Scottsdale (Avondale: coupons, health insurance, appliances)

[asufan]

Originally Posted by jmac1

• Front-End RatiosLenders use what is called a front-end ratio, which is reflected as a percentage of your gross monthly income. The front-end ratio signifies the payment a buyer can reasonably afford, from a lender's point of view. You may prefer a lower payment.
  The front-end ratio for a FHA loan is 31%. For a conforming conventional loan, the front-end ratio is 33%. This means if your monthly gross income is $4,000, to qualify for the maximum FHA loan, your monthly principal, interest, taxes and insurance (PITI) payment can not exceed $1,240. For a conventional loan, it is $1,320.
• Back-End RatiosThe back-end ratio reflects your new mortgage payment, plus all recurring debt. It, too, is computed on your gross monthly income. The back-end is higher than the front-end. For an FHA loan, the back-end ratio is 43%. For a conforming conventional loan, it is 45%.
  This means if your car payment is $300, and you pay $100 a month between two credit cards, your total monthly recurring debt is $400. On the FHA loan payment above of $1,240 PITI, plus $400 recurring debt, your total is $1,640. The back-end ratio number is $1,720 ($4,000 x 43% = $1,720). Your total debt is less than $1,720, so you qualify.
  For a conventional loan, $4,000 x 45% (back-end ratio), equals $1,800. The total debt of $400, plus your new mortgage payment of $1,320 for a conventional loan equals $1,720. Your total debt is less than $1,800, so you would qualify for a conventional loan.

http://homebuying.about.com/od/buyingahome



Financing 400k for 30 years @ 3.65 APR equals a monthly payment of 1829.00

Mortgage Calculator

4000 for property tax. 1200 for home ins. That is another 433 per month added to payment, which equals 2262 per month payment; and that is financing the entire 400k


At just over 100k (105k); 8750 is their monthly gross. 33% of 8750 is 28875.00 per month.


Like I said, it depends on their back end ratio. If they are not in debt, they could easily afford a 400k home

Bringing home 6600 a month after taxes, using the 33% rule, allows for a 2200.00 payment. Still leaving 4400 for other expenses and savings.

6600 is apprx 75% of 8750 dollars.

Now if that isn't enough for you to understand they can afford a 400k home, I can refer you to a site on how much a married couple should pay in federal and AZ state taxes which is 4.24%.

Can't spend all day reading that entire post but I have an MBA finance so I fully understand front/back end ratios. I'm not saying someone can't QUALIFY for a $400k home on $100k, I'm saying they can't afford it. Your definition of afford may be different than mine. then again your savings likely differs from mine as well

[jmac1]

Originally Posted by DetroitN8V

$100k for two people isn't very much. So they each make around $50k? I surely wouldn't buy a $400k+ house on that.

100k is relative. It depends on your spending habits and lifestyle. It is too bad that people believe 100k a year isn't very much, very much for what? It is too bad that someone could not live comfortably in Phoenix on 100k.

As far as buying a 400k house; one thing you should take into account before you make that statement is the investment aspect. Will that house be in an area that appreciates more and hold its value? If you can afford it, buy the house that will (hopefully, nothing is guaranteed) appreciate more. I already showed you that you could definitely buy a 400k home on a 100k household income.......

[jmac1]

Originally Posted by asufan

Can't spend all day reading that entire post but I have an MBA finance so I fully understand front/back end ratios. I'm not saying someone can't QUALIFY for a $400k home on $100k, I'm saying they can't afford it. Your definition of afford may be different than mine. then again your savings likely differs from mine as well

Afford:

: to be able to pay for (something)
: to be able to do (something) without having problems or being seriously harmed
: to supply or provide (something needed or wanted) to someone


Is your definition any different, because that is mine?


What is your definition of frivolous, it must be very loose

Don't have a MBA (I have a MA in Ed), but I own more than one home and I have zero debt

[asufan]

Originally Posted by jmac1

Afford:

: to be able to pay for (something)
: to be able to do (something) without having problems or being seriously harmed
: to supply or provide (something needed or wanted) to someone


Is your definition any different, because that is mine?


What is your definition of frivolous, it must be very loose

Don't have a MBA (I have a MA in Ed), but I own more than one home and I have zero debt

Once again, and hopefully for the last time the problem is you are not accounting much for savings, as if its an afterthought. For me, savings is my biggest "expense" every month. our mortgage is a similar $2,300/ mo (we pay $3,000 ea month) and savings gets an average $7-$8k/ month including my wife's 401k, company match, my sep 401k and taxable savings. if you BUDGET to pay yourself first, then that money is automatically taken out of the pool of money from your example. in your scenario, someone is essentially living paycheck to paycheck with no accumulation of wealth. that's why 30% of seniors have $0.00 for retirement. You are speaking more as a mortgage broker whereas my position if more representative of a financial planner.

[jmac1]

Originally Posted by asufan

Once again, and hopefully for the last time the problem is you are not accounting much for savings, as if its an afterthought. For me, savings is my biggest "expense" every month. our mortgage is a similar $2,300/ mo (we pay $3,000 ea month) and savings gets an average $7-$8k/ month including my wife's 401k, company match, my sep 401k and taxable savings. if you BUDGET to pay yourself first, then that money is automatically taken out of the pool of money from your example. in your scenario, someone is essentially living paycheck to paycheck with no accumulation of wealth. that's why 30% of seniors have $0.00 for retirement. You are speaking more as a mortgage broker whereas my position if more representative of a financial planner.

I get what you are saying. But again, it is percentages. How much percent should the average American place into savings? That changes according to lifestyle, but lets say you need a replacement rate of 70% at 65 yr of age, so you should be saving around 15% of your income (but it varies on need, saving start date, and retirement age) that is 15k a year based on gross!! 1250 a month apprx. 2000k for your mortgage, leaving you 3350 left for other things!?

Maybe I don't get it. Maybe some people need to have the fancy cars, boats, RVs, super vacations, wine and dine night in and night out et al. For me, if you can't have a nice live on 100k, I don't get it.

Should a person want more? Hell yes. Are you suffering? Hell no.

Overall I agree with you about saving. For people not to save..... If it comes down to the 400k house or more savings......buy the cheaper house, but if the house will provide you more wealth at the end of the day

I prefer to save less and invest more. Its more risky, but I am young and I have done well with this style of financial planning. I guess the wife and my pensions provides me with a false sense of security and a bias that obscures reality. Either way everyone has their own style....but the number one rule is to stay out of debt. The interest is a killer!

I like borrowing money to make more money Thus I believe in the housing market more than I do the stock market. The 401k's took a hit, the housing market took a hit; nothing is 100 percent.


Good day,

As you say, don't forget to pay yourself.............if you can AFFORD it

[Leaving Arizona]

Back to the point...

Originally Posted by OutdoorgirlUtah

I need suggestions on places to live we both work in Scottsdale but can't really afford to live in Scottsdale our money doesn't go very far since Scottsdale is so high priced we earn just over a 6 figure income. I need suggestions on cities to live in that we are not going to hate the commute. I've been looking at Chandler and Gilbert but they seem so far. Hoping I don't hate it in 6 months when we spend an hour each way in the car to make it to work.

I would suggest you rent first to see if you like an area before you pour your money into a house in this hot market.

Whereabouts in Scottsdale?

If you're in North Scottsdale, then you're going to want to try to stay within or near the Scottsdale borders. If your jobs are along central/south Scottsdale (that is, Indian School and southwards), then north Tempe, south Tempe, western Mesa and north Chandler come into play, and perhaps Ahwatukee if you're willing to put up with a commute.

Bottom line: unless you want a long, slow drive, try to get as close to your jobs as possible. We lived at I-10 and Ray, and Mr LA had nearly an hour's commute each way, no matter if he went up the 10 and over on the 60, or right up the 101 off of Warner. It sucked, and sucked the life out of him.

As for affordability, you may have to look into condos if you're within Scottsdale city limits, or not look at certain neighborhoods. While our friends here have sort of derailed the topic, their point is valid: at just over 100k in income, you should not be buying a 400k house, especially with so little down.

[DetroitN8V]

Originally Posted by jmac1

100k is relative. It depends on your spending habits and lifestyle. It is too bad that people believe 100k a year isn't very much, very much for what? It is too bad that someone could not live comfortably in Phoenix on 100k.

As far as buying a 400k house; one thing you should take into account before you make that statement is the investment aspect. Will that house be in an area that appreciates more and hold its value? If you can afford it, buy the house that will (hopefully, nothing is guaranteed) appreciate more. I already showed you that you could definitely buy a 400k home on a 100k household income.......

Could and should are not the same. $100k for a single person would be a fine living. $100k for a household, a family, means very strict budgeting, going without too many niceties and unless one wants to work forever and doesn't care about savings, not buying a $400k+ house.

[Valley Native]

Originally Posted by OutdoorgirlUtah

I need suggestions on places to live we both work in Scottsdale but can't really afford to live in Scottsdale our money doesn't go very far since Scottsdale is so high priced we earn just over a 6 figure income. I need suggestions on cities to live in that we are not going to hate the commute. I've been looking at Chandler and Gilbert but they seem so far. Hoping I don't hate it in 6 months when we spend an hour each way in the car to make it to work.

Where in Scottsdale??? You have to realize that Scottsdale is not just another suburb ... it's a city of its own that stretches pretty far north & south. Even if you find something right outside of Scottsdale, the location is going to make a big difference. Example: if you work at FLW & 101, but look in Tempe or Chandler, your best commute would be the 101, but it would be a rather long commute and a major pain during rush hour. So please provide cross streets or a more specific location of where your job is.

Originally Posted by DetroitN8V

Could and should are not the same. $100k for a single person would be a fine living. $100k for a household, a family, means very strict budgeting, going without too many niceties and unless one wants to work forever and doesn't care about savings, not buying a $400k+ house.

Exactly! A sizeable income really doesn't mean much if the person has a family to support and a hefty mortgage to pay. Even $100K per year won't go very far for a single person if he/she is saddled with a mortgage, car loan, student loan debt, and enjoys dining out at the finer restaurants.

[More Rock]

I live in Camelback East neighborhood of Phoenix. Twenty minute weekday commute to North Scottsdale via Hwy 51 (never any traffic). Come check out Central Phoenix, where there is more than golf courses and tan buildings.

[petroglyphin]

Ugh. Here we go again. There are MANY AFFORDABLE areas of Scottsdale. : Sigh :