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Seek out the advice of a banker/lender/mortgage type person and then reduce it drastically. The old formula of taking a mortgage for 2 1/2 times your income always seemed a little high to me. Better to live modestly and invest in TSA's, IRA's or even put some of the money in CD's until this crazy economy resets itself. Depending on where you live, I would think 100K down and a mortgage of 200K would keep your monthly house payments under 2,000, but have to also add in cost of taxes, upkeep, lawn services or condo fees, any remodeling costs etc.
area=Chicago suburbs
would like to live there for 20+ years (keep transaction costs low, so we don't have to buy & sell & pay commissions every 7 years)
we currently max out both of our 401ks
assuming you have no other big debt, the max would be a house in the $450K - $525K range.
this number would be reduced if you have no children, and plan on having a parent SAH, OR if you both plan on working but using daycare - that's a big nut.
Buy the least expensive house you think you can be happy in for the next 20 years.
More house equals more taxes, more insurance, more debt, more paid in real estate commissions, more to lose if there is a big drop in prices, higher maintenance costs, higher heating and cooling bills, etc.
Buy the least expensive house you think you can be happy in for the next 20 years.
More house equals more taxes, more insurance, more debt, more paid in real estate commissions, more to lose if there is a big drop in prices, higher maintenance costs, higher heating and cooling bills, etc.
area=Chicago suburbs
would like to live there for 20+ years (keep transaction costs low, so we don't have to buy & sell & pay commissions every 7 years)
we currently max out both of our 401ks
I agree with the other poster on the range$400-$500, to be comfortable.
If the Chicago suburbs are anything like other suburbs right now, there are a glut of new homes that have sat for a yr.
I would look into bank owned or short sales that had values in the $700k -$800k and offer 75% of asking price, the upper end homes generally add more equity faster, and in 20 yrs. could give you a tidy retirement profit. As well upper end neighborhoods are safer and just a nicer atmosphere to live in.
best wishes,
freedom
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