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All of these "calculators" i found online all worked out to about no more than 3x your yearly combined gross income (for me anyway). Ive seen some that push it more towards 4 but in my opinion, thats pushing it.
(I'm no spring chicken), but I was taught my entire life to never buy a house that costs more than 2.5 times your annual household income. (And put 20% or more down). Has worked for me.
Taxes are progressive. It's not going to reach 50% off the entire income anytime soon.
Why can't it reach 50%? The Ponzi scheme shall go on forever? Should people risk their house on this assumption? Just like they did earlier on statements like 'house prices shall not go down'? Then, blame the banks / rich for lending all that money to us ('its not my fault I borrowed too much - they said we could afford a house worth 4 times our income'), join the OWS movement while sipping chai lattes and talking to Siri?
Like I said, we need an attitude adjustment.
Sorry, for being cranky - its been a hard day!
IMO, unless Cheney / Halliburton come back in power and take over some Middle Eastern oil, how shall the US start paying its debts? Either inflate the hell out of the $ or increase taxes.
As an example, my all-in tax rate is currently a few points north of 40%. If I was living in Manhattan, it would be 50%. My property taxes are growing at 4% an year and shall continue to do so given NJ's finances. I expect my income to decline by approx 25% in the next few years due to the economy. If I'm buying a house, using a 50% tax rate is, IMO, the best catch-all adjustment I should make for the combined probability of higher taxes / lower incomes / higher inflation.
I'm not complaining - I've no reason to. I'm being realistic.
there are too many factors to dictate how much to affor and most depend on your monthly bills, kids etc. I have a 290k loan making 200k and I can't save a dime. I have three kids, go on several vacations a year, three cars etc. This takes money so can I go out and have a 600k mortgage HELL NO!
If you want to live for your house than so be it. I want to enjoy life and spend as I see fit.
there are too many factors to dictate how much to affor and most depend on your monthly bills, kids etc. I have a 290k loan making 200k and I can't save a dime. I have three kids, go on several vacations a year, three cars etc. This takes money so can I go out and have a 600k mortgage HELL NO!
If you want to live for your house than so be it. I want to enjoy life and spend as I see fit.
correction - we save IRA, 401K, kids have decent savings but we, wife and I, have little liquid capital with our name on it. Sorry, I was being a little over dramatic. lol
Why can't it reach 50%? The Ponzi scheme shall go on forever? Should people risk their house on this assumption?
You've got to take some risk. If you start extrapolating out to worst-case scenarios, it doesn't matter if you buy a house you're going to lose or if you save cash which is going to be worthless; you're in trouble either way (and you might as well buy the house; you can live in it until stuff hits the fan, and maybe a little after). Even precious metals don't necessarily work; the government has confiscated them before and can do so again.
Professionally, my sole job over the last 15 years has precisely been putting on and managing market risk. I don't shy from it.
However, this thread isn't about taking risk - it is about being realistic on expenses and on how much house one can actually afford.
Quote:
Originally Posted by nybbler
If you start extrapolating out to worst-case scenarios
This (a future scenario equivalent to a 50% tax in today's environment) is, IMO an expected scenario and not a worst-case one. People sometimes have difficulty in believing this because they assume that the current scenario they see around them is the best expectation of the future, which isn't the case here.
Quote:
Originally Posted by nybbler
it doesn't matter if you buy a house you're going to lose or if you save cash which is going to be worthless; you're in trouble either way (and you might as well buy the house; you can live in it until stuff hits the fan, and maybe a little after)
Hmm. Are those your only two options - cash under the mattress or buy a bigger house? There are a gamut of assets / exposures you can invest / diversify in. Additionally, my advice is: you want to bet on real estate - sure, do it but not using your home as collateral such that if you lose, your family has to move out.
However, this thread isn't about taking risk - it is about being realistic on expenses and on how much house one can actually afford.
Buying a house IS taking a risk.
Quote:
This (a future scenario equivalent to a 50% tax in today's environment) is, IMO an expected scenario and not a worst-case one. People sometimes have difficulty in believing this because they assume that the current scenario they see around them is the best expectation of the future, which isn't the case here.
Even accepting that a 50% effective tax rate is to be expected, how is that 50% tax rate achieved? If it's by removing the mortgage-interest deduction, obviously that argues against buying a larger home. But if it's done by raising marginal rates while leaving the property tax and mortgage-interest deductions in place, that's a different story.
Quote:
Hmm. Are those your only two options - cash under the mattress or buy a bigger house? There are a gamut of assets / exposures you can invest / diversify in. Additionally, my advice is: you want to bet on real estate - sure, do it but not using your home as collateral such that if you lose, your family has to move out.
It doesn't matter what asset you pick, there's a scenario which will leave it worthless.
My point is that in this country, many need to change their perception / expectation of how much home they can afford (even if it is an average-sized one).
that house looks pretty sucky for $1 million.
"Zestimates" (ok, I know) has this as almost a $1.2M house now
This thread has so many bad generalizations and assumptions it makes ones head spin.
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