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Old 02-16-2010, 01:44 PM
 
Location: Mount Laurel
1,811 posts, read 2,208,402 times
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It all depends on your age, how much in retirement you have, how much liquid fund you have. Estimating about $1200/month between the basic utilities and RE tax, I don't think you should consider more than $1200/month on mortgage. What that get you depends on how much you can put down.

I am being conservative on the $1200 mortgage because the fact that you are not a DIY'er.. If you don't do things yourselft, plan to spend a few thousand a year to be safe (this could mean putting a few extra hundred away each month).
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Old 02-16-2010, 01:47 PM
 
Location: Forest Hills
555 posts, read 947,971 times
Reputation: 336
Simple rule of thumb is 3 - 3.5x your annual salary is generally the high end of what you should be looking for in terms of a mortgage. You may not be comfortable spending that much, but you can probably get approved.
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Old 02-16-2010, 01:50 PM
 
1,308 posts, read 2,140,801 times
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Quote:
Originally Posted by TarheelsInNJ View Post
Our income is just under $100k, and our mortgage broker suggested a maximum of $300k, assuming taxes of about $7,500.

We do have significant law school loans to repay, but have great credit and otherwise no debt obligations.

It sounds like child care costs may not be an issue for you, unless pre-school is very expensive, so that's helpful. In our case, we have a baby and both work full-time, so that additional $1500 or so is a factor for us. Because of that and the student loan payments, we're really more comfortable in the $250- 275k range.
$250k house with $7200 taxes = $2000/m payment.
Bills on a house like that easily $500 (Gas/Electric/Water/Sewer/etc...)

$100k income breaks down to roughly $5800/m income.

Now factor in cars, car insurance, life insurance, car mait, cell phones, TV, food, entertainment, child care, student loans, credit card debt, home mait, home improvements, vacations, etc....

Oh yeah. Factor in 401k deductions or any type of savings... Which should be AT LEAST 10% making monthly income closer to $5200/m.

Seems like it would be tight but doable.
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Old 02-16-2010, 02:03 PM
 
101 posts, read 225,620 times
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It looks kind of sad- i remember when I was younger(I am 32)- if someone told you they were making 100k, you would think they could probably pick the house they wanted... looking at the numbers here- and the houses I see listed for 250k-
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Old 02-16-2010, 02:17 PM
 
1,308 posts, read 2,140,801 times
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Quote:
Originally Posted by IanErikson View Post
It looks kind of sad- i remember when I was younger(I am 32)- if someone told you they were making 100k, you would think they could probably pick the house they wanted... looking at the numbers here- and the houses I see listed for 250k-
Yep. I wonder how people can afford to live in most bigger cities. Even Philly which is fairly cheap compared to NYC or San Fran a decent 2bd in a good location will run you every bit of 500k. Who can afford these places?
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Old 02-16-2010, 02:44 PM
 
Location: New Jersey
1,290 posts, read 1,698,145 times
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i may be more conservative than most people here but we just closed a few weeks ago and our mortgage is less than 2x our gross income. my wife and i max out our 401k's and make sure our total expenses including mortgage can be take care of from just one of our salary.

as to your situation, if i was making 100k annually i would spend at the most 300k on a house assuming 20% down and zero debt. don't be fooled by how much a bank could lend you. they will be more than willing to lend you as much as 3.5x your gross but they will also be the first in line to collect their mortgage irrespective of your financial situation.
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Old 02-16-2010, 02:59 PM
 
15 posts, read 59,098 times
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Wow, thanks for all the responses -- truly helpful! Here's a bit more about our situation.

- I'm 30, and my income is steady.
- My wife is a SAHM -- financially it just didn't make sense for her to work to pay for childcare -- her previous profession is naturally low-paying so whatever extra we would have, didn't seem worth it to cover the stress.
- We have zero debt and currently pay about $1500/mo in rent for a two-bedroom condo. That means we're quickly outgrowing our space and infuriating the neighbors who live above and below us.
- We have about $140k in liquid savings now. To help lower the monthly payment, we were thinking of putting as close to $100k down -- however that doesn't leave us much cushion, since we'd probably have to spend another $10k in closing plus the usual amount to fix up things since I'm mechanically handicapped. (Seriously -- basic handyman and car maintenance skills should have been a requirement to graduate high school). Any thoughts here on how much I should put down vs. keep liquid for a cushion? Usually they say you should have about six months to a year of cushion available.
- Both our cars are paid off, but are 10 years old and sedans... so we're likely going to have to upgrade to a used minivan in the next 2-3 years.

So in some sense, I think we're in better shape than most people in our situation since we're lucky enough not to have any debt. Part of the challenge for me is figuring out how best my income should be allocated to important things like retirement savings, life insurance, kids' college, etc. Any thoughts here would be much appreciated as well.

Again, there's lots of stuff the site and books tell you, but I thought it'd be great to reach out to the community here and see what REAL people have experienced and actually do.

Thanks again to all the people who responded -- I truly appreciate your input!

-jersey$p!ke
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Old 02-16-2010, 03:36 PM
 
2,578 posts, read 1,269,533 times
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Honestly, as a home owner to be and in the same situation as you (make about the same income, 2 kids), I would recommend to get a bigger house. I have only look at houses in good school town ranging from 400k to 550k. I ended up getting a house slightly higher than my target range but it is a two family. So rent will take care of the tax and insurance.

Looking for a house is a journey, I have look at more than 6 to 8 towns, over 300 properties. Made 3 offers, first one die after inspection. Second one was submitting late and the owners accepted the offer from the buyer who submitted few days earlier. I am glad I was late, or else I wouldn't find the house I am buying now. Much bigger house and better condition. Best of it, tax is lower.

Ask yourself this question when you look at the property: Is this the best I can offer to my children? If no, then move on to the next property.
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Old 02-16-2010, 04:30 PM
 
1,837 posts, read 1,731,369 times
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Quote:
Originally Posted by mdpesq View Post
"not thrilled with the options"

Welcome to my world! My wife and I make $120K gross but after $85K in law school debt, savings, etc. I'm in your same boat. I hate the idea of renting in my middle 30's but I'm not going to spend $375K for a 3BR, 1BA ranch or cape with window AC and pay $5-7K in property taxes per year!

What exactly do you plan on doing then? Renting forever? Not that this is not possible but do you really expect things to come back that much more? Even if Real Estate another 10 to 15% everything wont be that much cheaper. Not to mention "nice" places in jersey will always be overpriced.
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Old 02-16-2010, 04:33 PM
 
1,837 posts, read 1,731,369 times
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Quote:
Originally Posted by davenj08 View Post
i may be more conservative than most people here but we just closed a few weeks ago and our mortgage is less than 2x our gross income. my wife and i max out our 401k's and make sure our total expenses including mortgage can be take care of from just one of our salary.

as to your situation, if i was making 100k annually i would spend at the most 300k on a house assuming 20% down and zero debt. don't be fooled by how much a bank could lend you. they will be more than willing to lend you as much as 3.5x your gross but they will also be the first in line to collect their mortgage irrespective of your financial situation.

Are you saying mortgaging 300k? If so where is this guy going to find a nice house in NJ with at least 3 Bedrooms for a growing family? Thanks.
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