What is your definition of house poor?

[vi edit]

Also, do the math on which way you would come out the most ahead.

Instead of putting a big downpayment on a house, would you be better off paying off your truck first?

Say the truck is $350 a month payment. How much would the money you put twords your truck affect your mortgage amount? If you are concerned about the additional interest paid on the mortgage, you can now take the excess money from the truck payment and make additional payments on the house. If it's a tight month you don't have to pay anything down.

Do the math on your loans.

 

[Garet Jax]

Originally posted by: PricklyPete
A lot of lending institutions want to keep your house payment/other debts at less than 45% of your salary...at least the ones that I have gone too. This seems a bit high (you would be house poor), but what is your personal limit...or did you have one prior to buying a house?

I know there are a lot of other factors in there, but just interested in others experience/opinions.

Mine is around 27% and I feel house poor sometimes.

 

[vi edit]

ANother thing too is remember to add in property taxes and insurance into your payment. Check out the county assessor sites to see what neighbors are paying on similar houses on your street/neighborhood. Taxes and insurance can easily add up to several hundred dollars extra a month on top of the cost of the house itself.

Also be sure to consider in maintenance costs. You can play it safe and pick up a home warranty for around $400'ish a year for a bit of insurance. Our home purchase included one and it paid for itself. 2 months into our purchase the water heat crapped out. Called the warranty company and had a new on installed within 2 hours. That would have been over $600 out of pocket.

Something to think about.

 

[redgtxdi]

Well, I'm amazed that as many people afford homes as do.


Let's say that you have a couple DINKS just startin' out & makin' $15/hr. (Figure it any way you want I'm just picking a descent number for both)

Let's say that after it's all said & done, they're taking home......$3,500 (optimistic)

Now, here in So Cal, you can't buy a cardboard box behind a grocery store for under $300K. Even with a friggin' interest-only or 50yr traditional loan, payments are STILL gonna be well over $2K.

How the !@$~^!@^ do people afford to live???

$3,500-$2K = $1,500 for EVERYTHING else in their lives. NO FRIGGIN' WAY!!!!!!


I just don't understand it.

Then if you take away one of those jobs???

F!@%$............Game Over!

 

[PricklyPete]

Originally posted by: patentman


It sounds like it might be a bit tight on just your salary when you factor in the cost of kids. Its definitely doable if you plan right however. 18% of your combined salary is a good level to be at. Save as much money as you can in the interim between when you buy the house and have kids. After you have kids, you will know if the house payment is too much. A good barometer would be if you couldn't save money aside from retirement, and especially if you could not save money and had to take funds away from your retirment investments. Ideally you should have some excess every month, as nobody likes to feel like they are living paycheck to paycheck (though this happens a lot in the US).

Nik

I agree with you to a large extent. I always have said that I would only buy a house that makes sense on just my salary. That being said, I do think I should be seeing a jump in my salary in the next year or so...hopefully sooner. I don't want to bank on that...but if I haven't gotten a reasonable raise by the time we are having kids, then I've done something wrong. Over the last 4 years (that I've been workign full time), but salary has increased 30%. If that trend were to continue, I'd be within striking distance of our current combined salary in 5 years.

Of course there is nothing certain...but if you never take risks in life...it is hard to get ahead.

 

[PricklyPete]

Originally posted by: redgtxdi
Well, I'm amazed that as many people afford homes as do.


Let's say that you have a couple DINKS just startin' out & makin' $15/hr. (Figure it any way you want I'm just picking a descent number for both)

Let's say that after it's all said & done, they're taking home......$3,500 (optimistic)

Now, here in So Cal, you can't buy a cardboard box behind a grocery store for under $300K. Even with a friggin' interest-only or 50yr traditional loan, payments are STILL gonna be well over $2K.

How the !@$~^!@^ do people afford to live???

$3,500-$2K = $1,500 for EVERYTHING else in their lives. NO FRIGGIN' WAY!!!!!!


I just don't understand it.

Then if you take away one of those jobs???

F!@%$............Game Over!

It does seem pretty rediculous how much people have to pay out there for houses. I have a friend in Santa Cruz who bought a smaller home (1700sq/ft...close to what I'm looking at size wise) for $750K. I'm sure that sounds like chump change to someone in Manhattan, but that is unbelievable amount to someone like me who is used to southeastern prices.

 

[PricklyPete]

In an interesting turn of events, I just got a 4% raise for a succesful project that just went in...

 

[BurnItDwn]

I pay around 28% of my gross income currently (it was closer to 39% when I first bought the place.) (If you include the monthly assessment as it is a townhome.) No Assessment, then the percentages are a little bit lowwer.

Anyhow, I've never had any difficulty in making payments. I have actually made several extra payments in the last couple of years.

 

[alkemyst]

Originally posted by: redgtxdi
Well, I'm amazed that as many people afford homes as do.


Let's say that you have a couple DINKS just startin' out & makin' $15/hr. (Figure it any way you want I'm just picking a descent number for both)

Let's say that after it's all said & done, they're taking home......$3,500 (optimistic)

Now, here in So Cal, you can't buy a cardboard box behind a grocery store for under $300K. Even with a friggin' interest-only or 50yr traditional loan, payments are STILL gonna be well over $2K.

How the !@$~^!@^ do people afford to live???

$3,500-$2K = $1,500 for EVERYTHING else in their lives. NO FRIGGIN' WAY!!!!!!


I just don't understand it.

Then if you take away one of those jobs???

F!@%$............Game Over!

with 2 making $15/hr your gross monthly is about $5000. With a house and the tax break it should yield you should be looking at around $4000 or more.

$1500 should go a long way unless you have a lot of credit debt and car payments.

$15/hr isn't much money today though and those making only that would be better off buying a lower priced condo and saving for a home. Then they can rent out that condo for some side income, or at least an equity gainer.

 

[FoBoT]

25% of gross is too high unless you live in bubbleville

 

[DrPizza]

I don't believe the percentage of your income is really that good of a benchmark any more. Usually, people are looking at the percentage of income that's taken up by other expenses - utilities, etc. However, in some areas, the difference between additional costs on top of a $300,000 home and a $50,000 home are almost negligible (especially if you're putting the taxes and insurance in escrow). Both have similar water bills. Similar electric bills.. similar gas bills, etc. Thus, if person A makes $4k a month and person B makes $5k per month, person B could probably justify putting that extra $1000 (or whatever it would be after taxes) toward a mortgage payment, and other than that, both individuals could have the same lifestyle/extra costs.