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I admit I did not read all the responses, but I think you would be MUCH better off to find a HOME without the HOA fees that you could pay all your $$$$ available to as equity vs outrageous HOA fees.
I think the HOA fees are a MUCH bigger issue that then mortgage/cost of the home.
3x your annual salary is the normal to get a home in high cost cities are used to paying a lot more towards housing, IF YOU MUST live there. He is looking at potential appreciation and tax-writeoffs than paying off a mortgage.
$2700 is $800 more than rent
you are also paying $800/month for pre-school. (that is a lot, we paid $400 in North OC near Los Alamitos)
You have to keep in mind that HOA payments can go way up if not careful due to litigation or natural disasters with an assessment to ALL homeowners. ( OC Neighborhood Moves | Connecting Buyers and Sellers ) We know California has lots of disasters such as floods, fires, earthquakes....
Instead of the paying an extra $800 going to townhouse and HOA, that $12,000/year could be saved for your kids college fund. $12,000 extra per year out the door. All interior repairs are at your costs.
Ther interest you'd deduct is only $17,000 per year at 4.25% on a 30-year fixed loan.
You never mentioned your current savings amount either.
If this was Shark Tank, The Apprentice or whatever other reality TV show I don't watch, you'd be give a "NO". OK, I do check out Shark Tank time to time.
3x your annual salary is the normal to get a home in high cost cities are used to paying a lot more towards housing, IF YOU MUST live there. He is looking at potential appreciation and tax-writeoffs than paying off a mortgage.
$2700 is $800 more than rent
you are also paying $800/month for pre-school. (that is a lot, we paid $400 in North OC near Los Alamitos)
Which is why most Americans have very little savings towards retirement or rainy day fund. Just one job loss and a prolong job hunt will force most into foreclosure which the banks actually love in high value RE locations. It's a business for banks to take foreclosed properties in a normal economy and put it back on the market.
They love people like the OP who can't make mortgage payments after 3-6 months to go into foreclosure and they can easily sell the probably back or the OP is forced into short sales and the RE agencies making a killing too.
Which is why most Americans have very little savings towards retirement or rainy day fund. Just one job loss and a prolong job hunt will force most into foreclosure which the banks actually love in high value RE locations. It's a business for banks to take foreclosed properties in a normal economy and put it back on the market.
They love people like the OP who can't make mortgage payments after 3-6 months to go into foreclosure and they can easily sell the probably back or the OP is forced into short sales and the RE agencies making a killing too.
Well, it is tougher to get a conventional mortgage. No more 50%+ debt to income ratios unless you're doing an FHA loan. His would not qualify under FHA so his current DTI will need to pass underwriting analysis. I am not sure if the govt. is more worried about people being gauged with fees of if they truly qualify.
They don't enjoy that type of business as they are not experts in holding and marketing REOs but some are starting to limit how much a realtor can make on a short sale.
Right? I feel like the average person making <$80k live in hovel shacks on the coasts. Or they're driving 2 hours to live way in the landlocked areas for reasonable prices.
It's probably more that the average person has several hundred thousand dollars to put down in these markets. That isn't average for the US, but it is where the houses cost more. In some markets, sure, you'll find people buying $700K houses with FHA loans. But more often than not they're putting quite a bit down.
These days I wonder if it is better to just rent. No property taxes,
no mortgage, no maintenance. If you get tired of the property that
you are renting then just move when the lease is up.
A 500,000 mortgage is too much for you to carry, I recommend a much
more inexpensive property. Good luck!
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