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I work in DC, the money that can be made in this town is OBSCENE.
Lobbyists, defense contractors, media types, government consultants, attorneys, industry association gigs. etc.
Now, granted that's not most people.
A couple with both people making 100K -- which is no wear near top money in this town -- can easily afford a 400K house.
A 400K house here isn't even "all that."
100K in DC in certain circles is pocket change.
Heck even certain union gigs in construction and manufacturing -- with OT added can get you 100K.
And of course, most people with a profession degree -- MDs and LLBs can make more than that.
Certain finance jobs pay WELL more than that.
Teachers in major cities can make 100K.
So affording a 400K house…..depends on your income.
In some markets they are. Change markets if living in a cheaper one exceeds many of your other wants.
I qualified on my own (without my wife) back in 2014 for $274K, with a lower income, and a lower credit score than yours.
I see no reason for you to not afford it, and no reason for you to not maintain an emergency fund...
Hi David,
I could easily get the loan. In fact bankers are excited about loaning the money to me when I tell them the details however I would still have a $ 1,500.00 / month obligation for 15 years. I don't want to use a 30 year mortgage because I would like to have it paid by the time I die and based on insurance company life tables, I have about 20 years left if I'm lucky. Moreover I may get sick, lose my job, my auto could break down or wear out (approaching 200,000 miles now but I think I can get 300,000 lol). I suppose growing up poor, I fear the thought of losing everything. I am very risk adverse and I guess that means I will never have anything nice lol.
Thanks for your response David.
V.
Last edited by VictorTepes; 07-06-2016 at 03:07 PM..
I would agree with those who say that the biggest factor is a combination of savings, income and the COL in the particular area which can drive up salaries and also home prices.
In my own experience, we just bought our first house after saving for about 3 years. The mortgage is in my spouse's name, though we both earn similar salaries and we keep my income as an undocumented "backup" in case there are any major issues, repairs or we want to purchase a second home in the future. We are on a 15 year fixed, payments around 5-6K a month with the escrow (taxes out here are obscene) but hope to pay it off as soon as possible. Salaries tend to match the other costs around here, so as long as you are decently able to save and budget it is not that difficult.
In the midwest town I originated from, however, $400k homes are outliers in most suburbs and the average is around $150-300k. However, it appears that the average salaries also reflect these lower costs, so I believe it all evens out for the most part.
I could easily get the lone. In fact bankers are excited about loaning me the money and they seem excited when I tell them the details however I would still have a $ 1,500.00 / month obligation for 15 years. I don't want to use a 30 year mortgage because I would like to have it paid by the time I die and based on insurance company life tables, I have about 20 years left if I'm lucky. Moreover I may get sick, lose my job, my auto could break down or wear out (approaching 200,000 miles now but I think I can get 300,000 lol). I suppose growing up poor, I fear the thought of losing everything. I am very risk adverse and I guess that means I will never have anything nice lol.
Thanks for your response David.
V.
You could do a couple of different things.
You could take the 15 year, and pay more on it. Or take a 30 year, and pay more on it.
Everybody has these what-ifs. If you lose everything, you start over. I don't think you have as much to risk when you live in the home you are purchasing, especially in a market that appreciates.
Otherwise, you could just continue to live in the haunted mansion and stack cash in case what-if comes.
However, I wouldn't buy a home if I had any trepidation about it.
Yes, I was thinking about taking the 30 year at 3.6%, paying it bi-monthly and making double payments whenever possible, the second payment applied to the principle which should bring down the total amount of interest I pay. I think that's right.
Last edited by VictorTepes; 07-06-2016 at 03:05 PM..
I am a public school teacher. I haven't had a television or cable bills for 25 years. I'm single and don't have children. I pay my credit card balance in full each month and live rent-free in a "haunted" house that no one else will live in just so that it will be maintained in good condition. I have no water bill, no gas bill, no trash collection bill. I pay $100/month for my telephone and Internet. I don't take vacations or have many luxuries. I have no debt, not student loans, no auto payments, nothing. I don't even have an air conditioner, just a fan.
I earn 68 k /year and have saved 160 k. my credit rating is 815 so I qualify for a very good mortgage rate. The home I want to buy is 294 k and I still can not afford it and maintain an emergency fund buffer. I don't think I could live with that much debt.
It is my opinion that homes are much too expensive for the average person.
Victor, I don't think I have run across anyone in your income bracket that has kept their living expenses so low. I have to hand it to you. I don't know how old you are, I will estimate that you are in your mid 50's.
Your $160,000 saved, while admirable, is low considering your lack of spending for what I believe two reasons
You are risk averse. My guess is you stuff your money into savings or very safe investments.
I think you probably overpay on taxes/fees. Our tax code is not that friendly to the middle class. Any gains the you may have been getting from your savings is subject to taxes impacting its compounding.
Victor, I don't think I have run across anyone in your income bracket that has kept their living expenses so low. I have to hand it to you. I don't know how old you are, I will estimate that you are in your mid 50's.
Your $160,000 saved, while admirable, is low considering your lack of spending for what I believe two reasons
You are risk averse. My guess is you stuff your money into savings or very safe investments.
I think you probably overpay on taxes/fees. Our tax code is not that friendly to the middle class. Any gains the you may have been getting from your savings is subject to taxes impacting its compounding.
Hello Jw2,
I forgot to mention that I don't have a sewer bill (septic tank not outhouse lol) and my only dependants are two turtles and a cat that drops by to see me sometimes.
Thank you for responding to my message.
You are correct on all three accounts.
I'm 57, have a little money in a couple of low risk investments while the rest is in very low interest-paying savings accounts, and the tax code kills me in this bracket and in my circumstance.
I played the market when I was in my 20's made some money but lost more. Then I tried mutual funds but I got distracted by a beautiful young blonde, withdrew the funds, suffered the tax penalty, didn't go to med school, and got married. Now she's gone and here I am lol.
My house was around $400k and I only put down 3.5% as a first time home buyer.
Location: CA
That's pretty low for a house for many parts of CA, so I'm not sure your example applies.
400k down and only 3.5% down is a stupid move in much of the rest of the country, but pretty common place in CA.
I'm pretty sure OP, which posted like 5 years ago, was talking about houses in sane markets.
It's not hard to afford a 400k house. Two people who have a combined 150k/year income can easily afford it, and there are plenty of couples out there that make that kind of money.
Then again, there are those idjits that can barely qualify that buy them for 400k and struggle every month. Had a neighbor like this. He aged considerably in the 2 years he owned the house before being forced to sell.
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