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You're missing taxes, 401(k) contributions, healthcare premiums, and post-tax paid benefits like life insurance, disability, and AD&D.
Then, you're missing that many young couples eat out several times per week. Then you're missing that even with all of the above, your budget is never the same one month to the next. Lots of irregular expenses creep up "as needed' for break-fix car repairs, clothes, AMAZON...
That's what you're missing.
I'm missing that or the banks are? Banks only ask about debt, but I'm sure all the other expenses are factored in also when telling you what a person qualifies for. They assume that people have these other expenses.
I also think 5-6x income is bonkers. That would put us in a 1MIL house just on base salary alone in an area that doesn't warrant that spend at all. Our home is worth about 350k and we have a small mortgage on it that feels like about the right amount to spend. We have no debt otherwise, no childcare expenses. I guess we like to invest, save, travel and eat well = live. We drive very nice cars, but no one *needs* heated massaging seats and those cars would be gone in a heartbeat for a quick cash infusion if something happened to the job. We have other friends that make similar to what we do and they bought the cheapest house in the county and are looking at ways to cut costs further. They need to live a little lol
I’m really surprised people are still getting approved for such expensive houses. I barely got approved for $124,000 house on an $80,000 a year salary. It took over three months with many close calls to get approved.
I'm missing that or the banks are? Banks only ask about debt, but I'm sure all the other expenses are factored in also when telling you what a person qualifies for. They assume that people have these other expenses.
You're missing it. You're wondering why a couple making $100k would have trouble finding a house, right? The numbers you plugged into your calculator (the same thing the bank would see) are the only expenses visible on their credit reports. Anything else is a household budget issue. They may very well qualify for the loan, but will their budget balance with other expenses? Likely not. They'll end up on Dave Ramsey in under a year.
So this may be your answer *why* the couple making $100k *doesn't* buy the $300k house with relative ease. This may also be why a couple might balk at $150k.
I’m really surprised people are still getting approved for such expensive houses. I barely got approved for $124,000 house on an $80,000 a year salary. It took over three months with many close calls to get approved.
I really *love* the part where you have to keep sending them bank statements while YOU wait on THEM.
You're missing it. You're wondering why a couple making $100k would have trouble finding a house, right? The numbers you plugged into your calculator (the same thing the bank would see) are the only expenses visible on their credit reports. Anything else is a household budget issue. They may very well qualify for the loan, but will their budget balance with other expenses? Likely not. They'll end up on Dave Ramsey in under a year.
So this may be your answer *why* the couple making $100k *doesn't* buy the $300k house with relative ease. This may also be why a couple might balk at $150k.
It's because the risk and value of the homes in the area is not worth the risk for banks. In East or West coast with your $80k job you can get a loan for a $300-400k house with a 12-15% down depending on credit. Banks will gladly lend the money because they look at the home values any of the homes here starts at $400k-700k. If you defaulted, it wouldn't hurt the bank to foreclose the house and not take a huge loss.
I live in Indiana where homes are relatively cheap. I've ran the numbers for a couple who makes 100k a year total, which should be easy in Indiana and has $1000 in monthly debt. So maybe 2 car payments and credit cards. Then I put in a 10k downpayment. Well the mortgage came out to 300k, which is a nice home! That would buy a nice home in Indiana! Help me understand what I'm missing.
What you are missing is that it is generally not in your best interest to buy the most expensive home the bank will allow. You need to consider your long term needs too, such as health care, retirement, emergency funds, and flexibility.
I really *love* the part where you have to keep sending them bank statements while YOU wait on THEM.
We had to pay $750 to extend closing, twice, despite me sending everything they asked for immediately. The mortgage company picked up the third extension fee.
We had to pay $750 to extend closing, twice, despite me sending everything they asked for immediately. The mortgage company picked up the third extension fee.
Goodness. Paying to extend closing?
I was in a different world. 2014 in a "village" (best term to describe it) of 3,000 people, 10 minutes from a town of 30,000 people in rural NC. Started the ball rolling on a USDA (guaranteed, not direct) loan in November 2013. One government shutdown and $1000 in earnest money later, the sellers stuck with me until I was finally able to close in late March.
Unfortunately, the bank was still open for business, and kept asking for pay stubs and bank statements every two weeks. You get an incompetent admin who just relays the demands of an underwriter with whom you cannot speak. No matter, loan was sold to Chase before I got to make my first payment. Loan was again sold to PennyMac a year and some change later.
I was in a different world. 2014 in a "village" (best term to describe it) of 3,000 people, 10 minutes from a town of 30,000 people in rural NC. Started the ball rolling on a USDA (guaranteed, not direct) loan in November 2013. One government shutdown and $1000 in earnest money later, the sellers stuck with me until I was finally able to close in late March.
Unfortunately, the bank was still open for business, and kept asking for pay stubs and bank statements every two weeks. You get an incompetent admin who just relays the demands of an underwriter with whom you cannot speak. No matter, loan was sold to Chase before I got to make my first payment. Loan was again sold to PennyMac a year and some change later.
Yes I suspect the processor or whatever she was at the mortgage company was incompetent, and I didn’t know better. I was a W2 but worked as a per diem for a few different companies at a much higher rate (therapy). She got stuck at verifying my employment income, wanted “yes she works 40 hours a week” but I didn’t have guaranteed hours with any one company, even though I did work 40 hours a week and had a decade of tax returns to show it. I had to explain it over and over. They also made some errors (which is why they paid third extension).
I'm missing that or the banks are? Banks only ask about debt, but I'm sure all the other expenses are factored in also when telling you what a person qualifies for. They assume that people have these other expenses.
The banks don't give a darn about what a person's costs of living are so long as they get their chunk of pie each month. (There's a reason why the bank locked my loan into a lower rate *only* if I agreed to have the money auto-deduced monthly. It wasn't because they were being generous or kind, but because they could go to the front of the expense line and get their money first.)
When they run the numbers to determine whether or not someone qualifies for a loan, only the spending habits (credit cards that carry a balance, etc.) , debts (student loans, car loans, etc.) , and income that show up on paper count. Some high earners with equally high debt such as physicians sometimes get special consideration (physicians, by the way, are notoriously bad with money), but that's not the norm. If a person is trying to qualify for a non-conventional loan, the loan folks will look even more closely at the paperwork than they do at full twenty percent down loan.
Kids need braces? Furnace needs to replaced in the dead of winter? Car needs to be either repaired or replaced? Wife or husband has a spending problem that doesn't show up on credit reports because just enough money is coming in to support bad money habits? The bank is indifferent to to any of these common occurrences.
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the part where you have to keep sending them bank statements while YOU wait on THEM.
