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.
1. On interest rates. Someone with a 9.25% mortgage should have a much lower ratio of income to house price than someone with a 3.25% mortgage. It's just math.
2. On what stage of life you are at. A couple in their late 40s/early 50s making their peak income and about to start paying college tuition for their kids and planning to pay off the house before they retire in 15 years should have a much lower ratio of income to house than a couple in their late 20s/early 30s with a solid career(s) and growing income.
3. On how stable you are. Someone who's income or job is less stable (e.g. commissioned sales, temporary contract worker) or who has to pay a lot out of pocket for insurance, retirement etc. should have a lower ratio of income to house than someone in a very stable field (e.g. tenured professor, some government workers) who has solid benefits and a pension.
4. On where you live. Someone in say the suburbs of Houston, Texas, where properties are relatively affordable and property taxes are high, should have a lower ratio of income to house compared to someone in say the Virginia suburbs of Washington D.C. where properties are fairly expensive but property taxes are less than 1%.
I don't know of anyone that put down 25% during the bubble and walked away from their mortgage...
Do know a lot of homes where the owner with little down or HELOC loans owed far more than the home was worth and plenty did walk because it "Wasn't worth it"
A very successful lawyer bought another home in his exclusive enclave and then walked on the one he was living in... had no qualms about it.
My point is with a significant down... it is hard to find yourself upside down.
Of course, some of those that bailed are now looking at the same homes and seeing not only has the market recovered... it has also appreciated.
I understand what you are saying, but you're talking personal preference and long-term commitment phobia on a house that has dropped in value vs what I was talking about which is return on my investment.
Over the past 3 years, that extra 10% I could have put into the house but instead left in the market (when we put 10% down instead of 20%) has earned 50% instead of saving me 4.5% in interest that I can write off.
Paying off a house is great (I am now paying some extra into the house since I feel the market is closer to a "peak"), but when we bought the house, equities were a buyers' market and home interest rates were low, so I didn't see a point to pile all of our savings into a down-payment on a 4.5% loan.
I understand what you are saying, but you're talking personal preference and long-term commitment phobia on a house that has dropped in value vs what I was talking about which is return on my investment.
Over the past 3 years, that extra 10% I could have put into the house but instead left in the market (when we put 10% down instead of 20%) has earned 50% instead of saving me 4.5% in interest that I can write off.
Paying off a house is great (I am now paying some extra into the house since I feel the market is closer to a "peak"), but when we bought the house, equities were a buyers' market and home interest rates were low, so I didn't see a point to pile all of our savings into a down-payment on a 4.5% loan.
The only time I have ever realized a loss has been in the market... never sold a home for less than I paid or a car for that matter... 99% of my vehicles are used...
The Stock Market has too much smoke and mirrors for my taste... I know folks to great and some beyond anything I could imagine... it's just not in my comfort zone and I have brokerage accounts that I opened going back to when I was 21.
My last refi came in at 2.75 fixed with no points through the credit union and I also paid down about a third of the remaining balance... so my savings from paying down are even less than yours.
My employer 401k offers 6 funds to choose from and we seem to change fund companies every 2 to 3 years... when the match stopped back in 2006... so did my contributions.
Strange thing is the 401k people would always be highly visable in an up market... as soon as the market turns the other direction... they all get shuffled around... seen it happen several times now.
Keep your use of resources responsible (house value in the 10-30% of net worth range).
i wouldnt imagine too many young people would have that ratio.
i know home values in nj are higher than other places so maybe its more possible in other places. a 500k house would require a 1.6 million net worth. maybe that starts happening as people get older, but not so much with young folk.
i wouldnt imagine too many young people would have that ratio.
read more carefully.
Quote:
a 500k house would require a 1.6 million net worth.
setting aside the rest of their finances, let alone what a young couple is doing with a $500K house...
how much equity would be required to keep that in the 10-30% range of their net worth?
setting aside the rest of their finances, let alone what a young couple is doing with a $500K house...
how much equity would be required to keep that obligation in the 10-30% range of their net worth?
you said house value, not equity. so how do you want to use that equity number with relation to your 10-30% figure? my 100k of equity should be lower than 30% of net worth? that would make it easier but im not sure i get the logic.
do you not understand what constitutes "net worth"?
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.
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.
