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Mortgage would be closer to 360. Again I overestimate as our payment would be in the 2600 range but my budget I overdid expenses and factored a 3000 mortgage.
What if someone in you family will need some medical help. Keep in mind not all health insurances cover all expenses. Look up about people collecting money to fight their kids illnesses because their health care providers refused to cover that treatment. Think about gas prices. What if the price will jump from 4 to 7 bucks per gallon? You know what it means - food prices will be on a rise as well. And salary - not so much. It's great your family owns a daycare, but other kids activities might be expensive too, like any sport activity. Who knows where education will be in 10-20 years, you might be thinking about private schools for your kids. And retirement money... With that mortgage amount for 30 years you might end up with less savings. Do you travel? Do you want to travel? Simple Disney trip for a family might end up being out of your budget. Simple credit card perchases like furniture for a new house or renovation expenses including new roof will not go away. Don't make yourself house poor. Live your life, not work yourself for a house.
Mortgage would be closer to 360. Again I overestimate as our payment would be in the 2600 range but my budget I overdid expenses and factored a 3000 mortgage.
Look at household budget? Do you have any kids or expect any kids?
Because even at 360K mortgage with a $119K is very borderline line. Sure you will get approved for the mortgage. That's not the crux of your question.
What you are worried about is is $2700 (or $2500) mortgage a lot for your situation.
Everyone's risks level is different. Everyone's definition of risk is different. I am self employed and honestly feel I need about 18 months in cash reserves (not just stocks). Cash reserves. I got a non working spouse and 2 kids to support. Sure I am a highly paid professional. But highly paid professionals can still find themselves out of jobs for a few months at a time.
My financial advisor tells me I have to much cash sitting around. He tells me I shouldn't have more than 6 months of cash reserves. Well I sleep a lot better having 18 months of cash reserves.
I asked my wife yesterday if my income were to take a hit, could she cancel cable? Could she stop shopping at the local grocery store (Publix) rather than save and go to a discount grocery store like Aldi's or Walmart. We all know the answer to that. My wife says she will make that decision when the time comes. In my mindset, I know she can't downgrade like that. Most people can't downgrade that fast. It's a known fact.
So be prepared for the worst situation. After running through all your numbers (monthly expenses, cable, smartphone bills, car insurance, entertainment expenses). Factor in potential $1000-3000 unexpected house house expenses (well unless the house is less than 5 years old...because houses that are newer rarely have problems).
Do all that calculation and decide how well you can sleep at night.
For you to ask this question means you are not sure yourself or trying to convince yourself the house is right for you. So unfortunately there isn't an easy answer. People's spending and saving habits are different.
I think since this is the first time the OP is buying a house is why he threw the question out there. It sounds like he has gone through the different scenarios and even has a budget....heck - how many of us have a budget? Good luck with whatever you decide OP.
Of course only I know my finances but homes in CT are not cheap. At least not for what you want. So take this 110k gross, we were looking to take on a mortgage (total including taxes, insurance) of $2,500 on an average home that would need updates and add ons and what not. Or we can get this home we are looking at but our cost would be $2,700 (max). We have no CC debt, no student loans, good secure jobs, good credit, one car loan.
I am basically just looking to see if I'm insane for considering this even though I know it's the right move and the right home. 30 year fixed, 10% down plus closing. It's a home run house checks every box. I figure if we keep saving then we are just going to end up with a higher rate and looking at the same homes we are now so the situation won't change.
Ok I out my suit on so I'm ready for the flack. Thanks for listening.
You are going to have massive mortgage interest deductions upfront the way amortization schedules work so your first 5ish years will reap huge tax incentives.
Did you factor that in?
$2500/mo over 30 years? That is one expensive house! ($900,000 over life of loan)
You didn't say your current housing situation, did you factor in utilities and the sorts?
I am just winging it, however I think my utilities (my house is about as green as you can get too) is 15% or so of my mortgage when it is all tallied.
Just expect to be paying $3000/mo when everything trickles in, and the inevitable increase in property taxes will push you up hundreds over the life of the loan.
That is totally insane. We make the same amount,and the most I would consider for a .mortgage is 1200, though we. Qualify for much much more. I just don't feel comfortable maxing out and putting so.much of our salary into a mortgage.
Yeah, signing your financial life away for a 30 yr $900,000 loan in total is madness in 2013. This is case and point of why we have real estate bubbles and then bailouts.
$100k/yr is not enough for this type of deal, you are one risky dude if you do it. One misstep and you are going to be on the pain train.
Look at household budget? Do you have any kids or expect any kids?
Because even at 360K mortgage with a $119K is very borderline line. Sure you will get approved for the mortgage. That's not the crux of your question.
What you are worried about is is $2700 (or $2500) mortgage a lot for your situation.
Everyone's risks level is different. Everyone's definition of risk is different. I am self employed and honestly feel I need about 18 months in cash reserves (not just stocks). Cash reserves. I got a non working spouse and 2 kids to support. Sure I am a highly paid professional. But highly paid professionals can still find themselves out of jobs for a few months at a time.
My financial advisor tells me I have to much cash sitting around. He tells me I shouldn't have more than 6 months of cash reserves. Well I sleep a lot better having 18 months of cash reserves.
I asked my wife yesterday if my income were to take a hit, could she cancel cable? Could she stop shopping at the local grocery store (Publix) rather than save and go to a discount grocery store like Aldi's or Walmart. We all know the answer to that. My wife says she will make that decision when the time comes. In my mindset, I know she can't downgrade like that. Most people can't downgrade that fast. It's a known fact.
So be prepared for the worst situation. After running through all your numbers (monthly expenses, cable, smartphone bills, car insurance, entertainment expenses). Factor in potential $1000-3000 unexpected house house expenses (well unless the house is less than 5 years old...because houses that are newer rarely have problems).
Do all that calculation and decide how well you can sleep at night.
For you to ask this question means you are not sure yourself or trying to convince yourself the house is right for you. So unfortunately there isn't an easy answer. People's spending and saving habits are different.
Solid analysis, mind if I ask what you do for a living? I peg you for a fellow IT brethren if I must guess.
I think since this is the first time the OP is buying a house is why he threw the question out there. It sounds like he has gone through the different scenarios and even has a budget....heck - how many of us have a budget? Good luck with whatever you decide OP.
Agreed. Not only that, but looks like OP doesn't currently have rent payments, since they live with/in family house.
OP, seriously, don't make my mistakes.
Our first house - 167K on 80K income with a baby on his way, and we knew once I gave birth I would go part-time and we will only have 60K for at least a year. 5% down, since originally we were planning on 150K tops and 10%, but "couldn't find anything that fit our need". So, we decided to go for a more expensive house and put less down. While we were house-shopping our car got totaled, we got about $5K for it, but had to buy a replacement for $9k: -$4k right there. Once we bought a house, we had about $3K left in savings. It was a brand new house in 2003, so we, luckily, never had expensive repairs, the most expensive of them being our central AC for $300 or so. We paid $600 rent before, now we were paying $1100 mortgage, on 3/4 of income, with a newborn (two kids now instead of 1). It wasn't horrible, but we couldn't afford anything else. My mom helped with the newborn, so we didn't spend a dime on child care until younger one was 3, but still - children are expensive even without day care. Last year that house sold for 19K less than we bought it for, and I'm still glad we got rid of it! I mean, I loved that house, after all, our kids grew up in it. Our income increased in 2007, and it took us several years of making double payments to get to 20% in equity. Ugh, what a stupid financial mistake!
Now we are sitting on a $1900 mortgage, $390K house, on a $190K income, moving out of $1650 rental. The rent would've been $1800 had we stayed and not bought. Feels so much better! I can contemplate if we should put more in our 401Ks or save some money after-tax and utilize other investment vehicles. Never will I have 30% of my net, let alone gross, spent on mortgage - not a good path to a secure financial future.
I'm not sure which side to argue, I could argue both.
1) putting real estate questions like this on a national board, you're going to get answers that are literally all over the place. you have people saying why can't you get a 1300 a month mortgage....... which is just unrealistic in most areas of the tristate area within any kind of commutable distance to NYC.
2) certian sacrafices are made for living in this area, you either make them, or you have to move.
3) using straight percentages of income is only a rule of thumb especially when you're making more than 40K-60K a year. the amount remaining after paying for the house is significantly larger on someone making $110 vs $60K, not that this stops you from spending all of it.
4) and not to point out something that is pretty obvious, well to me, if you can afford $2500, then you can afford $2700. At your income level and expense level $200 although is money, isn't a whole lot in relation to your salary, you would cut back somewhere and just get there, its less than a car payment, in fact its closer to on par with the cable TV package you'll get. if you're having trouble affording $2500, then you're going to have trouble with $2700.
Just to ask to put the facts of your housing market on the table here
Does a $150K house exist?
does a 250K house exist? is it livable? is it in a bad area?
what are the taxes?
what is the median price of a house in your area?
I'd venture a guess you're talkign about 8-12K in taxes, with houses on average being between 350K-600K.
To answer the posed questions, yes 150-250 homes exist but they are tiny, under 1500 sq ft. For us not livable when we do a lot of family stuff and can easily have 20 people in our home for a gathering just in family members. The median price of homes in this area are very high 390's to over 500k depending. Taxes are about 7k. Te other cheaper homes are not in bad areas but the neighborhoods are so old and small that updating and expanding your home really does nothing for the value other than make you stick out like a sore thumb on the street.
To answer the posed questions, yes 150-250 homes exist but they are tiny, under 1500 sq ft. For us not livable when we do a lot of family stuff and can easily have 20 people in our home for a gathering just in family members. The median price of homes in this area are very high 390's to over 500k depending. Taxes are about 7k. Te other cheaper homes are not in bad areas but the neighborhoods are so old and small that updating and expanding your home really does nothing for the value other than make you stick out like a sore thumb on the street.
I'm not looking to tell you what you're doing is right here, it is what it is. I'm just in the same boat, my mortgage is probably a bit larger, but I don't have PMI, income a bit more, but not hugely. You do end up paying a LOT of money for your house, its not super comfortable, and certianly be what I wanted to do when I graduated college, but here you are, and if you want to stay, i'd rather pay lets say $2700 for the house that I like that is nice etc.. vs paying 2000 for a crappier smaller, dated whatever. the incremental cost from crap to nice isn't as large. Its the first 2000 part that makes you cringe.
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