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Old 08-31-2008, 03:06 PM
 
Location: Tarpon Springs
79 posts, read 285,175 times
Reputation: 35

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I would side with the wife as well. What if the ac has to be replaced? What if you need a new roof? What if something happens to where you won't have that 1400 disposable income? 1400 is not enough to budget with after all is said and done. Some months you bills may be higher. The real question is....why are car payments 900 a month. Thats crazy! I would either go for a smaller house or certainly look for another way to create more disposable income for those "what if" situations. As a homeowner that is not enough to cover a whole lot more.
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Old 08-31-2008, 04:57 PM
 
207 posts, read 301,758 times
Reputation: 53
If the bank says you can afford it go for it. They will look at your total debt/gross income ratio, and if you have excellent credit, above 700 you might be able to stretch that ratio up 45%. Due to the mortgage meltdowns banks are more stringent. I would also calculate how much in federal taxes/state taxes (not sure if your state has state taxes) you will save by itemizing, that could certainly help in additional monthly revenue. I would use last years tax return and estimate how much your total mortgage interest, RE taxes etc would be. In addtion I would rough it the first couple of years and build some nice reserves (12x1400 = 16,800 year one, 33,600 year two) Good luck.
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Old 08-31-2008, 06:29 PM
 
Location: Tampa
2,119 posts, read 3,161,227 times
Reputation: 2931
You appear to be safe, but that almost one grand a month in car payments makes me queasy. The most important factor I would consider is if your monthly load can be handled on one income plus unemployment should one of you lose your job. I seriously don't mean to be a downer, but you should try to be safe.
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Old 08-31-2008, 07:57 PM
 
152 posts, read 405,683 times
Reputation: 61
Agree with the wife as well. IMO, it is best to qualify based on one person's income rather than both...ensure's you can afford it in the long run.
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Old 09-01-2008, 07:58 AM
 
Location: Tampa,FL
54 posts, read 238,572 times
Reputation: 18
IMO it is up to you and your wife if you really want to purchase the house. You know the numbers will work and whether or not you two can survive on the extra money each month. FHA will give you 97% and you can still apply for the 3% DPA for the next month, then you will not have that option. Good luck!!
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Old 09-01-2008, 09:46 AM
 
Location: New Mexico
45 posts, read 100,735 times
Reputation: 77
No disrespect intended, but when I first read this post last night, I honestly thought it was a joke and that you weren't serious.

But, when I saw that you had 910 posts and a very high reputation as a City-Data poster, I realized that I was wrong.

We just live in different worlds.

Since you asked for opinions, I will tell you that my family owns a small house and lives happily on less than $1,400 a month total income.

In fact, our monthly income is about what you pay in car payments and credit cards bills each month.

Yet, we own a small house in a nice neighborhood, and a nice car and have some savings. We have a mortgage, although it is is not a big mortgage. We are very happy and rarely worry about money. And, we still are able to save for emergencies.

It was a little difficult when we first moved here, because we had too much stuff - but, that has been resolved and we enjoy our little house.

In my opinion, having $1,400 a month left over after all your bills would be amazing. I can't imagine why you would have any trouble - ever.

But, if your wife is planning on quitting work to have children in the future - can you just make your plans without adding her income and buying a different house with a lesser payment? That way you can be sure you will always manage fine, and can put all of her salary into the bank for the future.

Last edited by Pit Bull Dawg; 09-01-2008 at 09:56 AM..
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Old 09-20-2008, 11:11 AM
 
4 posts, read 3,162 times
Reputation: 10
I would recommend working on getting rid of the car loans and credit cards first... you are really setting yourself up for trouble if and when anything goes wrong...
also keep in mind that there are a lot of other little things that come up when you own a home that most people overlook. Utility bills, connection fees, garbage collections, home maint, etc that really add up.
The reality is you make more than enough to own a home, you may just need to restructure your budget a bit before you do it.

best wishes

Last edited by Marka; 09-20-2008 at 01:38 PM..
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Old 09-20-2008, 01:50 PM
 
Location: Sarasota FL
6,515 posts, read 8,597,986 times
Reputation: 6021
A mortgage is based on your gross pay not what you take home as net. And they use 28% of the gross as a starting point. The 28% includes Principle-Interest-taxes-insurance. The 28% may be increased if a large down payment is made. With a total debt load to 36% which includes credit card payments, car loans, etc.

Last edited by d4g4m; 09-20-2008 at 02:58 PM.. Reason: info added
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Old 09-20-2008, 01:58 PM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
Reputation: 8078
As pit bull dawg states, the answer is very personal to your individual situation.

I assume you do not own a home now (or you would have mentioned that), so you don't have that baggage to deal with. Owning a home in Florida may never be as affordable as it is now, or I should say at least, your dollar will go further than it has in a long time. For many, this is a once in a lifetime opporturnity....no home to sell, buying a home well below what they have sold for in the past.

Another unknown factor that no one can answer for you, what are your spending habits? I would write down every expense for the next 30 days (both you and your wife), or go back through bank receipts and check cards and evaluate if you would have been stretching yourselves thin.

And finally, you mention you are contributing to retirement, but what about other savings? If you or your wife got sick, went on 50% disability, or any of a 100 different scenarios, how long could you survive without a paycheck?

hehe, I said finally, but ooops......one more. If you are not a homeowner now, you will have write-offs you didn't previously have. You can do one of two things - increase your exemptions for withholding resulting in more take home dollars or keep everything the same and bank the IRS refund. This really isn't difficult if you do your taxes on the computer.....just plug in 95% of the P&I for a hypothetical interest deduction and then your real estate taxes......it won't be exact, but a general idea of the impact of the benefit of homeownership. If you like what you see, make an appointment w/ an accountant to fine tune your numbers.

Oddly enough, my husband and I didn't have a strong savings account until we were able to buy a home. We used it as a forced savings account and able to bank a couple thousand every year (1K -3K). As we became more accustomed to homeownership and our incomes started to climb, that hard to swallow loan payment became easier to handle.

Whatever the decision, it should be joint. Both must be enthusiastic about the same home. Anything less is a hardship on the relationship and definitely will be a financial hardship with would 'uvs and should'uvs.
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Old 09-21-2008, 06:48 AM
 
Location: Midwest transplant
1,984 posts, read 4,784,628 times
Reputation: 1508
6800 / 4 = 1700~that's what your target should be. Leaves room for the "unexpected", allows for larger cash emergency fund, getting out from underneath auto and cc debt, more aggressive savings (pension and SS are not going to be enough to live on, you're going to need to get into some annuities or TSA's as well).
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