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Location: New Albany, Indiana (Greater Louisville)
11,974 posts, read 25,354,025 times
Reputation: 12186
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Might consider moving somewhere with lower COL. My wife and I just bought a starter home for $55k. Our monthly payment - including insurance and property tax - is around $350.
How "they" do it seems the wrong question to ask. For all I know they might have a rich relative or an inheritance big enough to pay cash for the house. Or maybe they stretched into it with an I/O ARM. But this doesn't answer the question that really seems to motivate you here. You seem, deep down, to be asking how you can afford a house.
To this end, you should try cutting your expenses elsewhere and perhaps moving. Both of these things can go a long way.
Might consider moving somewhere with lower COL. My wife and I just bought a starter home for $55k. Our monthly payment - including insurance and property tax - is around $350.
Yeah, but cmon, living in Kentucky is just.....well lets just say its not for most people in the US unless they are natives to that state. Of course your house isn't gonna cost the same as a place in Santa Monica, California.
Is it affordable at 98K?
I want to own a place. Otherwise it just continues to throw money away? The place we live in now is nice but it's all orginal from 1984. Needs a major touch up and damages from when our dogs were pups. I'd like a yard for our dogs. A ranch home. I also refuse to live in a low income area. Call me a snob but I grew up and always lived in a upper middle class area.
I do commend you for not wanting to live hood. Dont wanna go back to that myself.
However, don't fall victim to the hype rewning.....you really dont own that house and won't for a quite a while. If you hit a financial snag and afford the mortgage, the bank is coming to evict and then re-sell
Your mortgage sounds like it will only be slightly higher than your rent, however once you factor in taxes and maintenance. OUCH
The best way to afford and save more is to budget and spend much less than you make. . .
As your income grows, keep your spending the same. Your savings will soar and you will have much more money to do the things you want to do like afford a better house. . .
I know how to budget and I dont waste money on all the stuff they call necessities.
AMEN to this. Just want to add: BUDGETING means setting a limit on the amount you'll spend for every category of expenditure that might come up (except emergencies). I'm not sure everyone realizes what a difference it makes to define categories for EVERYthing and assign a monthly $$ amount.
If you budget $100 for takeout food each month, you STOP SPENDING MONEY ON TAKEOUT FOOD once that limit is reached, even if you reach it on the 12th of the month! If your grocery budget is $300 and you overspent on takeout, you DO NOT get to go over the $300 for groceries. You eat beans and rice and peanut butter sandwiches on day-old bread for the final days of the month!
And if you're serious about saving, your budget amounts are LOW. When we were saving for our first house, my clothing budget was $15 a month, and I had a professional job. (OK, $15 in those ancient days was about $94 in today's dollars. But still, it was NOTHING! So I learned to shop very wisely!) We almost never went out to eat. We saved like that for two years to scrape up the down payment and it was worth it.
Max Out Retirement Savings and Live Below Your Means. Make it your mantra.
If the loan is more than 2 and a half times your income, refuse it, do not take it. That is the first rule. $15k savings? I would have more savings before getting into it in case of emergencies, but if you crossed the bridge already then you can still figure on ways to save. I went without cable TV for a couple years for instance.
I learned the hard way. Had little savings and got into buying a house about 2 and a quarter times my income. I had the ratio right but not enough savings. I could only save $1,000 the first year. Had raises along the way which really helped. I kept getting raises and just saved more and more, like I should have done in the first place. In my case in 1990 it was a $96,000 house. Brand new. Great layout. But it was bought for emotional reasons. I could not even afford a landscape the first year.
. 40 Y.O.DINKs and all you managed to save was 15% of one years income.. you have MAJOR financial issues.. You bought a home with less than 10% down? REALLY??? 20% down should have been minimal goal ..
Quote:
Originally Posted by KrischiDe
This may seem harsh ... but at this level of income, if you have only 15k saved, you need take a long, hard look at your spending. Without kids and without home maintenance expenses, even in a high cost of living area, it should be eminently possible to save more than 15k every single year. Look at it this way - without a cushion, what will you do when the inevitable major home expense pops up? An unplanned water heater replacement here, gutter and roof replacement there, and we're talking major cash outlays.
The good news is that with proper budgeting, unless there are major circumstances that you haven't told us about, carrying a 190k home at 98k should be no problem. So, that's the first step. I've heard good things about YNAB, but even an old fashioned spreadsheet does the trick.
We saved up and purchased ours cash. No mortgage, no bank involved, no restrictions. We bought small and on the cheap. Now we are getting ready to sell as my wife will probably have to relocate elsewhere for work when she finishes college. We are in our 50s. I will take what we earn from this house and bank it, live in a 2-bedroom apartment whilst she finishes school, meanwhile I will be working and banking money and when we are ready to relocate, we'll look for another small place (we are empty nesters) to purchase cash so we will have no mortgage. We live within our means.
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