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Old 10-15-2010, 11:37 AM
 
Location: Plano, Texas
1,676 posts, read 6,287,299 times
Reputation: 684

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Quote:
Originally Posted by danieloneil01 View Post
Then shouldn't those people not buy until they have enough down to get it to 1/4? I plan on doing what he recommends on this on my next home purchase. This way if me or my wife loses a job we won't be forced to become like millions of others in forclosure.

I figure that we could get a 150k home on a 15/yr note with a household income of 140k.
ARe are you picking and choosing what you want to follow? Dave Ramsey also says that you or your wife should not work but stay home with the children? (not sure if you have any though)

Are you also tything at least 10% of your income? Dave says you should do that to.

Do you have a written budget using his envelope system? He says you shoudl do that.


A lot of what Ramsey says makes sense but not so sure how realistic it is. But nothing wrong with following his advise regarding the maximum mortgage.
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Old 10-15-2010, 11:43 AM
 
Location: NJ
17,579 posts, read 37,768,306 times
Reputation: 16085
Quote:
Originally Posted by danieloneil01 View Post
Because it's the smart way? Do you think it's a smart idea to pay 1/2 your net ?
Is that are only choices? 1/4 or 1/2?

And why isn't 1/4 too much? Wouldn't the smart thing be to only pay 1/8?
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Old 10-15-2010, 12:00 PM
 
Location: Niceville, FL
7,140 posts, read 15,017,697 times
Reputation: 6714
It's about where we are right now with our primary mortgage, including taxes and insurance. (We took out a HELOC this year to do some remodeling, and the balance between that and the mortgage is still well below our original purchase price) We managed to buy pre-boom in the classic good area-excellent schools scenario.

It wasn't really planned as some sort of financial moral virtue or anything, but rather that we were still paying off student loans when we bought, and knew we were also looking to buy a new car less than five years, and didn't want to get to a point where we were in the ramen scenario.
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Old 10-15-2010, 01:35 PM
 
Location: Albuquerque
5,549 posts, read 13,713,440 times
Reputation: 2662
Quote:
Originally Posted by danieloneil01
Do you think it's a smart idea to pay 1/2 your net ?
It depends.

What if your net is $30k/month?
What if you really want a $2 million house and you make that much?
What if you have enough liquid assets to pay off the house?
What if by paying 1/2 instead of 1/4, you save 1/4 on commuting costs?

It depends.
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Old 10-15-2010, 05:27 PM
 
4,248 posts, read 10,113,546 times
Reputation: 3108
Quote:
Originally Posted by MikeyKid View Post
Not knowing your personal situation, but I wonder what metro/area has housing stock at $150k for a family making $140k and sending their kids to good public schools.

Your average "how much home can I afford mortgage calculator" (using this term loosely) will put a $140k income family well into the 300s on housing. Depending on your other debt/taxes/insurance/etc, it could easily put you over $400k for affordability on a house... frankly, the list prices of homes in most metros that support a $140k income reflect this.

In Houston you can get a great home for 130-170k in great schools. And I'd rather spend low on a home than do like you and buy a 300k on a 30yr loan and be in my 60's still making mortgage payments if my wife and I haven't got laid off or god forbid dies.


Taxes are around 2.1 to 3.9%, insurance about 600/yr. And I will have 2 car payments and no CC debt.
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Old 10-15-2010, 05:29 PM
 
4,248 posts, read 10,113,546 times
Reputation: 3108
Quote:
Originally Posted by VictorBurek View Post
ARe are you picking and choosing what you want to follow? Dave Ramsey also says that you or your wife should not work but stay home with the children? (not sure if you have any though)

Are you also tything at least 10% of your income? Dave says you should do that to.

Do you have a written budget using his envelope system? He says you shoudl do that.


A lot of what Ramsey says makes sense but not so sure how realistic it is. But nothing wrong with following his advise regarding the maximum mortgage.


No kids
No
Excel

And what he says on the matter I brought up seems like a win win. Why buy a house more than twice your household salary on a 30yr loan/ House poor is stupid and paying that much in interest is even dumber. It's funny how people hate on credit cards and their interest rates but paying double the price on your home after 30 yrs is a smart investment.
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Old 10-15-2010, 09:15 PM
 
Location: Charlotte, NC
2,193 posts, read 4,412,439 times
Reputation: 1072
Quote:
Originally Posted by danieloneil01 View Post
It's funny how people hate on credit cards and their interest rates but paying double the price on your home after 30 yrs is a smart investment.
Well that's because real estate always goes up! And they still think that!
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Old 10-15-2010, 09:23 PM
 
Location: Charlotte, NC
2,193 posts, read 4,412,439 times
Reputation: 1072
Quote:
Originally Posted by MikeyKid View Post
Not knowing your personal situation, but I wonder what metro/area has housing stock at $150k for a family making $140k and sending their kids to good public schools.

Your average "how much home can I afford mortgage calculator" (using this term loosely) will put a $140k income family well into the 300s on housing. Depending on your other debt/taxes/insurance/etc, it could easily put you over $400k for affordability on a house... frankly, the list prices of homes in most metros that support a $140k income reflect this.
Seriously, you of all people should know you can get a perfectly great house in the Charlotte area/suburbs for under 250K with great schools. You are completely exaggerating.

You can a really nice house in Thornhill in S. Charlotte which has fantastic schools. And there are MANY subdivisions in S. Charlotte that are around that price point. And you know very well that these areas are desirable with low crime and nice. You imply all these places will have shacks and a person will be fearing for their life if they bought at lower prices.

Another example, my brother lives in Houston in one of the best school districts in the area, his home is a well built home, safe area, 3000sq, and...and...was only 165K.
He paid off his home in 7 years.

Just because a person can 'afford 350K', does not mean they have to get a house that expensive when they live in an area that has lower cost of living.
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Old 10-15-2010, 09:31 PM
 
Location: Charlotte, NC
2,193 posts, read 4,412,439 times
Reputation: 1072
Quote:
Originally Posted by MikeyKid View Post
I wonder how Dave Ramsey suggests people do this when median home values are still so far out of whack to median incomes... There's no possible way to meet this recommendation with our current housing stock.
Because some people actually save up 20% down and make more money than the median. You know their are plenty of people who are above the median. That's why it's called a median.
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Old 10-15-2010, 09:35 PM
 
Location: NJ
17,579 posts, read 37,768,306 times
Reputation: 16085
Mortgage rates are so low right now many people would choose to go with a longer mortgage and invest the money instead of paying off the house sooner.
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