Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics > Personal Finance
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 09-15-2013, 08:41 AM
 
4,191 posts, read 6,874,702 times
Reputation: 7165

Advertisements

Our house is about 1.2X our combined gross income.
Reply With Quote Quick reply to this message

 
Old 09-15-2013, 11:06 AM
 
Location: Inland Empire, Calif
2,884 posts, read 5,631,919 times
Reputation: 2803
Last home we purchased was 5X's annual income, and we paid cash for it. I have purchased several home over the years, every one far exceeded my income. Rented out rooms to make payments, and when the home appreciated, I sold it and moved up. Not something one can do if married with children, but for me it was how I invested and made far more than my working career.. Waited until I was 40 to marry and by that time was living in a large paid for home. My system worked for me, certainly not for everyone.
Reply With Quote Quick reply to this message
 
Old 09-15-2013, 04:26 PM
 
350 posts, read 708,596 times
Reputation: 502
Quote:
Originally Posted by deckdoc View Post
Yes~ bought my Az home at about what I gross per year. That was almost 4 years ago. Paid extra whenever I could. Last payment should be about December.
Bummer. Imagine how much wealthier you'd be today if you took out the loan at 3% or so and put the rest in an index fund.

S&P500 March 2009: 683
S&P500 July 2013: 1691
Reply With Quote Quick reply to this message
 
Old 09-15-2013, 04:32 PM
 
350 posts, read 708,596 times
Reputation: 502
Quote:
Originally Posted by southkakkatlantan View Post
Compared to your gross income, what do you consider a realistic maximum house purchase amount?

No more than 3 times your gross income? No more than 2 times your income?

Know anybody who bought a house close to their annual income...?
It depends on a lot of things including down payment and interest rates and your expected number of earning years and your net worth.

If you're young and have at least a 20% down payment and if interest rates are low then it is probably a good idea to buy as much as you can afford, that is push it a little. Your income will rise in time but your loan will stay the same.

Putting additional money down with low interest rates almost always results in a lower future net worth.
Reply With Quote Quick reply to this message
 
Old 09-15-2013, 04:51 PM
 
Location: Prescott Valley,az summer/east valley Az winter
2,061 posts, read 4,127,701 times
Reputation: 8190
Quote:
Originally Posted by southkakkatlantan View Post
I admire you. I would love to do this.

Did you have a lot of temptation to buy more of a house?
no~ had been looking for a retirement house in Az. for years. Met every requirement we had set
1. in a guarded retirement community.
2. An HOA that was not overly restrictive.
3. Plenty of activities to keep us busy.
5. Dedicated quilt room.
6. Dishwasher and central air.
7. UNOBSTRUCTED VIEW OF MOUNTAINS FROM INSIDE HOUSE.
8. Not so large as to be hard for us retirees to keep up.

Hard to find all those wants, but we managed.

As far as putting the money into the stock market as opposed to our house, we already get a lot of our retirement income from there, markets go down as well as up, and we'll be happy to stop the payments.
Reply With Quote Quick reply to this message
 
Old 09-15-2013, 05:01 PM
 
Location: Prescott Valley,az summer/east valley Az winter
2,061 posts, read 4,127,701 times
Reputation: 8190
Quote:
Originally Posted by brainwashed_in_church View Post

If you're young and have at least a 20% down payment and if interest rates are low then it is probably a good idea to buy as much as you can afford, that is push it a little. Your income will rise in time but your loan will stay the same.
This is exactly the type of thinking that caused the realty crash. your monthly payments can change due to changes in property taxes and your income does not necessarily rise. My payments went from $851 to $928 in 3 years, that's pretty hard if you are pushing the envelope to get the most house for the money, and something interferes with your income or other expenses. Even having a child would be a tremendous challenge.

Last edited by golfgal; 09-15-2013 at 06:42 PM..
Reply With Quote Quick reply to this message
 
Old 09-15-2013, 07:17 PM
 
Location: Richmond VA
6,874 posts, read 7,852,754 times
Reputation: 18199
Quote:
Originally Posted by brainwashed_in_church View Post
If you're young and have at least a 20% down payment and if interest rates are low then it is probably a good idea to buy as much as you can afford, that is push it a little. Your income will rise in time but your loan will stay the same.
Ahhh, but you are also leaving out one of the elements you cant control and that is the market. The value of your house could drop below what it was when you paid for it. Then where will that leave you?

Don't buy the house you think you can afford. Buy the smallest/least expensive house you can stand to live in.
Reply With Quote Quick reply to this message
 
Old 09-15-2013, 07:27 PM
 
350 posts, read 708,596 times
Reputation: 502
Quote:
Originally Posted by deckdoc View Post
This is exactly the type of thinking that caused the realty crash. your monthly payments can change due to changes in property taxes and your income does not necessarily rise. My payments went from $851 to $928 in 3 years, that's pretty hard if you are pushing the envelope to get the most house for the money, and something interferes with your income or other expenses. Even having a child would be a tremendous challenge.

Actually, that kind of thinking had nothing to do with the real estate crash.

As far as property tax changes are concerned, I live in California at state in which property taxes are very predictable due to prop 13. I am not familiar with other states' property taxes changes but how much are we talking about? If it is more than a 10% if the total tax bill, OK, then perhaps a person should factor that in worst case. Other than that, a person's monthly payment is pretty constant. Changes are in the noise.

Of course if you are planning on having kids a person should factor that in too. As well as other expenses such as cars, insurance, college savings, emergency fund, retirement, etc.
Reply With Quote Quick reply to this message
 
Old 09-15-2013, 07:28 PM
 
350 posts, read 708,596 times
Reputation: 502
Quote:
Originally Posted by Stagemomma View Post
Ahhh, but you are also leaving out one of the elements you cant control and that is the market. The value of your house could drop below what it was when you paid for it. Then where will that leave you?
In exactly the same place as if the house didn't drop. It is irrelevant as long as your income and payments and costs are the same or if you have to sell.

But over the long term (more than 15 years), housing almost always increases in value.
Reply With Quote Quick reply to this message
 
Old 09-15-2013, 07:43 PM
 
Location: The Triad
34,090 posts, read 82,726,620 times
Reputation: 43659
Quote:
Originally Posted by southkakkatlantan View Post
Compared to your gross income, what do you consider a realistic maximum house purchase amount?
Anything you like.
What matters is the MORTGAGE amount (vs your income) and the house value vs your total net worth.

Keep your debt level/payment affordable (that's where the 2-3X comes into play).
Keep your use of resources responsible (house value in the 10-30% of net worth range).
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics > Personal Finance

All times are GMT -6. The time now is 09:05 AM.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top