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If you can document yearly earnings for the husband that translates into $110,000 annually for the past two years, and his business has no obvious ties to troubled industry that translates into terrific income of $175K. You could easily qualify for a mortgage of over $500K, though if this is over the conforming limit for your area that may be a sticking point that lenders would extract a hefty premium. Coupled with only $50K as a max downpayment you would need to figure out alternatives to PMI.
If you are in an area where the conforming limit is $417K I would prefer to see you (as first time home buyers) shop in that range...
Thanks chet for the advice.
We're thinking no more than 350K. But even this number kinda scares me.
I'm just wondering if I am just worrying too much about job loss or something. We do have an emergency fund on top of our downpayment, so I think we're ok.
But the mortgage payment of over 2K kinda scares me. (I guess also because our apartment only costs $900/month also).
In similar boat. Trying to balance cost/size/want/need. Pain. Our issue is we want a midsize house but one that is updated nicely. If you look at more expensive houses in my area you get more SIZE but not more updated. So we are having tough time finding right sized house for right price with right updates.
How much house to buy? The real question is how much do you really need?
If you ask me, I think 1800-2000. If you ask my husband, he'll say 2500-3000+ lol.
But the price also determines location. It's not necessarily just how big. If we're closer to our offices, it's pricier. So we're not sure if we should spend more (for less house) to be closer.
Thanks chet for the advice.
We're thinking no more than 350K. But even this number kinda scares me.
I'm just wondering if I am just worrying too much about job loss or something. We do have an emergency fund on top of our downpayment, so I think we're ok.
But the mortgage payment of over 2K kinda scares me. (I guess also because our apartment only costs $900/month also).
I can empathise with your situation completely. We are currently renting a 2 BR apartment for a little over $700/mo, and even though we were approved for over $400k on ONE salary, we decided to buy a house for under half that amount, because we would like for life to be completely comfortable using one salary - including things outside of a mortgage payment.
IMO, just because you *can* afford a certain mortgage, it doesn't mean you *should* put yourself in that situation.
If you ask me, I think 1800-2000. If you ask my husband, he'll say 2500-3000+ lol.
But the price also determines location. It's not necessarily just how big. If we're closer to our offices, it's pricier. So we're not sure if we should spend more (for less house) to be closer.
This is a really good point. After much deliberation, my family chose the smaller, more expensive house within an easy hike of work and public transportation (i.e., light rail). We are surrounded by shopping and even the dentist is just down the block. The convenient location has allowed our family of four to live comfortably with one car, which is a huge reduction in our living expenses. On the downside, the house is older and upkeep is more expensive than the newer, exurban tract house in which we previously lived. That said, because my husband's commute takes minutes, he has time in the evenings to do a lot of the household maintenance himself.
I say buy just a little bit bigger than your minimum. Now is not the time to stretch financially, so keep your total ownership expenses below the 30% of net income mark. Yes, I know that's really conservative, but in the long run, I think that the lack of financial stress will make it worthwhile.
BTW, where are you planning to purchase?
Last edited by formercalifornian; 06-01-2009 at 01:28 PM..
Depends on your goals in life.... Set your savings goals first and then do a budget working backwards to see what you are comfortable with paying in a mortgage after you meet your saving goals.
We have always lived in homes that are around 2700 - 3000 sq. ft. (2 adults, 2 kids and 2 large dogs) Life as well as the mortgage payment was always comfortable. Then we had to move very quickly and ended up renting a very nice place, but it is only 1200 sq. ft. and I realized how much money was going out the door in utilities, maintenance, etc.... Now that the retirement account is not looking so good anymore, I personally will keep my mortgage on my next home as small as possible and invest/save the difference. We consider it a lucky do over!
But whatever you do, have your top amount set in stone before looking - it is very easy to creep up when you see what more money can buy!
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