing $50k, $75k and maybe $100k barely and really pushing it. I know of people who ended up in foreclosure because the irresponsable lender approved them for too much

Oh im worried about this couple looking for a $550k house in south CA. I know its not my business what their finances are but im gonna guess their lender approved them for alot more house than they can really afford. Very, very, very few people make enough to afford such an expensive house!
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Old 03-03-2007, 10:02 PM
 
Location: Sometimes Maryland, sometimes NoVA. Depends on the day of the week
1,501 posts, read 11,724,971 times
Reputation: 1135
Quote:
Originally Posted by Need_affordable_home View Post
because a $55k household income can safely afford not more than $125k to $150k of house at the very most or you risk getting foreclosed on as the mortgage can exceed your income(after paying taxes, insurance, food, cloth, gas, utilities and other expenses and not having enough left to pay the mortgage
No. a $55k household income can safely afford not more than a $125k to $150k MORTGAGE. If you have cash or equity from a previous home sale, you can get a more expensive house. We are aiming for a mortgage about 2.5x our income, but due to equity from our previous sale, we are looking at houses that are 3-3.5x our income. No everyone in the market, or even on this board, is a first time buyer.
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Old 03-03-2007, 10:22 PM
 
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 14,048,744 times
Reputation: 1032
Quote:
Originally Posted by rubytue View Post
No. a $55k household income can safely afford not more than a $125k to $150k MORTGAGE. If you have cash or equity from a previous home sale, you can get a more expensive house. We are aiming for a mortgage about 2.5x our income, but due to equity from our previous sale, we are looking at houses that are 3-3.5x our income. No everyone in the market, or even on this board, is a first time buyer.

Dont forget the property taxes, insurance and other expenses will be much higher as well. This will really add to your mortgage. I would be saving the equity into stocks/funds instead of spending it on the biggest, best house you gotta have.
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Old 03-03-2007, 11:15 PM
 
Location: Miami
20 posts, read 83,918 times
Reputation: 18
Wink Every case is different.

I have to echo the opinions on this board.

My husband and I currently only make a combined income of $90,000 because, I work part time while I pursue my grad work.

But, when looking for a house...you have to factor in debt and the market. We have very little debt, and the market we are currently in has us renting at $1800 a month. I m looking at $275-300,000 homes because, frankly we'd be saving a bunch v.s. renting.

There are so many factors that YES it should be left up to the buyers, not the realtors to make this decision. It's just like a line of credit---it is up to the buyer to exercise restraint. We don't yell at VISA for extending obscene amounts of credit to college kids or car dealerships for their sketchy loans. Yet, unlike those purchases, a house is something that appreciates the moment you buy it.
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