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I don't like this advise.
Its exactly what I did over the years.
Looking back on it.
I would have been much better off if I had stayed in my first house.
I could have renovated to more perfectly suite my needs over time and I would have payed it off by now.
Instead I bought and Sold and Bought and Sold and Bough and Sold and Bought and Sold.....
and every time I sold I gave away 6% of my net worth along with the cost of moving and wear and tear on my furnishings and the stress of moving. It all took its tole.
Try to stay within 3 to 4 times your annual Salary.
Buy the best home you can find in that price range.
Stay there.
Learn from my mistakes.
I so agree. I bought, sold and moved up several times through the years. Although I did not get caught up in the housing mess, I would now be mortgage free if I had kept my first, second or third house. Now I have a big ole house with a mortgage.
When determing how much mortgage you can afford, it depends on your lifestyle. Will there be money to save toward retirement? Will you have an emergency fund for repairs? Do you have 6-8 months of your monthly expenses saved that you will not have to touch unless you are unemployed?
Consider your mortgage expenses for the house in the price range that you qualify. Create a budget with that amount and use it for at least six months to determine your financial comfort level. After six months, you should be able to determine the amount of mortgage that would be comfortable for you. You want to own your house, you don't want your house to own you.
Man, if some of these posts are correct, I'll never be able to afford a house.
In the area where I live it's nearly impossible to only spend 25% of your net on your mortgage. I'd have to make 250K per year to afford a fixer upper.
Many people spend more than 25% of their net on their mortgage. More than 25% is not unreasonable. It is a matter of priority and willingness to alter lifestyle. It is good to have enough to budget for vacation, even if it is only for a few days. It doesn't have to be expensive. Doing things that offer no financial return would need to be kept to a minimum, example, picking up coffee and breakfast often, eating out for lunch and or dinner, unnecessary shopping, expensive cars, cc debt and just expensive taste in general if your income doesn't allow such. It can be done without a lot of sacrifice. It is all about the lifestyle you choose.
Man, if some of these posts are correct, I'll never be able to afford a house.
In the area where I live it's nearly impossible to only spend 25% of your net on your mortgage. I'd have to make 250K per year to afford a fixer upper.
All of Pasadena except Northwest is in a massive...ridiculous massive...bubble. It would burst if the shadow inventory were released, but right now theres actually a huge shortage of inventory thats artificially created. The banks that service loans in Pasadena for whatever reason have chosen not to foreclose there.
And this is the point of how ridiculous the prices are there...in a large city like Pasadena, with its huge city governments, and craptacular public schools(don't get me wrong, I love Pasadena...think its gorgeous), IF you DID make $250K a year, and used the old standard(2-3x) income.....
There are currently only 22 properties available for you to purchase. That is properties priced from $500-750K, 3 bd/2ba/1750+ sq ft.
And simply put, that is utter nonsense that in a city of 100,000 population, mostly middle class, with a large wealthy area, that a person making $250K a year has such a limited inventory of housing available to purchase.
The ratio's only serve as guide(especially when it comes to gross % as payment)...you need to run the numbers and budget. Are you paying your own health insurance(that might increase or decrease..who knows), do you emergency fund set up funding, utilities, etc, etc.
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