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Old 01-07-2019, 01:15 PM
 
Location: Denver, CO
1,661 posts, read 4,042,733 times
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PITI 20%, save the rest. You'll be happier in the long run.
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Old 01-07-2019, 04:00 PM
Status: "On The Lookout" (set 22 days ago)
 
Location: The Triad (NC)
28,388 posts, read 61,750,545 times
Reputation: 31926
Quote:
Originally Posted by MrRational View Post
I'm not asking you to show it but the ONLY numbers that $2200 gets compared to are gross and net income.

Whatever gross is... less 15% into save/invest accounts, less 9.1% SS/FICA, less Federal taxes @18%...
but also less the property tax (in lieu of State Income tax) ... the whole $7000.
@ $150,000 gross that roughly nets out to $82,000 or $1576 net and available for PITI, utilities, etc.

You don't have to pay the RE taxes twice (good for you)... what does the rest come to?
$300 for utilities; $100 for insurance leaving $1176 for P&I (350-150) $200K financed
which is about $1000/mo P&I (see calculator posted before).

If you earn $150K gross (and maybe a lot less) you're still doing just fine.
Math Error: I neglected to deduct Federal Income Tax. Corrections in BLUE
Of course you still need to plug in your own specific numbers.
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Old 01-07-2019, 04:09 PM
 
13,709 posts, read 7,271,001 times
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Quote:
Originally Posted by mizzourah2006 View Post
I'd want my PITI to be no more than 20-25% of my after tax income (higher % if you are maxing out your 401k, lower if you aren't).

I think if you're young and on an upwards career trajectory, you can go as high as 28% of your gross income for mortgage/taxes/insurance. If you've plateaued, I agree with your number.
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Old 01-07-2019, 04:12 PM
 
13,709 posts, read 7,271,001 times
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Quote:
Originally Posted by MrRational View Post
Whatever gross is... less 15% into save/invest accounts, less 9.1% SS/FICA, less Federal taxes...
but also less the property tax (in lieu of State Income tax) ...

SS/FICA is 6.2% of Social Security and 1.45% for Medicare. 7.65%, not 9.1%. For a high earner, you also max out your Social Security contribution at some point.
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Old 01-07-2019, 05:03 PM
 
6,108 posts, read 4,663,859 times
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Quote:
Originally Posted by mizzourah2006 View Post
I'd want my PITI to be no more than 20-25% of my after tax income (higher % if you are maxing out your 401k, lower if you aren't).
I want a lot of things. Somethings just don't work out.

When I moved to California decades ago, my PITI was over 50% of my gross income. That really hurt, but it was either that or pay a lot in rent.

I have often been in the region of over 30% of after tax income. Living on Long Island also means looking at utility costs. The costs of electricity are several times the national average.
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Old 01-08-2019, 09:14 AM
 
Location: Kirkland, WA (Metro Seattle)
3,921 posts, read 3,214,195 times
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Quote:
Originally Posted by pipsters View Post
I'm wondering what a normal mortgage payment would be. Let's pretend for two 30 something "professionals" ie both work and have degreed jobs. I'm not talking uber frugal or on the ragged edge house poor, I mean normal.

I'm starting to think I might be unrealistic in my quest for a home to meet our requirements...ie I should bump up the budget. But feeling really out of my comfort zone. Current house was bought for $175k when our income was lower and I'm stuck on that $1,100 mortgage payment of which $600 a month comes back to me in principal reduction (so net $500/month).

But we really need to leave. Our neighborhood is starting to turn and we do not fit in with our neighbors on a socioeconomic level, and I don't want to make the same mistake again (we just couldn't afford a nicer house when we bought).

Looking in Dallas, TX but could be for anywhere.


What is the question, what is "normal" as that is entirely market dependent, right? Depends who you ask, and I'm no sage, but "It appears" there is no imminent crash coming as the fundamentals are different from GR. I don't care to argue the point, but let's take that on faith. Seems to be true in my area, anyway.

I don't know the Dallas market. There are many hot spots in the US that recovered magnificently from the GR of 2008-11 (or so). Seattle, my home, is one due to tech and Cloud boom. Los Angeles, Boston, others too of course. Sadly, parts of the US did not, and if anything retrograded, leaving us where we are today: the beginnings of financial and social balkanization. In fact it's well on the way.

$2K/month note is beer money for some out here, chief. $175K couldn't buy a garden shed from here to Bellingham to the north or Vancouver WA to the south. Mine, on a split level 3 bdr 1900 sq/ft on modest lot in highly desirable, growth neighborhood with almost zero land available, is $2,500 plus taxes on a fifteen year. I have about eight and a half to go on that. And...? That's a hella-bargain compared to many out here, I bought years ago and did a refi, though others need the cashflow from a 30-year. No professional person, couple, etc. could get into anything decent these days for less than $750K turnkey, AFAIK, though last year was calmer than other most recent in terms of growth.

Back of an envelope, a couple who are professionals here making $100K each (pretty typical, in IT) goes after that $750K house in Lower Queen Ann neighborhood, north part of Seattle. They need 20% down, so not sure who they'll have to murder to come up with $150K cash, but if liquidating from a starter property elsewhere, entirely doable. Younger couple: kiss that goodbye, welcome to a condo in Renton (not so nice).

Run through rest of the calcs based on WA realities and typical assumptions, the note is about $3,400/month including everything (taxes and insurance). K, each person ponies up $1,700 or so, and barring divorce life goes on via that thirty year note. I question if they're accomplishing anything, the wisdom of that is another story, so amp it up significantly for a 15 year.

And yes, that is entirely "normal" in the PacNW. Don't move here without solid jobs, plans, assets, etc. if you want to live the American dream.

LOL: guess you'd better, ah, "bump up the budget" after all, though with so many fleeing TO Texas I wonder if they're onto something, in terms of taxes, personal liberties, and property values. I work with a kid based in Dallas and he has a shotgun shack condo near downtown he paid a hundred grand for, which is now paid off at age 25 (he works tons and definitely earns his keep). Good for him, I figure, and he's been everywhere and correctly realizes in some ways he's in an ideal location...for him...not far from DFW. Doesn't even own a car.
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Old 01-08-2019, 09:38 AM
 
9,971 posts, read 4,581,849 times
Reputation: 15168
Quote:
Originally Posted by jrkliny View Post
I want a lot of things. Somethings just don't work out.

When I moved to California decades ago, my PITI was over 50% of my gross income. That really hurt, but it was either that or pay a lot in rent.

I have often been in the region of over 30% of after tax income. Living on Long Island also means looking at utility costs. The costs of electricity are several times the national average.
Why is 30% on housing normal though? Banks use it to judge financial risk of mortgages, but why should people use a bank standard for non-bank issues?

If someone wants to spend half their income on housing because they like the area, then that also includes their"discretionary" budget since they would spend money to travel there if they had lived elsewhere. Spend money going there on vacations or spend it year round to stay there. Same money bucket of "I want to be there"

This expands to schools and "nice" areas of town, the "I want to be there" expense.
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Old 01-21-2019, 03:26 PM
 
Location: Monterey County California
272 posts, read 247,277 times
Reputation: 276
how much can you rent it for?
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Old 01-21-2019, 03:33 PM
 
Location: NC
882 posts, read 668,000 times
Reputation: 1102
Quote:
Originally Posted by onlymike View Post
how much can you rent it for?
Believe it or not most rentals cost more than the mortgage would be by far for a much crappier house. Dallas is a crazy landlord market.
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Old 01-24-2019, 10:59 AM
 
255 posts, read 131,419 times
Reputation: 159
Quote:
Originally Posted by pipsters View Post
I'm wondering what a normal mortgage payment would be. Let's pretend for two 30 something "professionals" ie both work and have degreed jobs. I'm not talking uber frugal or on the ragged edge house poor, I mean normal.

I'm starting to think I might be unrealistic in my quest for a home to meet our requirements...ie I should bump up the budget. But feeling really out of my comfort zone. Current house was bought for $175k when our income was lower and I'm stuck on that $1,100 mortgage payment of which $600 a month comes back to me in principal reduction (so net $500/month).

One thing I need to keep reminding myself is our income would grow by about $1,000 month due to no state income tax. So there's that. But the prospect of a $2,000/month mortgage payment scares the hell out of me, or spending the equivalent in cash to purchase such a high priced property.

But we really need to leave. Our neighborhood is starting to turn and we do not fit in with our neighbors on a socioeconomic level, and I don't want to make the same mistake again (we just couldn't afford a nicer house when we bought).

Looking in Dallas, TX but could be for anywhere.
There is so much stuff you said that I just can't seem to understand how it's relevant. Your mortgage depends on what you can afford with your take home pay. You shouldn't actually be factoring your tax credits or principles payment amounts in as savings to trick yourself into feeling the payment is lower. So again depending on your take home pay only you can decided if 2000 a month is too much. For me personally I like for all of my bills to be paid by one pay check or less. That's fter all deductions are taken. I think my housing is about 21% of my take home pay. That includes mortgage, hoa, utilities etc.
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