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Seriously... are these online calculators realistic? I hope so...
I can not get an honest assessment of what I can actually afford. I visited the hud.gov (U.S. Department of Housing and Urban Development) and clicked on the "How much home can you afford?" link, and it took me here:
I have asked how much utilties cost on some forums and Yahoo answers website, but get the typical response of "it depends".
The numbers just do not seem to add up; I have a feeling the "other monthly housing cost" is a little low? If you are a current homeowner, please feel free to run the calculator.
I do not make much, and I'm all alone in the world (no family, probably will be single for life), but I would like a roof over my head.
What essential utilities are there in a house? Sewer, gas, electric, water, trash... Hazard insurance, property taxes, maintenance and forbid the occasional repair. Of course my lovely cable internet.
Of course, I know it depends
* I don't make much
* Single
* In the market for central Indiana (Plainfield, Greenwood, southside Indianapolis). This state is more affordable, and I hear the property taxes are more fair.
* At least 20% downpayment...
There is a general rule of thumb, but I don't even agree with that.
There are many MANY variables that determine if you can really afford a home.
Things like:
How much money do you TAKE HOME?
How much credit card debt do you currently have and the monthly payment?
How much car debt do you current have and the monthly payment?
What is your current MONTHLY budget for food and clothing over the past two years?
How much do you have in savings and are you living paycheck to paycheck?
Do not forget that when you own a home, you are responsible to keep it repaired and maintained. Neither are cheap by any stretch of the means and there is NO general rule of thumb because every house is different. Some houses require next to nothing in maintenance and some are hell on earth.
Since I do not know you nor do I know about you, I cannot give you an answer. The only person who can answer your question is YOU. There is a HUGE difference in "Can I qualify" and "Can I afford".
I have friends that do not make a lot but can afford a decent house because they have the discipline to save for expenses and if they do not have enough they have absolutely no issue eating rice and beans until they have enough. And same if they lost their low paying job, they have savings and can make it fine for quite some time without a job.
I have other friends who make a lot and can't afford any home because they have NO savings and NO discipline and the first major repair to come up would bankrupt them or go on the credit card which they usually have maxed out. And if they lost their job they would be near bankrupt within' a months time after all the bills started piling up.
If you have a good savings discipline and do not mind eating rice and beans when the large repairs come in (AND THEY WILL!) then you, more than likely, do just fine owning a home within' reason.
If you currently live paycheck to paycheck and live in a garage, have credit card debt, car payments, and cannot live within' your current means.. Stay far away from home ownership. It is not for you, at least for now. Even if you have no car debt or credit card debt but have no savings that is a huge red flag.
If you live in a garage and have substantial savings and a good track record of savings discipline and have the extra surplus monthly to have a mortgage and continue to save for retirement, major home repairs, home maintenance, and a solid emergency fund (for job losses that happen to millions) ON TOP OF YOUR CURRENT BUDGET OF FOOD, CLOTHING, AND TRANSPORTATION then now has NEVER been a better time to buy!
I'm making no assumptions about you since you gave no details about you. A little more about you will help if you want a more detailed answer.
Thanks, I'm just not sure how much house utilities would cost.
I have no credit card debt, I made that mistake when I was 20. My Fico score is 690.
I did have a 5-year car loan, but I paid that off in 3-years. I think it might have boosted my credit score? At this time I may not have a car loan, but I feel like setting money aside to pay cash for the next car.
Car insurance in central Indiana isn't to bad. I also do my own maintenance and small repairs (if need be) - anyone familiar with auto shop bills will know how much money one could save.
$22,000 in savings.
I live in a detached garage with a window air-conditioner, small fridge and microwave. It is no way to live, but its $180/ month. No heat, but I find the cold better to sleep in than the summer heat (sleeping bag). I've tried the apartment with a room-mate, but just couldn't connect and ultimately ended up hating it. Apartments cost too much for me to live alone without sacrifice. I know a house will cost more, but I'm thinking years down the road when I retire I will not be able to afford $600/month in rent (probably more with inflation). Besides, will there even be social security?
I'm not sure how much food will cost me. Being I don't have a stove, and its hard to cook with a microwave. One place I should be able to cut back, when I settle down, is eating-out too much.
Ok! It sounds like you have your head pointed in the right direction and are saving for your goals. Awesome job!
Again, you will be the one to know if you can afford a home or not. You know what you make and what you have at the end of the month. If you currently eat out a lot then it will be hard to cut back after owning a home. I've seen it a lot. Just keep that in mind. It's better to break the habit BEFORE owning a home rather then after because it usually does not happen and when you run out of cash out comes the VISA.
As for utilities.. it is going to depend on the going rates around you and if the house has gas heat/water heater or a wood-stove or a heat pump and the LARGEST factor is going to be how insulated the home is. That can factor your bills x2 or x3 with a home that is not well insulated. When you are shopping around for a home in your price range just ask what the previous owner paid in electricity/gas/water/ect.
Your area is bound to be cheaper than my area for utility prices and things like Natural Gas if available. Around here it is cheap and wonderful to heat the home and water heater with.
Do a little research on who the Gas and Heat providers are in the area you wish to purchase a home. For example: Raleigh, NC has Progress-Energy servicing the electricity and PSNC servicing the Natural Gas. The City of Raleigh provides the water/sewage. In Raleigh you pay County AND City taxes.
City of Raleigh Water/Sewage: Tiered Rates @ 0-4 CCF $2.28 and 5 – 10 CCF $3.80 and 11 CCF & greater $5.07 (CCF = 748 gallons) for JUST water and usually tripple those rates to add in sewer, taxes, and fees. Utility Rates, Deposits & Fees - The Official City of Raleigh Portal
Wake County and City of Raleigh tax rates are: Raleigh NC = .3735% per $1000 and Wake County = .5340% per $1000.00 WakeGOV.com - Tax Rates & Fees
These figures do not include taxes and misc fees that are charged because they can.
I know these figures do not mean much to you but might give you an idea of what to research in your area to find out the total price of utilities in your area.
So, with the figures assumed, you are single and buying a home for $100,000 for a 1,200 sq/ft brick ranch and it is medium insulation (not drafty) with a heat pump and electric water heater.
I would, on the stated rates, assume $120 per month to heat/cool the house comfortably year round. (if you have Natural Gas cheap then you are looking around $70 for electricity and maybe $25-$30 for gas depending on how cold it gets there).
You are single and do not have kids that take hour+ long showers every day and night .. so your water bill would more than likely be low LOW around $20/mo if you use the avg amount for a single person (50gal pr day).
Taxes in my county are close to .91% per 1k so @ 100,000 you are looking at: $910 annually so $76/mo.
Home owners insurance varies GREATLY but in our area I'd put a figure of about $400 annual on a $100,000 home. So $400/12= $33 a month.
So added up if you were in my area:
$120/month for power
$20/month for water
$76/month for local taxes
$33/month for home owners insurance
-------------
$249 in addition to your mortgage payment
$100,000 @ 4% = $477.42 w/o PMI (if you put 20% down to get to $100,000).
I did not include Cable/Internet since those are not a requirement to live comfortably.
So @ 100,000 you are looking at a total of (mortgage + utilities/taxes/ect) of $726.41 in this area MINIMUM.
Hopefully this will give you some idea of what to be looking out for since MOST places/companies/agencies do not mention the "extra" things needed for home ownership.
You will also want to include maybe $100 a month for major expenses (roof in 10 years, HVAC blow out 10 years, major repairs) and then maybe another $100 a month to maintain appliances in the home. It happens. I purchased our current house in Oct of 2010 and have already replaced the HVAC, fence, ceiling, walls, paint, floors, furniture, $$$$$$$$$.. It adds up.. AND ONLY you know what you take home and have extra.
Definitely do some research and balance that budget to get solid figures before making a long term commitment.
Thanks warriorfan, your post helps me put things in perspective.
Here in central Indiana we have Natural Gas. Pretty much every house has a gas furnace.
I will probably only be comfortable with a $60,000/$70,000 house.. That may not sound like much in some areas, but this is central Indiana. hopefully the market doesn't improve anytime (sorry current homeowners).
I just found another one of those online calculators.
Please contact a reputable realtor and ask all of your questions. Tell them you are not ready to commit to a realtor-client relationship, that you just need some help getting prepared. A good realtor will answer your questions and help you find a lender to prequalify you. Don't use online calculators, please.
Please contact a reputable realtor and ask all of your questions. Tell them you are not ready to commit to a realtor-client relationship, that you just need some help getting prepared. A good realtor will answer your questions and help you find a lender to prequalify you. Don't use online calculators, please.
I'm not using online calculators as a realistic measure.
Secondly, I'm researching.. and asking other homeowners what their experience is is an honest way to gain.
Realtors? I think they might just want to sell me a house. I don't ask a car salesman questions when I'm buying a car.
To be honest, I'm not familiar with realotors and their way of business.
There used to be a rough guide line in that you could afford to buy a house that cost 2.5 to 3 times your yearly income. Also for one months salary, 30% to housing cost, 30% to debt, 30% to food, 10% misc.
You said earlier about a $60K home. By my guideline you would be needing to make at least $20K per year to afford such. As I said, all rough guidelines but you just might find them fairly close.
Realtors? I think they might just want to sell me a house. I don't ask a car salesman questions when I'm buying a car.
To be honest, I'm not familiar with realotors and their way of business.
A Realtor is different than a car salesman. A good one will be able to guide you through the process, get you with a good lender, etc. Think of it like this: the car salesman has a lot with cars on it. If you buy one of his cars he makes money. If you leave his lot, he doesn't make money. The agent is the buffer between you and the car salesmen. His inventory is every car dealer in town and he doesn't care which one you buy from.
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.. so your water bill would more than likely be low LOW around $20/mo if you use the avg amount for a single person (50gal pr day).
Volpe, you are going about this the hard way.
