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Old 12-31-2012, 03:01 AM
 
3,285 posts, read 5,430,440 times
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Hello to whomever this pertains,

Well to cut to the chase, I'm just dreaming of how I want my life to be when I get older and I started looking at homes in DC. So I saw one home online that absolutely caught my eye, of course I may never have it but its still nice to dream. The price was $1.675.000 so its a bit costly, so I looked up a mortgage calculator and pretty much set it to a 30-yr fixed mortgage with a 6.125% interest rate, and the downpayment was $335,000 so at the end the house came up to like $8,000 monthly. I know some people in America really make that much money to afford it, but d*** that just seems like a lot of money. Is that reasonable considering the price of the home? I'm from NC where mortgages are typically like $1,500-2,000 monthly so $8,000 monthly for a home seems unheard of.

2130 CATHEDRAL Ave NORTHWEST, WASHINGTON, DC 20008 | MLS# DC7874634 | Redfin

That's the link to the home, I'm a contemporary type of guy so I wouldn't expect everyone to like it. So pretty much my question is, if you have excellent credit would and a well paying job, would a $8,000 mortgage seem reasonable for such a house? I'm only 20 years old now, and my rent is $800 monthly now (with a roommate in a brand new building in DC) so that $8,000 figure seems extremely exotic for me.

Thanks for any responses.
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Old 12-31-2012, 07:27 AM
 
Location: MID ATLANTIC
7,729 posts, read 18,598,912 times
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Quote:
Originally Posted by BMOREBOY View Post
Hello to whomever this pertains,

Well to cut to the chase, I'm just dreaming of how I want my life to be when I get older and I started looking at homes in DC. So I saw one home online that absolutely caught my eye, of course I may never have it but its still nice to dream. The price was $1.675.000 so its a bit costly, so I looked up a mortgage calculator and pretty much set it to a 30-yr fixed mortgage with a 6.125% interest rate, and the downpayment was $335,000 so at the end the house came up to like $8,000 monthly. I know some people in America really make that much money to afford it, but d*** that just seems like a lot of money. Is that reasonable considering the price of the home? I'm from NC where mortgages are typically like $1,500-2,000 monthly so $8,000 monthly for a home seems unheard of.

2130 CATHEDRAL Ave NORTHWEST, WASHINGTON, DC 20008 | MLS# DC7874634 | Redfin

That's the link to the home, I'm a contemporary type of guy so I wouldn't expect everyone to like it. So pretty much my question is, if you have excellent credit would and a well paying job, would a $8,000 mortgage seem reasonable for such a house? I'm only 20 years old now, and my rent is $800 monthly now (with a roommate in a brand new building in DC) so that $8,000 figure seems extremely exotic for me.

Thanks for any responses.
What is impressing me the most is you are 20 years old and getting a sense of what you want. Almost no one starting out says "lets go buy a 1.6M home. Someone buying this home would most likely be on their 3rd (or more home), with equity in a home they are selling. Additional cash would come from something like a bonus (some of the bonuses we see are really high, like 20 - 40K) or perhaps an inheritance. And most of the folks in this price range have what is called a private bankers where they bank. Private bankers are typically assigned to those with at least 50+K in assets or at least 12K coming in a month - they are well aware of what down payments are required for the best possible rates.

The other common profile of someone buying that home, most likely has been in this country for a couple years and will be putting most of the sales price down, carrying no or a very small mortgage.

Those making that kind of mortgage payment without a larger down payment are rare, but they do exist. They are pulling in around a 350K - 400K. Print out that picture of that home....keep it somewhere you can see it everyday....as a reminder and a subconscious motivator. I'm betting you'll be there sometime in your future.
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Old 12-31-2012, 10:13 PM
 
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Lots of the buyers I see on the million plus are making huge down payments... 50% is not uncommon.

Remember, buying is only part of it... then you add taxes, insurance, maintenance... etc.
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Old 12-31-2012, 10:36 PM
 
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well said Ultrarunner

Then you have to maintain it long after the thrill of buying it wears off.
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Old 01-01-2013, 06:05 AM
 
3,576 posts, read 6,062,435 times
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There are many professional working families (lawyers, doctors, lobbyists, etc) who can easily afford $8000-10000 a month mortgages. Especially in the DC area.

I know that particular location well inside DC.

Maintanance cost and property taxes need to be factory when spending this type of money.

The real problems people face with affording a 1-.1.5 million dollar mortgage is
1. Not putting enough of a down payment to offset any potential decrease in income. Spending in excess of $8000-10000 a month while unemployed/taking a lower salary.

DC's job market is still robust and prices really never dropped below (late 2004 prices) even in this housing crash. I am talking about DC proper and mainly inside the beltway (with the exception of PG county cause its a minority county that has had a big housing hit).

In my opinion if you are buying a home (especially those in this price range and higher).
1. Don't rely on 2 incomes exclusively. One could always get laid off/take lower paying job (yes i've known Doctors and Lawyers who have lost their jobs in this recession) or family situations change (kids, one spouse working less)
2. Factor in Maintanance cost and potential for higher utility bills especially in winter times (heating bills run $500 and up a month just to start)
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Old 01-01-2013, 09:09 AM
 
18 posts, read 58,751 times
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Quote:
Originally Posted by thomasdavie View Post
well said Ultrarunner

Then you have to maintain it long after the thrill of buying it wears off.
I totally agree. I have met many people whose eyes were too big for their wallets. We could have bought a million dollar house . But who was going to pay the steep taxes, the steep home insurance. Better to buy a house thats reasonable to maintain , and bank the rest. When the thrill of buying the home wears off, they are stuck with a bunch of bills. Thats a great way to put it.
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Old 01-01-2013, 08:36 PM
 
1,784 posts, read 2,990,389 times
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Yeah but 6.125% is pretty high at the moment. I guess since you're thinking way down the road you're accounting for higher rates then?

If you dropped it from 6.125% to 3.625%, the payment goes from $8200 a month to $6100 a month. That's over 2 grand!
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Old 01-01-2013, 10:46 PM
 
3,285 posts, read 5,430,440 times
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I can't tell you how much I appreciate the responses to this post; I honestly didn't believe I'd even get any, so I'll 1+ Rep all of you.

I agree with every post in this thread, I don't want to ever get myself trapped into a mortgage that I can't afford; I've seen it happen too much during the past recession. Realistically speaking, with a career in the field I'm in school for, I'd make anywhere between $70-120k annually. Therefore this property would not be obtainable with that salary, but luckily I'm a business minded person. I've already began a series of investments in stocks, silver, savings bonds, and of course savings in general, I understand that none of these investments will make me any tremendous profits therefore I only make these investments to practice money management. By the time I'm seriously settling down, and planning to purchase home, I want to be in a comfortable position where I can afford the mortgage, taxes, etc while being able to take a few foreign trips annually, purchase goods, and etc without struggling. So at the end of the day, if my salary is at worst $70k annually, then I want to have other sources of revenues from investments.

Worst case scenario, I just won't have this home. I'm not going to make myself buy an $1.7 million home, if I can't afford it. I'd rather just find a nice home in Baltimore, fix it up to suit my needs and live happily ever after.

Right now I rake in about $30-34,000 as a college student, so that $8,000 monthly mortgage made my eyes water. LOL I don't plan on buying a home until I'm in my late 20's or early 30's anyways, so I have time. Never know, I may become a multi-millionaire someday and can afford the home of my dreams. Because I live in the DC area, I've noticed plenty of businesses here that could do well in the part of NC I use to live in, so that's something I want to do.
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Old 01-01-2013, 11:02 PM
 
426 posts, read 1,691,248 times
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Good for you!!! Seems like you got a great head on your shoulders
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Old 01-02-2013, 11:00 AM
 
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I know some people in CA who bought their houses (over million $) on the terms "interest only" mortgage. The only thing is they are planning to sell it, not live there forever.
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