How much house can/should I buy? (Houston, Austin: renter, insurance)

[houston to austin]

Greetings. My family will be relocating to North Austin in December for my new job and I am not sure what we can afford (we are currently renting). I will make 95K gross annually and my wife will stay home with our one year old.

We found a house we really liked for 300K in Brushy Creek and another one for 310K in Steiner Ranch. These seemed affordable, but then I realized what the monthly payment would be after taxes, PMI, and insurance and got a little nervous.

We could put 10% down, but would prefer to put 5% down. Anyone have suggestions? The online mortgage calculators say we can afford it, but I would like to hear from someone who has been in a similar position.

Thanks!

[iceshots]

Originally Posted by houston to austin

Greetings. My family will be relocating to North Austin in December for my new job and I am not sure what we can afford (we are currently renting). I will make 95K gross annually and my wife will stay home with our one year old.

We found a house we really liked for 300K in Brushy Creek and another one for 310K in Steiner Ranch. These seemed affordable, but then I realized what the monthly payment would be after taxes, PMI, and insurance and got a little nervous.

We could put 10% down, but would prefer to put 5% down. Anyone have suggestions? The online mortgage calculators say we can afford it, but I would like to hear from someone who has been in a similar position.

Thanks!

This topic was just discussed in another thread. Look Here.
//www.city-data.com/forum/austi...-i-afford.html

Based on the advice in that thread, you are probably aiming too high. Also, with the credit uncertainty right now, you may want to check with a lender to see if you would be able to get a 5% down mortgage.

Good Luck

[centralaustinite]

Don't forget the property tax!

Why do you want to put so little down? We won't buy anything without 20% down, better interest rate and no PMI.

[houston to austin]

Thanks for the responses. After reading the other thread it looks like we may have to lower our expectations a little. We really like the two neighborhoods I mentioned and could see ourselves staying there a long time.

The primary reason we don't want to put down 20% is that it would wipe out most of our non-retirement savings. I like having that safety net there for unexpected expenses. Any suggestions for neighborhoods that have new construction in NW Austin for ~250K?

[FalconheadWest]

With reasonable debt to income ratios, I agree that you're aiming way to high. On average, most people can qualify for about 2.5-3 times their salary given average debts of a car payment, credit cards, possible student loans, etc... You should probably be looking at $275k max, especially since the taxes are higher in the areas you're looking in.

As for a difference in 5% vs 10%, there's not much. You might as well keep the extra 5% in your pocket in case there are repairs needed like carpet or paint. It will really only make a difference if you go to 20%, so stick with the 5% and lower your price range.

Steiner is really nice, but we chose not to buy there because the tax rate was so much higher than other places...

[houston to austin]

FalconheadWest - Thanks for the advice. Do you know a good resource to look up tax rates? The high rates are making a larger dent than I anticipated.

Also, I think we were attracted to Steiner and Brushy Creek because they had new construction, but kept trees when possible and did not seem "cookie cutter". The schools also appeared to be good. Are there any similar neighborhoods in NW Austin with a similar feel (but slightly cheaper)?

Thanks!

[iceshots]

Tax rates and house appraisals are public record. Try searching the web site of the counties you are interested in for their housing tax records. When I was looking I found the records for Hays county and it was very helpful when selecting a house. Depending on the location, the difference in taxes sometimes were equivalent to about $50K in a house price when you calculated the monthly payment.

It is not only the country you have to look at for a tax rate, it is also the neighborhood. Many new subdivisions have road bonds they are paying off or may be part of a MUD which adds onto the tax rate. Two different neighborhoods in the same county can have drastically different tax rates.

[swaushorn]

If you need to check the tax rates for a specific area, google the Travis County Appraisal District (tcad.org), you can also find out the exact taxes for a property by visiting the Travis County Tax Assessor and Collector website - just click on "research taxes" - you'll find everything you need.

As someone who has been around the biz for awhile, it's best to tighten up your expected amount to pay for a house. While it's appealing to go for the "high end" of your debt/income ratio, it's probably best in the current environment to be a bit more conservative. There will probably be some good deals out there if you work hard enough (or have your agent work hard enough).

[Trainwreck20]

A few things to consider (some already mentioned):
Taxes:
Williamson Central Appraisal District
Travis Central Appraisal District - Appraisal Roll Information
Put in a random address on the street(s) you are looking at, or just one in the area, and you can see what the tax rates are. In general, you will have to add up several. Ignore the appraised value, since it can be way off. Williamson County lists the tax 'codes', and then you have to go look up the associated rates. I really like that Travis county has them inserted in the account page itself.

If you put 20% down, then you get out of mortgage insurance (PMI), which can be quite significant, so if you buy a cheaper house and that allows you to put more down, then you get the added bonus of maybe $100 or something in savings on PMI.

Going from a renter to an owner, you will probably switch from a standard deduction to an itemized deduction, so there will be a small amount of 'tax return'' on your federal taxes due to paying local property taxes. Not huge, since you loose the 10k or so standard deduction, but something.

In a very general sense, it is a much better deal in Texas to own a modest home. The tax rules put more of the burden on single family income households (via property tax), so, imho, I would aim for a house more in the $200 - $225 range. Your tax burden goes down significantly in addition to the lower payments, and there are some nice areas 'up north' that fall into that price range (although probably not Steiner). We bought a 'cheaper' house some years ago and financed to 15 years at a sub 5% interest rate. Our house is now withing 6 or 7 years of being paid off. We never would have managed that if we had stretched our limits on buying a house, and we would be 20 plus years from paying it off still.

[texastea]

You could look at the Perry Homes in Crystal Falls--a Houston builder trying to break into the Austin market. Its a little further out, but the area they're building in is really nice. David Weekley is there, too.