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Don't forget that if you have 2 young adults working full time, you may also have child care costs that eat up 1/2 of one of those adults' salaries. You also have property taxes in some areas that eat up another fat share of that income. Health insurance that many employers no longer provide is big bucks, and if your household makes over 80K, you probably aren't going to get much of an ACA subsidy.
Since virtually everywhere in this country rent and mortgage payment are the same amount of money, and the tenants are paying their rent, which happens to be the same amount as a mortgage payment, it isn't a problem of not being rich enough. It is a lack of desire to figure out how to own a house.
Explain the phenomenon of people who are declined for mortgages that would cost less per month than they are currently paying for rent.
Explain the phenomenon of people who are declined for mortgages that would cost less per month than they are currently paying for rent.
I was barely able to qualify for my mortgage, which was for a $102,000 house, on a salary of about $85,000 and a credit score over 800. I am a therapist and for the past 10-15 years I worked for 3 or 4 different rehab companies as a per diem. I did this because my rate as a per diem was $10-$15 higher per hour than full-time staff. There was plenty of work for the decade+ that I worked like this, I was turning work down because I was too busy.
But the requirements got so stringent after 2008, I don't think people realize this. They think it's still 2007 where all you needed was a pulse. They (the bank/mortgage people) wanted to call an employer and hear "Yes, Ocnjgirl works here 40 hours a week" but that's not how it worked, no hours were guaranteed. I might work for one company 40 hours a week for 3 months covering a maternity leave, and then the next week work 3 days for one company and 2 days for another. One company might be fully staffed and not need me for 5 months, then want me to work 40 hours a week for 2 months till they replaced a vacancy.
I tried to explain a million times but the mortgage lady kept calling and saying "we are having a problem with your employment verification". It made me want to scream, especially as I had over 10 years of tax returns showing that I worked for these companies and that I made $80,000 to $90,000 a year doing so. They didn't seem to count the tax returns at all. She'd say "We need something that says you work for them and for how many hours a week" and I kept saying "It doesn't work like that!" but she seemed to have rocks for brains.
I had to pay an extra $1400 or so to delay closing twice because it took that long to approve me. The third time it was delayed, the mortgage company ate it. It was very touch and go for a while. I really thought it was going to fall through at some points. We put our deposit on the home in early September, and it took until January to close because of the problems I had getting approved.
Yet OP thinks it's easy for a couple making $80,000 to get approved for a $300,000 home. I can guarantee I would not have gotten approved since I had so much trouble getting approved for a foreclosed home that was vacant for a year that we bought it for a third of that price. And we were only able to buy that because my honey and his friends are contractors and able to do a lot of repair on it. So if he weren't handy, we'd still be renting because I wouldn't have been approved for a home more expensive than we bought, and the only homes here in that price range are foreclosures in semi-rural areas like ours that have been sitting empty just like we bought.
And then we still had to rent for 2 months or so while we made the house livable (for instance it didn't have a usable bathroom, no walls just studs and insulation, and no fixtures) So we had to pay mortgage and rent at the same time. Plus we had to put out $24,000 for a new septic system and $11,000 for a new roof, aside from having to buy toilets, sinks, stove, kitchen cabinets (half of them were missing) etc. And this was by far in the best shape of any of the foreclosures we looked at (they make up the bulk of houses that were in the price range we wanted to be in)
So even buying a foreclosure is not a viable option for most people unless they have contractor friends/spouse and money to put into it.
But people seem to see the surface only, as in "There are foreclosed homes near me that can be had for $60,000, there is no excuse why anyone can't afford a home!"
Yeah, I don't understand poor people. If you want a house, just get rich, and if you can't get rich, just sell one of your luxury animals or airpanes, duh!
Uh, I didn't mean it to come across that way. I mentioned that more in terms of creative financing since we gave up these items in trade for a house, knowing we couldn't afford both.
A used Cessna was cheap in the 70s. Both the horse and the Cessna were worth about $5,000 each then but we still owed on both of them.
No different than someone giving up their motorcycle or drum set, in order to invest in a home. We knew it was important to get into home ownership, even at age 21. Chose to have no kids, either.
It truly IS so different now. I don't know how any young 'uns can afford a home without massive help. OCNgirl's story is very illustrative. Her $104,000 mortgage isn't even all that different from mine 45 years ago: we paid $72,000 for a small starter home in Mission Viejo, CA. Very easy to qualify then.
Some of your key words are "in my town", there is a huge percentage of young adults, at least in my state, who are not close enough to a state college or even a community college "to live at home and commute".
I strongly encourage people to look for a home in a location that is within commuting distance of a state university, and preferably a flagship state university.
I do know people who do this. Again, this is for people who are looking for ways to save money when it comes to the costs of attending college.
Exactly. I didn't go to college. I did go to secretarial school a year or two after hs to get a better job, but it never occurred to me to go to college. That was something other people did. My father had an engineering degree, but that was because he was disabled in the war and could no longer be an electrician.
I expected to get married and not work anymore at some point.
But the requirements got so stringent after 2008, I don't think people realize this. They think it's still 2007 where all you needed was a pulse.
While I understand the effort to minimize risk, the requirements are onerous, period.
In 2010 when we were going to buy a house, the spouse had been a contractor for some years in their field. A common approach to their work and a way to make easily 25% more than being an employee. Despite having excellent credit, plenty of reserves and a work history that was lengthy and well proven, we finally had to resort to them "flipping" with an employer to become a W-2 employee just to get a mortgage.
As soon as the mortgage was secured and the property closed on, they went back to contracting.
I strongly encourage people to look for a home in a location that is within commuting distance of a state university, and preferably a flagship state university.
I do know people who do this. Again, this is for people who are looking for ways to save money when it comes to the costs of attending college.
I have also known people who have done this.
A variant of this strategy is to for parents to buy purchase a rental property (anywhere for that matter as one does not where the school will ultimately be) way in advance of their son/daughter attending a college, with the idea of cashing out of the rental property when it comes time to pay for the tuition. If one does this way in advance, let's say more than ten years, such RE payoff can be quite significant, when you consider all the positive cashflow, capital appreciation, mortgage principal paydown, etc.
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