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Old 11-14-2011, 03:59 PM
 
Location: West Orange, NJ
12,542 posts, read 17,755,471 times
Reputation: 3681

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Quote:
Originally Posted by tdstyles View Post
I'm pissed that people even have to ask this question! We need more regulation and laws governing this. People are stupid and banks are businesses set up to make money, put that together and you have a recipe for disaster...a la 2008 financial meltdown.

The fallout from the ignorance of the consumer and bravado of the banks effects everyone. There needs to be a simple set of rules, and it needs to be conservative! They lost their right to play things loose when the system almost failed and they almost crashed the global economy. This is going to be a hard pill for both the consumer and the banks to swallow but its a dose of medicine that needs to be administered ASAP

PS I really like that house in the pic
i think that was a bit harsh. the OP can be very bright, but not have a handle on household budgeting. not everyone is financially savvy, just like not everyone gets what The Great Gatsby is about. but you're point is correct. people who are not savvy with budgeting + banks that are making profits - due diligence by banks = financial meltdown...because of the societal impacts of such actions, there certainly needs to be something laid out. Individuals are going to continue to make these mistakes and often take more risk than they can. Banks, if left to their own accord, don't care, because they take small profits over originating those loans and then sell the risk to someone else.
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Old 11-14-2011, 04:48 PM
 
Location: Glen Rock, NJ
667 posts, read 1,439,783 times
Reputation: 377
While paying $500k + for a home is no bargain, in certain neighborhoods it's not such an abnormal price point as so many mention. But the issue with the OPs price point is the already high taxes will likely go up before they go down (if ever). $140k for a $580k house is definitely stretching it thin. The poster that mentioned $180k minimum salary is pretty dead on IMO.
Hey, at least they're not trying to stretch for the 1BR co-op in NYC at $900K with no amenities, no schools, in an ok block and 'maintenance' charges starting at $1,500/month!
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Old 11-14-2011, 04:58 PM
 
2,508 posts, read 5,273,164 times
Reputation: 1550
Quote:
Originally Posted by bradykp View Post
i think that was a bit harsh. the OP can be very bright, but not have a handle on household budgeting. not everyone is financially savvy, just like not everyone gets what The Great Gatsby is about. but you're point is correct. people who are not savvy with budgeting + banks that are making profits - due diligence by banks = financial meltdown...because of the societal impacts of such actions, there certainly needs to be something laid out. Individuals are going to continue to make these mistakes and often take more risk than they can. Banks, if left to their own accord, don't care, because they take small profits over originating those loans and then sell the risk to someone else.
Dude, have you looked at the fallout the last mess caused? I was putting it lightly. There are people out there protesting the banks, we need an equal number of people protesting the ignorance of the consumer. There is no room anymore for excuses. That is not harsh, that is reality.
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Old 11-15-2011, 08:10 PM
 
9,339 posts, read 13,879,872 times
Reputation: 9401
I'm going to go against the received wisdom and argue this isn't particularly extravagant. Assuming 4% mortgage and 20% down payment, it's about 30% of gross. That's a little high, but not the sort of insanity which caused the mortgage mess. Whether the OP should (financially) do it depends a lot on other expected expenses.

If the 20% down payment (plus money to cover closing) isn't there, forget about it.
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Old 11-16-2011, 08:42 AM
 
3,996 posts, read 8,740,644 times
Reputation: 3177
Quote:
Originally Posted by nybbler View Post
I'm going to go against the received wisdom and argue this isn't particularly extravagant. Assuming 4% mortgage and 20% down payment, it's about 30% of gross. That's a little high, but not the sort of insanity which caused the mortgage mess. Whether the OP should (financially) do it depends a lot on other expected expenses.

If the 20% down payment (plus money to cover closing) isn't there, forget about it.
I don't think people are saying they would necessarily default, but that it is going to negatively affect this couples quality of life (due to them constantly being stretched thin).

It does not make sense to spend this much on a house, especially when they are just a couple with an infant.
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Old 11-16-2011, 09:57 AM
 
Location: Glen Rock, NJ
667 posts, read 1,439,783 times
Reputation: 377
Quote:
Originally Posted by nybbler View Post
I'm going to go against the received wisdom and argue this isn't particularly extravagant. Assuming 4% mortgage and 20% down payment, it's about 30% of gross. That's a little high, but not the sort of insanity which caused the mortgage mess. Whether the OP should (financially) do it depends a lot on other expected expenses.

If the 20% down payment (plus money to cover closing) isn't there, forget about it.
agree. One would have to take into account what they are paying now in rent? How much do they already have in savings? Is the $140k the max earnings that he will make or is he still likely to increase his salary as he moves up the chain? They have no debt, which to me is a big part of the equation.
It's really about what the other expenditures (overhead + 'the wants') look like. I know folks that are spending $300/month on cable tv alone! Then add fancy cars, 2-3 vacations a year and a $300k salary isn't even enough to cover it. Hopefully they are not buying a $580k fixer-upper?
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Old 11-16-2011, 10:10 AM
 
261 posts, read 444,493 times
Reputation: 109
OP, I urge you to look in other towns. Our household income is more than you listed, but our budget is same as yours and we are still scratching our heads. Remember real costs are always atleast 10% more than they seem on paper. I went back to work, now we pay a fortune for day care, no time to cook so we eat out more, hired help, etc while other living expenses, taxes etc only go UP. It is a subjective thing. Me and my husband are very conservative, we've had our share of financial surprises/shocks growing up so we try to not be in that position ever again.
Living paycheck to paycheck should not be an option at all. Perhaps renting for some time in your desired town is not such a bad option then?
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Old 11-16-2011, 01:11 PM
 
Location: West Orange, NJ
12,542 posts, read 17,755,471 times
Reputation: 3681
Quote:
Originally Posted by tdstyles View Post
Dude, have you looked at the fallout the last mess caused? I was putting it lightly. There are people out there protesting the banks, we need an equal number of people protesting the ignorance of the consumer. There is no room anymore for excuses. That is not harsh, that is reality.
i'm sorry, but if the bank is doing their due diligence, then i can't borrow more than i can afford to pay. your wording was right - people ARE stupid. you were also right saying banks are set up to make money. the issue in the fallout was the banks would issue a loan quickly, not care about the customers' ability to pay because they were just turning around and selling the loan...so, keep counting on the fact that borrowers will often be financially stupid, and banks should be doing due diligence to ensure that people can pay.

i have stellar credit, minor debt (student loans, 1 car payment), and when i got my preapproval, i was approved for almost 2x what I ended up spending. if i went based on what I was preapproved for...i'd be struggling. not everyone realizes that and many think that bankers who calculate preapprovals actually understand finance.
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Old 11-16-2011, 01:13 PM
 
Location: West Orange, NJ
12,542 posts, read 17,755,471 times
Reputation: 3681
Quote:
Originally Posted by nybbler View Post
I'm going to go against the received wisdom and argue this isn't particularly extravagant. Assuming 4% mortgage and 20% down payment, it's about 30% of gross. That's a little high, but not the sort of insanity which caused the mortgage mess. Whether the OP should (financially) do it depends a lot on other expected expenses.

If the 20% down payment (plus money to cover closing) isn't there, forget about it.
well said. they'd be pushing up against the walls of their household budget. but with the prospects of the 2nd adult getting a job, maybe it's not a bad move. i just don't like deciding based on ifs.
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Old 11-16-2011, 01:36 PM
 
2,508 posts, read 5,273,164 times
Reputation: 1550
Quote:
Originally Posted by bradykp View Post
i'm sorry, but if the bank is doing their due diligence, then i can't borrow more than i can afford to pay. your wording was right - people ARE stupid. you were also right saying banks are set up to make money. the issue in the fallout was the banks would issue a loan quickly, not care about the customers' ability to pay because they were just turning around and selling the loan...so, keep counting on the fact that borrowers will often be financially stupid, and banks should be doing due diligence to ensure that people can pay.

i have stellar credit, minor debt (student loans, 1 car payment), and when i got my preapproval, i was approved for almost 2x what I ended up spending. if i went based on what I was preapproved for...i'd be struggling. not everyone realizes that and many think that bankers who calculate preapprovals actually understand finance.
I wish that were the case but as you pointed out, banks are not doing due diligence, even now, which is mind blowing. People are preapproved for way too much. There needs to be stricter lending guidelines not just in regards to credit worthiness, but also in maximum allowable borrowing. The current ratios are still far too liberal.

Last edited by Goldendoodle1969; 11-16-2011 at 02:00 PM..
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