Buying a home on a teachers salary, what is one to do (Houston: for sale, neighborhood)

[Katana49]

You don't want to end up house poor. With your income, I would set a cap of $300k for your search, and look for homes in the $250-300k range. That will give you a lot of choices, given your stated preferences, I would concentrate on looking in Plano. The homes that come up in your price range will be in central or east Plano. If you're not having any luck finding something you like, then I'd expand your search to Richardson or Allen, not before.

[aggie972]

Originally Posted by toddsby

I'm not entirely sure where making $100k makes you a pauper?! If you and your husband have a combined FICO score above 700 most lenders will lend you 4x your income, giving you up to $400,000 for a mortgage. There are many many great homes in your target markets within that range. My wife and I have been looking at beautiful homes the past 3 months in those areas for well below that range. If you're serious about buying your home though you need a realtor who can hustle in this market climate. We've worked with a great one who we'd highly recommend if you're interested.

As someone already mentioned, make a list of your must haves and then see if they line up with your budget. I saw some gorgeous houses in the $320-350,000 range. 4 bd / 2.5 bath 2,200 sq ft. 8,000 sq ft lots. $2,000 / month with taxes, insurance.

The biggest financial issue with a home purchase is DTI (debt to income) and down payment. If you have 20% down you avoid PMI but even with PMI you can have as little as 5% down on a conventional loan.

I'd highly recommend you swing by barnes and noble or amazon and buy the book "Buying a home, the missing manual" by Nancy Conner. Might help you feel more at ease with the process.

Just because the bank would lend her 4X doesn't mean it would be prudent for her to accept the top end of what the bank is offering. TC80 already explained why. It's not up to the bank to make responsible personal finance decisions for people, it's up to the people themselves. I would hope most people learned that lesson after the housing bust.

Also, this board isn't a good proxy for what's "average". This is a website for people doing research on their city, so it's going to skew toward higher education and higher incomes. And even among that unrepresentative sample, the people with higher incomes/more expensive homes are more likely to be proud of their earnings and thus more likely to share them.

[tcualum]

Can you work in DISD somewhere within walking distance of the DART line? There are some well established neighborhoods that are still affordable close to the Richardson DART stops. That would keep you in RISD and could help with your commute.

[TeamLynn]

$400,000 is probably a big stretch and not what I would recommend.
I'd probably stay closer to $200,000 with maybe a stretch up to $300,000 at the very very most.
You don't have to buy a lifetime house, just your first home.
You don't have to be there forever.
You can also remodel.
Some people do a project each year.
Buy a beater in a nice neighborhood.
You can redo the kitchen next year.
The floors the next year.
The bathrooms the next year.
Landscaping the next year.
Fence the next year.
Etc.

There are great parts of Dallas and as you know some great DISD schools...people forget that.

Consider Oak Cliff...Oaklawn...East Dallas....downtown.

Consider a condo or townhome.

You could also consider someplace East of Lake Ray Hubbard....depending on where you teach....Rockwall, Fate, Heath.

[Wittgenstein's Ghost]

Originally Posted by toddsby

I'm not entirely sure where making $100k makes you a pauper?! If you and your husband have a combined FICO score above 700 most lenders will lend you 4x your income, giving you up to $400,000 for a mortgage. There are many many great homes in your target markets within that range. My wife and I have been looking at beautiful homes the past 3 months in those areas for well below that range. If you're serious about buying your home though you need a realtor who can hustle in this market climate. We've worked with a great one who we'd highly recommend if you're interested.

As someone already mentioned, make a list of your must haves and then see if they line up with your budget. I saw some gorgeous houses in the $320-350,000 range. 4 bd / 2.5 bath 2,200 sq ft. 8,000 sq ft lots. $2,000 / month with taxes, insurance.

The biggest financial issue with a home purchase is DTI (debt to income) and down payment. If you have 20% down you avoid PMI but even with PMI you can have as little as 5% down on a conventional loan.

I'd highly recommend you swing by barnes and noble or amazon and buy the book "Buying a home, the missing manual" by Nancy Conner. Might help you feel more at ease with the process.

I really don't think this is great advice (regarding the 4x figure). Yes, a lender may qualify a person for a purchase that large, but there is no way that a couple making $100k should buy a $400k house, assuming they have a somewhat normal down payment. That is a lot of debt relative to income.

I agree that making $100k doesn't make one a pauper. This board is heavily tilted toward the northern DFW suburbs, meaning it has disproportionate participation from people who are wealthier than average. But buying a $400k house, especially with a 5% down payment (!), is a bad idea on an income of $100k.

[lepoisson]

If people are worried about affording a home on a $100,000 annual salary, I need to be really worried about every affording a home in DFW on my $50,000 annual salary. I've got no kids though, so I'm perfectly happy with a 3br in the $150-200K price range.

[toddsby]

Originally Posted by Wittgenstein's Ghost

I really don't think this is great advice (regarding the 4x figure). Yes, a lender may qualify a person for a purchase that large, but there is no way that a couple making $100k should buy a $400k house, assuming they have a somewhat normal down payment. That is a lot of debt relative to income.

I agree that making $100k doesn't make one a pauper. This board is heavily tilted toward the northern DFW suburbs, meaning it has disproportionate participation from people who are wealthier than average. But buying a $400k house, especially with a 5% down payment (!), is a bad idea on an income of $100k.

I'm of the philosophy that any home purchase is not an investment but a liability. That said, we all have to live somewhere, right? Not all people want to live a fiscally conservative lifestyle, and to define that as unwise is inaccurate. Some don't mind hour drives to grocery stores but love acres of land, others prefer small spaces in dense urban environments. Everyone should evaluate all the information and make decisions they can live with. Each is free to use whichever criteria they deem helpful. The reality is all home purchases are a risk and a liability. There are many paths to becoming a happy and wise home owner.

[Wittgenstein's Ghost]

Originally Posted by toddsby

I'm of the philosophy that any home purchase is not an investment but a liability. That said, we all have to live somewhere, right? Not all people want to live a fiscally conservative lifestyle, and to define that as unwise is inaccurate. Some don't mind hour drives to grocery stores but love acres of land, others prefer small spaces in dense urban environments. Everyone should evaluate all the information and make decisions they can live with. Each is free to use whichever criteria they deem helpful. The reality is all home purchases are a risk and a liability. There are many paths to becoming a happy and wise home owner.

I'm not arguing that every person isn't free to make whatever financial decisions they want. That has nothing to do with anything I said. Rather, I'm simply saying that a $400k house is a bad purchase for a couple making $100k. That isn't me exhibiting excessive fiscal conservatism. That is some basic money management wisdom. Of course people have different priorities, but leveraging one's self to that extent is a recipe for disaster.

[lepoisson]

Originally Posted by Wittgenstein's Ghost

I'm not arguing that every person isn't free to make whatever financial decisions they want. That has nothing to do with anything I said. Rather, I'm simply saying that a $400k house is a bad purchase for a couple making $100k. That isn't me exhibiting excessive fiscal conservatism. That is some basic money management wisdom. Of course people have different priorities, but leveraging one's self to that extent is a recipe for disaster.

Most financial experts recommend spending no more than 25-30% of your income on housing. Unfortunately, many Americans are spending 50% or more.

For an income of $100,000, a good home price should be around $300,000 (or even less). This should make the mortgage payment + tax + homeowners insurance roughly 20-30% of your net income.

You can still get a REALLY nice home in DFW for $300,000.

[rdz1979]

Originally Posted by Pink&GreenLady

I don't know why...Although, I live in Plano and teach in DISD does not make me a bad teacher. Would you say that to the teacher that lives in Richardson but teaches in Plano? Or the teacher that lives in Plano but teaches in Allen? I am insulted that you think this makes me not a good teacher. If you think that all it takes to be a good teacher is to live in the same city, then you my friend are sadly mistaken.

I could and still can teach in Plano if I choose to, my mother teaches in Plano. However, I chose to teach in a school/district where I felt I could make a difference. If anything my students are shocked to find out I live where I live and drive where I do to serve them...But I fail to see in the scheme of things how where I live affects my students. The only thing my students care about is knowing that they have a teacher that cares about them and wants to see and help them succeed.

Agreed