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.
I think total debt being 25-30% (depending on tax bracket, children, etc.) of the maximum is a good amount, including house, cars, student loans, etc. If people have significant liabilities such as cars, grad school loans, then 25% could be too high. If people are childless (and plan to stay that way) without tons of tax liabilities and no debt, then I think it's okay to go to 30% in many cases. I agree with you in general though.
One thing I think people on this forum need to understand is they are significantly more conservative than most people and the standards in the market are way different. That said I think most of this forum is quite smart/correct in their conservatism but at the same time it needs to be understand that it's not normal behavior.
You are quite right. There's plenty of articles out after the bubble burst telling of folks buying homes 10x their salaries on interest only loans and treated that as normal. And here I was wondering how all those folks in California were in blue collar jobs living in $500K homes and enjoying the good life..what was I doing wrong I asked. Then the bubble burst and the truth came out.
Sometimes slow and steady is all you need to be comfortable.
"I spoke with a lender..." There's your problem right there. Are you talking about gross income ratios? If so, that's insane.
If you're borrowing as much as a bank is willing to lend you, you're borrowing too much.
My lender approved us for a 350K loan based on my income alone. I didn't even tell him my husband's income. I told him he was out of his mind! He said your salary is 5K per month and you have no debt; you could carry a $2500 mortgage.
One thing that probably should be clarified when talking about affordability ratios/rules of thumb is whether you are talking about house-to-income or mortgage-to-income ratios. These are often used interchangeably but they should not be. Example: the house may be priced at 500K and your income is 50K, but if you put down 400K, your mortgage is only 100K. A person who is flush with cash due to years of diligent savings but only makes 50k could very well still be able to afford this house.
Indeed. 1 out of every 4 mortgages is underwater now. Underwater = balance is greater than worth of the house. Following what these people did does not seem to be very prudent even though I am sure that on the way to do this, they were convincing themselves they were doing a smart thing.
As soon as you start looking at the maximum payment you can handle, you have lost the battle as you are already caught in the trap.
Wow! Do you have a source for that stat? That is amazing, if true.
I go with the notion that you should purchase your house based on the assumption that the lesser of the 2 incomes will be financing it. Since in your case this is 62K, then you cannot afford this house. However, if you put down a larger downpayment (eg 50%) or paid for the house outright in cash, then it might be a go.
Okay, let's not get crazy. If that is your personal philosophy, then its great, but I'm not sure that is a standard you should necessarily be applying to others.
Okay, let's not get crazy. If that is your personal philosophy, then its great, but I'm not sure that is a standard you should necessarily be applying to others.
What makes you think I am applying this standard on others? Even if I wanted to, show me how I could possibly force you to adhere to this standard?
What makes you think I am applying this standard on others? Even if I wanted to, show me how I could possibly force you to adhere to this standard?
Maybe because the OPO asked if she was overextending herself and you used her data to say that "she could not afford the house?" You're absolutely right though. No one is obligated to take any of the advice given here.
Maybe because the OPO asked if she was overextending herself and you used her data to say that "she could not afford the house?" You're absolutely right though. No one is obligated to take any of the advice given here.
Get real. Everyone here except you knows that opinions on this board are just that: opinions. They're not mandates. But I find it amusing that my opinion actually bothered you enough that you had to convince yourself that what I said was not a mandate.
....A person who is flush with cash due to years of diligent savings but only makes 50k could very well still be able to afford this house.
A person that is in this position has the good sense not to do it.
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.
