First-time home buyer asking monthly mortgage advice (Tucson: real estate, rent)

[RelicJ]

Hey all,

My girlfriend and I have been here almost 2 years now but we are renting and would like to finally own a home. Our current yearly gross income is $123,000/yr ($10,250/mo) and our take home pay is approximately $7500/mo. I've looked at almost every mortgage affordability calculator online and it seems our max "comfortable" mortage should be no more than about 375,000. I currently have about $27,000 for closing costs/down payment so I would expect about 5-6% down.

Our only debts currently are a $100/mo credit card which will be paid off very soon, a $100/mo payment on our bed which will also be paid off very soon, and my girlfriend still has a $1,150/mo student loan payment that will be with us for at least 5 years.

After much research, I've come across what I feel to be our maximum monthly mortgage payment (this includes mortgage, taxes, insurance, pmi, etc) of $2400/month. I would prefer maybe $2300 or lower. I have created an itemized monthly expense sheet based on these numbers and was curious how others who own/have owned a home feel since we don't have any experience with owning a home yet.

Mortgage/Taxes/Insurance/PMI - $2300
Student Loan - $1150
Groceries - $500
Credit Card - $100 (Going away soon)
Bed - $100 (Going away soon)
Insurance for both cars $200
Cell phone $65
Internet $65
Electric (assumed maximum) $425
Trash $30
Gas (for cars) $120
Eating out (overestimate) $300
Miscellaneous $250

TOTAL PER MONTH $5605
AMOUNT LEFT $1895

So, I did overestimate some things since it's much safer to overestimate instead of being lenient just to make myself feel better. I also made a miscellaneous fund of things I did not think about. I was curious on how other, more experienced home owners felt about the expenses given above.

Thanks!

[LeoDaVinci]

Hi RelicJ, congratulations on your decision to buy a home. You won’t regret it, unless you plan to move every two or three years. Strictly from a financial point of view, people who move frequently should rent their homes, since the cost associated to selling and buying can be as high as 10% of the value of a house.

You should search properties priced in the $325k - $350k range and put down $20k. With a 30-year fixed-rate mortgage you should be able to stay below $2,300 a month, including taxes, PMI and HOA (if there’s one). You may want to be prequalified by a lender offering competitive rates, so that you guys will know for sure how high you can go in total price with the monthly payment you want. In your price range there are plenty of nice homes in the Tucson area.

You budgeted your expenses, so you’re ahead of the game compared to those buyers who do nothing and just hope they’ll be able to afford things.
If you buy an older home, you’ll have to pay for the occasional repairs. That will be $200 a month, maybe less but you’re conservative in your forecasts. There are actually plenty of newer homes in our area that require almost nothing, for the first 10 years you own them.
I’d add some money for entertainment (movies, bars, cable or streaming services at home etc.) and for dental/medical co-pays. Two young people who budget $150 a month for those shouldn’t receive unpleasant surprises.
Your girlfriend’s student loan will only be there for five more years, then you’ll be on easy street!!
Find a home that you both like and want to keep for a long time, and start building pleasant memories!!

[wit-nit]

Maybe premature, but realistically, whose name is the house going to be on the deed. Man/wife is not a problem, man/girlfriend need to plan for the future if there are relationship problems. Things could get messy then.
But you are wise to buy now as real estate will be going up and in general is a good investment. Paying a landlords mortgage gets you nothing in return.