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Old 01-14-2009, 11:13 AM
 
235 posts, read 688,178 times
Reputation: 185

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The tax on a $300k house will be nearly $800-1000 a month by itself. Then insurance and all that other stuff. I still don't see you being able to afford anything more than $170k.
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Old 01-14-2009, 11:15 AM
 
235 posts, read 688,178 times
Reputation: 185
Quote:
Originally Posted by Tasksgirl View Post
Well I'm sure you are spending ALOT of money on "extras" whereas maybe this family is used to or doesn't mind living more frugally without tons of extras. (and I don't mean to call you out personally I just mean in general) Maybe they have large sums of cash saved up and maybe they already own their cars outright. Maybe they don't need to go out to eat 3 times a week or get Starbucks every morning. 300k is reaching but I know people out here in CA who make around 50k and even a little less and still make their payments on their house every month. They should bring it down a little bit to make it easier on themselves, maybe 250k since they have such a large down payment, but overall what is right for you is not always going to be right for another person. A family with 3 kids and 2 brand new cars that loves to take vacations and eat out or buy tons of books and CDs (like my mom does ha) would have a hard time affording anything more than 1.5 times their income. But a family with no kids, 1 paid-off used car, knowledge of how to get $200 of groceries for $50 using triple coupon days and get $400 worth of household items at CVS for $35 using their coupon and rebate programs would have no problem affording something alot higher that at first glance everyone goes . Yeah they'd have to sacrifice alot and to some people that sacrifice may seem silly, naive, or not worth it - but ultimately everyone has to decide what's right for their family.

That being said, pull it back a tiny bit 250k would be easier for yourself, which would be 190k after your down payment.

Oh and BTW if they are on their way to having 60k saved up on a 50k salary then they obviously know some great secrets about saving money and living frugally !
This is America we're talking about here. If I'm going to make assumptions, I'm assuming people aren't saving 30% of their income each year. That's how we got in this mess!
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Old 01-14-2009, 11:16 AM
 
Location: Charleston Sc and Western NC
9,274 posts, read 22,768,361 times
Reputation: 4684
California doesn't have the type of property taxes Texas does. Budget in another 8000 a year for that house. Plus insurance is about double here due to the flooding and hurricanes.
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Old 01-14-2009, 11:17 AM
 
398 posts, read 921,973 times
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Quote:
Originally Posted by parisby View Post
Thanks for the advice. I really appreciate this. Like I said this is going to be our very first time, and I just want to know what I will be getting into by being a home owner.

I figured at 300k for a house. I have excellent credit. We plan on doing the 30yr fixed rate mortgage plan and we plan on putting a 20% down payment (60k) on the house, and finance the rest by taking out a loan at the bank. So that should leave us with 240000 right. So we will have 30 years to pay 240k. Not sure how much our monthly payments will be. Is it possible to consolidate our monthly mortgage+property tax+hoa fees+insurance into one monthly fee instead of having everything seperate?
I still don't think you can afford a $300k house. I did some basic calculations, if you have excellent credit, put down 20%, today's rate for 30 yrs term is around 4.875%, you will be paying about $1270 JUST for the interest and principle. What about your HOA, insurance, property tax? To do the combine montly payment with all that, you're looking for an escrow account, I'm estimating that escrow will be at least $800 per a month. So, you're looking at least $2070 for your mortage payment. Can you afford that?
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Old 01-14-2009, 11:19 AM
 
Location: San Antonio-Westover Hills
6,878 posts, read 17,812,151 times
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Your entire house payment should be no more than one quarter of your salary.

That's 25% of whatever you get a month. Some financial folks say that should be gross. I say it should be net, because who knows what you get pulled out of your gross pay?

Your monthly payment (with principal, interest, and taxes) based on your numbers, should be no higher than $1000. How much do you have available to put down? Depending on what you have for a down payment, you will be looking in the $120-$160K range.
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Old 01-14-2009, 11:21 AM
 
Location: Katy, TX
1,288 posts, read 4,392,794 times
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The thing is if they do live frugally and have no kids or debt they why would they WANT to spend 300K on a house they then would have no money leftover to furnish or decorate? You really need to consider that houses can cost a lot more than just the sticker price...especially a first house if you've been living in an apartment and have limited furniture.

And then there's your emergency fund, which everyone SHOULD have in this economy...aim for 6 months of your living expenses, just stuck in the bank waiting for a rainy day. Now is not the time to take a big risk by committing to a huge mortgage assuming your income will always be there.
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Old 01-14-2009, 11:23 AM
 
Location: Charleston Sc and Western NC
9,274 posts, read 22,768,361 times
Reputation: 4684
What people always forget is that after paying interest and fees for 30 years, they will have paid 750,000 on a 300,000 dollar house.

Who knows maybe they can somehow qualify in this tough loan market and swing it.

Personally, I really like being able to buy food.
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Old 01-14-2009, 11:23 AM
 
101 posts, read 347,531 times
Reputation: 58
If the final monthly payment is $2070 and my wife and I combined income is 50k a year. Then yes we can. If you multiply that by 12 months then its $24840 that we need to pay annualy for the house. With 50k yearly that we make we can make it. I know it may be tight but it can work out.

Taskgirl thank you for your insight. I do also know a lot of single families with no children and no outrageous expenses that are living in 300k+ houses with combined salaries of about 50k as well. They don't go out to eat or go on vacations but are able to make it. So I think we should be able to afford a 300k house based on the same principles. We are not the typical average american who goes out to eat every week or go on vacations. We are more of a conservative type. We use coupons whenever possible. Only spend when we need to. With that in mind. I think it is possible.
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Old 01-14-2009, 11:29 AM
 
Location: Charleston Sc and Western NC
9,274 posts, read 22,768,361 times
Reputation: 4684
After taxes on a 50k salary you have about 3000 a month to spend on everything.

So on $1000 you can pay insurance, utilites(AC/Heat,phone, internet,gas,cable, should have an alarm for the insurance rate, fuel car insurance,etc) and food. Do you know how much utilites cost in the summer?

Maybe you can do it. But with all savings gone to buy the house...it's just seems like a very hard road. And you risk losing everything if something happens.
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Old 01-14-2009, 11:39 AM
 
363 posts, read 1,002,803 times
Reputation: 292
Great point about electric bills...especially in the summer. We keep our modest size house on the warm side and still have bills in the $200-$300 range in the summer and that is with a brand new 15 Seer/4 ton Trane unit.

What about scaling your home price back a bit and begin with a "starter home"? In a few years, your financial situation may change and you can always buy up.
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