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I think the rule of thumb is to not spend more than 1/3 of your gross income on housing related costs, right? So to make the math easier, let's say you were making $180k, a third of that would be $60k, divided by 12 months equals $5k a month. Assuming a house like that would have around $1000 a month for taxes and insurance, that leaves you $4000 a month for mortgage, which means a $600k house would be more than reasonable.
We do our taxes ourselves, and don't have any tax attorney (yet).
Looks like I'll have to consult a financial adviser or someone with that expertise.
It' not that complicated.
1st point :
as previously mentioned,will your wife continue to work
or work less hours or quit ?
2nd point :
how is the job market in your field ?
if you got laid off could you likely get a job
in the same field for the same salary ?
If not what salary could you realistically get ?
What I would do is calculate the worst case ,
your new salary at another job and no income from your wife or
her income minus day care expenses.
Take this new income ,subtract all income taxes and multiply by 40%
to come up with how much you can spend on mortgage taxes and insurance.
The bank will do something similar to qualify you only they will probably use your last 2 years income and average them
This is conservative and also does not consider the mortgage interest tax break.
Just my opinion buy at your own risk
I disagree. if he and his wife are making $190,000 a year and buying a house, they should go conservative and buy a place for like $350-400.
No reason to go overboard for these folks. They clearly are wealthy and have good things ahead of them. I would be conservative. $350,000 will buy you a nice home in a nice town. A place you could live in for the next 50 years without any problems. And if things continue to go well for you guys, you can obviously sell and move up to a better house.
Not having a mortgage payment every month, and having financial flexibility can not be over valued.
I disagree. if he and his wife are making $190,000 a year and buying a house, they should go conservative and buy a place for like $350-400.
No reason to go overboard for these folks. They clearly are wealthy and have good things ahead of them. I would be conservative. $350,000 will buy you a nice home in a nice town. A place you could live in for the next 50 years without any problems. And if things continue to go well for you guys, you can obviously sell and move up to a better house.
Not having a mortgage payment every month, and having financial flexibility can not be over valued.
I agree. Just because you CAN afford a 600K house does not mean you NEED a 600K house.
Put it this way - invest the savings in a smaller house into Jr's college fund, and your own retirement. 450K can buy a beautiful first house in central Jersey if you look.
I agree. Just because you CAN afford a 600K house does not mean you NEED a 600K house.
Put it this way - invest the savings in a smaller house into Jr's college fund, and your own retirement. 450K can buy a beautiful first house in central Jersey if you look.
No, really, it can't. If you think it can then your taste in what is deemed beautiful is very different than 99% of the people I know.
If you can afford it, do it. Don't be scared off by people who can't. If you can't, you already know that you can't. What makes some person who makes $20,000 a year SURE that he or she can make that trailer or house on wheels payment? Nothing.
What part of being able to "afford it" doesn't take the future (for JR) take into consideration?
No one NEEDS to go to college. No one NEEDS a car. No one NEEDS to own a computer, no one NEEDS a lot of things. Who is anyone to deem a necessity for anyone else?
I disagree. if he and his wife are making $190,000 a year and buying a house, they should go conservative and buy a place for like $350-400.
No reason to go overboard for these folks. They clearly are wealthy and have good things ahead of them. I would be conservative. $350,000 will buy you a nice home in a nice town. A place you could live in for the next 50 years without any problems. And if things continue to go well for you guys, you can obviously sell and move up to a better house.
Not having a mortgage payment every month, and having financial flexibility can not be over valued.
How many homes have you owned and how many Jr's do you have?
I think the rule of thumb is to not spend more than 1/3 of your gross income on housing related costs, right? So to make the math easier, let's say you were making $180k, a third of that would be $60k, divided by 12 months equals $5k a month. Assuming a house like that would have around $1000 a month for taxes and insurance, that leaves you $4000 a month for mortgage, which means a $600k house would be more than reasonable.
I think it's 1/4th gross income, and even that is a pretty liberal standard. The housing opportunity index (HOI) uses 28%.
At that percentage of gross, if you save for retirement and in that tax bracket, it will be close to half your take home.
I agree. Just because you CAN afford a 600K house does not mean you NEED a 600K house.
Indeed. That is something a lot of people overlook. As of now, we don't have any kids, or any other family members with us; and obviously, we don't have a Jr.'s college fund either
$350,000 will buy you a nice home in a nice town. A place you could live in for the next 50 years without any problems. And if things continue to go well for you guys, you can obviously sell and move up to a better house.
From what I've searched, I haven't been able to find a good house in that range. Any pointers ?
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