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Old 03-16-2024, 04:55 PM
 
25 posts, read 22,026 times
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Quote:
Originally Posted by rabbit33 View Post
The old rule of thumb is that PITI should not exceed 1/3 of your gross income, and it's a lot better to keep it below 1/4. Of course if you put half down you won't have the mortgage insurance which is a big help.

Look up recent mortgage rates, plug in $500,000 into any of the online mortgage calculators, and go from there.
Noted. Will do this.
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Old 03-16-2024, 04:57 PM
 
25 posts, read 22,026 times
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Quote:
Originally Posted by HokieFan View Post
Asking how much income for a $1m home is kinda backwards. With a down payment of $500k, your loan amount will roughly be $500k. So plugging in those numbers to get your PITI, can you swing that monthly payment on your current income?

Even though you're casually looking, my recommendation is to speak with a lender who can look at your specific financial position and tell you how much of a home loan for which you qualify. Then you can decide what PITI payments you're comfortable paying.

They can also ballpark the closing costs you can expect to pay (which, depending on your circumstances, may reduce the funds available for your down payment).
This is a good idea, especially the closing costs part. Somehow inside i was a bit hesitant about doing this. But i may go down this path.
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Old 03-16-2024, 04:59 PM
 
25 posts, read 22,026 times
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Quote:
Originally Posted by YorktownGal View Post
So my last NY house monthly mortgage payment was $3,500 for a 15 year mortgage including about $15,000 a year in property taxes and additional county taxes. I had a 4% interest rate on a $400,000 mortgage. My priorities were to saved for retirement and to saved $400,000+ for undergrad for two kids Our family income was in the mid-$300,000.

I never felt rich!

I used a mortgage calculator for a million dollar house with a $500,000 mortgage at 7.75% and the result was $2,800 per month. You'll need to add $2,000 for taxes with wiggle room for increases. So figure $5,000 per month as a minimum. Your after tax monthly income would need to be north of $12,000 or about $350,000 (without taking into account tax deductions from IRA/401K or other federal tax write offs).

My old lady two cents. Kids grow up fast! With a long commute, it will be harder for you to attend school plays, concerts and all those activities that are so important to kids. Kids never suffered from a small house. Kids suffer when they see their parents stressed over money.

While my kids were young, we had a modest 1,800 square foot cape cod style house in MA. When I moved to NY when they were teenagers, we traded up to a larger house. In a blink of an eye, they were off to college and my husband and I were alone in a four bedroom, three bathroom house.

There are lots of perfectly acceptable $600,000 homes in NJ! There is Basking Ridge, Bridgewater, Somerset, Paramus, Fair Lawn, Dumont. Try Nutley NJ - great commute and cute town! It may not be the perfect home, it just has to be a good enough! Some place where you can enjoy your family and live a less stressful life.
Thankyou for such a detailed post and drawing on your personal experience. Much appreciated.
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Old 03-16-2024, 05:02 PM
 
25 posts, read 22,026 times
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Quote:
Originally Posted by twingles View Post
There probably no houses where he wants to live at that price point. In the NY metro you can pay a lot of money for a house and have a decent commute, or you can buy a cheaper house and have a hellish commute. OP has an option, and a decision to make. When we lived there, after 2004, you were not getting a house in our town for $500K.
Yeah, very less inventory at that price point. Market has moved along.
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Old 03-16-2024, 06:59 PM
 
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Originally Posted by SmartMoney View Post
Telephone quotes/generalities, not everyone can fit in any one box, but you would be amazed at how many do. If your debt (credit cards and car payments) doesn't exceed 5% of your Gross Monthly Income, I tell wanna be homeowners they need to take gross annual income and multiply by 3 to 3.5 times. (This is for those calls when the buyer wants to be prequalified without telling me their personal income and debt. Yes, these people do exist).

The 33% of GMI went out the window with automated underwriting. We regularly see files approved at house payment + debt (no front in ratio, just total debt) going up to 44% on conventional loan. That really scares me as a starting point, because conventional won't cross 45%. There's no room for increases beyond your control. How many times have we seen taxes or homeowner's insurance come in well above the numbers used? Or, ooops, the credit report showed the student loan at $0 per month, but the 1% figure is now $600!

For the OP, assuming debt is in line (and not in Hawaii), your income needs to be 125K to 140K, depending on many other factors. But you may not like that payment. You need to determine how much you feel comfortable paying and find out what that loan amount is for your location in NJ. There are two completely different answers to the questions you are asking. Talk to a loan officer. And if you aren't getting answers to your questions, find another, and another.
Thankyou for the detailed post. I will go the route of reaching to a Loan Officer. And will then take a further conservative number than that.
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Old 03-16-2024, 07:48 PM
 
Location: SCW, AZ
8,305 posts, read 13,437,323 times
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Quote:
Originally Posted by khich View Post
This is a good idea, especially the closing costs part. Somehow inside i was a bit hesitant about doing this. But i may go down this path.
Decades ago an old timer neighbor told me something very similar:
Monthly housing expense should be same or less than 1/3 of your gross monthly income.
Ideally, monthly housing expense should be same or less than 1/3 of your net monthly income (to live comfortably).
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Old 03-17-2024, 03:40 AM
 
Location: Phoenix
30,348 posts, read 19,134,588 times
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Quote:
Originally Posted by khich View Post
Hello All,

I have been looking at homes on off basis. Based in NJ. So property taxes are high. The towns i am looking at in Central Jersey have property taxes around 22-24k for such a house. T

So taking a home prices of 999,999 USD, a high water mark property taxes of 24k. 2 young kids and a spouse. Have been saving for the last few years dilligently and can swing a downpayment of 500k, what would be an ideal take home income needed to run such a house? I have run some calculators on this but the results vary so much.

Another option is to start looking at other towns with somewhat longer commute. But save money in the longer run.

To add more context, outgrown our current place, and not a great school district. Another thought is to wait more, and save more money.

Appreciate your thoughts.
A lot of things to weigh but my rule of thumb was never buy a house that's costs more than triple my income (I'm in my 60's) and I never bought a house that was more than double my income.

Of course, you have a very large down payment which helps quite a bit. My other factors would be:
- How secure is your income for the next couple of decades
- How good is the school situation for your kids in competing areas (huge factor for me)
- Are there factors that will significantly change the value of the house in the future
- Have you considered renting (I'm currently renting because I can make over $100K/year on average using the money I would buy a house with). It doesn't make financial sense really to buy a house if you invest the money as I'm doing.
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Old 03-17-2024, 03:50 AM
 
106,594 posts, read 108,739,314 times
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we run around 5x income here in nyc .

but we offer cheaper alternatives like co-ops which is how most of us initially gain ownership .

homes in our neighborhood run 1 to 3 million , but co-op apartments in buildings can be had for 450k or so and about 1500 a month in maintenance which include heat , maintenance, hot water , real estate taxes , gas stove , etc .

so it really is the poor man’s way of getting ownership.

personally we do better renting and investing that 450k so we have no desire or need for ownership of anything at this point in our lives

Using the rule of thumb that buyers should expect to spend two and a half times their annual salary on a home purchase, the properties in Manhattan that could be said to be middle class would run between $300,000 and 650k

On the low end, the pickings are slim. The least expensive properties are mostly uptown, in neighborhoods like Yorkville, Washington Heights and Inwood. The most pleasing options in this range, however, are one-bedroom apartments not designed for children or families.

It is not surprising, then, that a family of four with an annual income of $84,720 or less qualifies to apply for the New York City Housing Authority’s public housing

Last edited by mathjak107; 03-17-2024 at 04:40 AM..
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Old 03-17-2024, 07:22 AM
 
17,285 posts, read 22,006,628 times
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Quote:
Originally Posted by NORTY FLATZ View Post
I can't fathom a prop tax of $2000/month. That could pretty much destroy an SS benefit.
So I'm an acquaintance of a very wealthy, very famous divorcee. Her post divorce mansion the tax bill was $350,000 a year.......essentially $1000 a day to live in your own house! After 3 years she made the decision that this is crazy, time to sell (already blew 1mm in taxes). The tax bill was sizable but the estate ate money at a ridiculous rate.
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Old 03-17-2024, 04:31 PM
 
Location: Sandy Eggo's North County
10,292 posts, read 6,818,131 times
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Quote:
Originally Posted by City Guy997S View Post
So I'm an acquaintance of a very wealthy, very famous divorcee. Her post divorce mansion the tax bill was $350,000 a year.......essentially $1000 a day to live in your own house! After 3 years she made the decision that this is crazy, time to sell (already blew 1mm in taxes). The tax bill was sizable but the estate ate money at a ridiculous rate.
And I thought $75 pre diem was a lot! A grand a day reminds me of some of the fines I had to pay, back when I was a business owner....(Now, they're $10,000/day. With each day, a new and separate violation...)
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