$2000 monthly mortgage

[moneygirl9]

I just had to go back and look at my mortgage.  We are currently paying 2,300 a month (3.75%), but our taxes are 10k a year so that really kills us.  For our area I think we are typically.  It isn't easy-our first mortgage was 1,000 a month a few years ago but the run up in prices in the mid 2000's changed the values of houses around us. 

We did decide on living in our dream house and we haven't regretted that decision yet.  We bought about three years ago when all heck was breaking loose in the economy so we just leap with faith that we could do it.  If I didn't take the chance I would have regretted not going for it. 

[Deleted]

I think I'll take my high insurance rates over some of your taxes!  My place is worth about 300K and taxes are $2400, but we usually end up getting 300-600 of that back in the form of property tax refund.

[Deleted]

Feb 27, 2013 22:25:50 GMT -5 phil5185 said:

So the giant non-green houses of 2013 will be white-elephants some day. The ones that cannot be re-sold will be razed.  Maybe a bit too extreme? Or maybe not?   

It could happen. We paid $240K for ours and I figure we'll sell it for whatever we can get when we decide we want out of it. The neighbors may not be too happy if we let it go for, say, $100K, but we could do it.

Someone mentioned (can't find the earlier post) old people living in huge houses they can't afford to maintain and can't afford to sell (because they'd have to bring $$$ to the closing and they don't have it). DH was just on the phone with his brother in CA- they have a small modular home near Chico (commutable to SF if you're a masochist) and they're in that situation except that it's not a huge house. They've never had really lucrative jobs and they've made poor decisions. Really sad. She just turned my age (60) and her life is so different.

[Deleted]

So the giant non-green houses of 2013 will be white-elephants some day. The ones that cannot be re-sold will be razed. Maybe a bit too extreme? Or maybe not?

I think so.  Most of the people who bought them wanted a new home with all up to date options but didn't get a lot of land to go with them.  So they have a small lot someplace you have to drive a distance to get to. As the houses age they will become less attractive to people who want the latest and greatest and they won't have other advantages to offset the aging (close-in, large lot, etc).  A friend of mine lives in a house like that and she and neighbor both want to sell but can't get out - even the short sale has been sitting on the market for a year. When my friend went to real estate agents she was advised to do quite a bit of upgrades - about 15k worth - because there was new developments just down the road and that's what she's competing with.

[DVM gone riding]

Feb 27, 2013 10:31:04 GMT -5 Kung Fu Panda said:

$500 month for Insur and Taxes seems very low. Thats lower than what I have for 240k. I would assume your Taxes and Insur should be closer to 14k / year. or about 1200/month.

you realize taxes aren't based primarily on value but rather on area right?  Mine on 200k are 1800 for the Year so for my area I would think 450k would be about 5000.

[shanendoah]

Up until a few weeks ago, we were paying $1800/month PITI (about $1650 PI) and when we first got this house, we had PMI and were paying $1900/month PITI, so $2000 for the mortgage payment doesn't sound that bad to me, but I do live in a medium-high COLA.
We just refinanced down to a $1200/month PITI which I am looking forward to enjoying for a bit, but I would not be surprised if our next mortgage were much closer to what the OP is looking at.

[gooddecisions]

Update: The seller accepted and signed our offer, but a week later decided they want to back out. They are very emotional and don't want to see someone get a good deal on their home so they never presented it to the bank and have begged family members to help them catch up on payments. We got a letter from the attorney that said the bank "probably" wouldn't have accepted it anyway and to leave these homeowners alone. I really think their agent blew it by not helping them see that they also get a good deal by not having to pay back the extra $150K they were under-water because they took out a pile of cash to do who knows what when the value was higher. Everyone wins.

It was a good offer at 5% below listing price. It would have been nice if they actually let the bank decide. Super bummed and will be really annoyed if another year or 2 from now this house is at a foreclosure auction.

[Deleted]

Mar 15, 2013 9:38:33 GMT -5 gooddecisions said:

Update: The seller accepted and signed our offer, but a week later decided they want to back out. They are very emotional and don't want to see someone get a good deal on their home so they never presented it to the bank and have begged family members to help them catch up on payments. We got a letter from the attorney that said the bank "probably" wouldn't have accepted it anyway and to leave these homeowners alone. I really think their agent blew it by not helping them see that they also get a good deal by not having to pay back the extra $150K they were under-water because they took out a pile of cash to do who knows what when the value was higher. Everyone wins.

It was a good offer at 5% below listing price. It would have been nice if they actually let the bank decide. Super bummed and will be really annoyed if another year or 2 from now this house is at a foreclosure auction.

what grounds did they have to back out?  they can't just decide they don't want to sell if they have a signed contract.  was it a short sale? 

[gooddecisions]

Yes, a short sale. Legally, we do have a signed contract to pursue it. But, we have no interest in going up against disgruntled homeowners who could damage property or worse. We're going to talk to the RE attorney today and just see if there is a buy-out clause maybe we could add or anything that might keep a string attached in the event they continue to miss payments and have to get out.

[gooddecisions]

The real estate agent said he had never heard of a seller backing out of a short sale. We had the listing agent write up our offer, so I hope he did his best at influencing- but I really can't help but think he blew it.

[murphath]

athena53 wrote:
DH was just on the phone with his brother in CA- they have a small modular home near Chico (commutable to SF if you're a masochist)

You'd easily spend 8 hours day in your car. I don't see even a masochist doing that commute!

[wewillsee]

I would love to only have to pay $2,000 a month for a mortgage, especially if it wasn't a fixer upper. My first and second mortgage combined is $2,945 and our annual taxes are about $8,500. Annual insurance is under $900. I make a little less than you two do. I bought at the peak in 2007 but we like the area, schools, etc. However, if I lost my job and couldn't find another comparable one quickly we would do a short sale for sure.

Any new home built around us are tear downs and those start at 3,000 square feet and at least $650,000.

[muttleynfelix]

Mar 15, 2013 10:04:32 GMT -5 gooddecisions said:

Yes, a short sale. Legally, we do have a signed contract to pursue it. But, we have no interest in going up against disgruntled homeowners who could damage property or worse. We're going to talk to the RE attorney today and just see if there is a buy-out clause maybe we could add or anything that might keep a string attached in the event they continue to miss payments and have to get out.

Well that stinks. I'm sorry things did not work out the way they should have.  What good is a signed contract if they just back out? Good grief.

[gooddecisions]

If you were unlucky enough to need a $150,000 loan in 1981 when rates were 15%, that alone would have been almost $1900/month. A $425,000 loan costs about the same at 3.5%.

[gooddecisions]

Mar 19, 2013 0:08:41 GMT -5 @patstab said:

You see that's where we are so different.  We did need a loan in 1983, we were not about to buy a new nice house and pay those kinds of rates so we bought a 3 bedroom mobile instead.  Later we bought a house and sold it on contract to some folks.   You don't need a $150k house at 15%, you want a $150k house.  There are ways to not be taken to the cleaners.  We left a brand new house up north when it busted there, but we were not going to get in debt here just to have a house.  Choices

You don't know me.

[Deleted]

Feb 27, 2013 9:39:40 GMT -5 gooddecisions said:

Am I crazy for thinking $2000/month doesn't sound so bad for a dream home? My current mortgage is only $690/month, so it's a big change. But, given mortgage rates are so low, nice homes are more affordable than ever. The same 450,000 loan was about $3000/month at 7% and now it's only about $2000/month at 3.5%. My only fear is that when mortgage rates go back up nobody will be able to afford the nice homes in the event we need to sell.

I use this site for all of our prior home buying transaction and some others.
What you are saying is makes a sense to me.Good luck with your decision making process. 

www.mtgprofessor.com/

[Deleted]

Mar 19, 2013 8:24:40 GMT -5 @patstab said:

When I say we left the house, we rented it out, not let it go back.  Work died up there.

and what if you hadn't been able to rent it out?  especially since you had to move for work, you were lucky you found someone to rent.

not everybody can just pick up and move where there's cheap housing.

you seem to have an 'I'm better than everyone else' attitude any time someone talks about housing in their area and what they spent on a house and how you would never spend that much.  well guess what, not everybody has a great paying job in a low cost of living area and sometimes you need to live in a high COLA in order to have a well-paying job or for your spouse to have a well paying job.  and not every $500K house is a McMansion - in my area it's a 4/3 on a postage stamp yard....however, I don't really think NASA has a presence in podunk USA so I could move there and get a 10,000 sq ft house for $47K but I wouldn't have a job to pay for it.

[Deleted]

My mortgage (with taxes and insurance) is $2500 per month, so $2,000 to me doesn’t sound that bad.  

But you have to look at your overall expenses.  Just don’t get spooked out of a higher mortgage if it’s going to make your life easier.  We used to spend $150/month on tolls and $400/month on gas to commute to our jobs.  Now we spend $0 on tolls and $120/month on gas because we’re closer to our work.  That’s not counting wear/tear on the car.

[muttleynfelix]

Mar 19, 2013 21:48:34 GMT -5 @patstab said:

We just don't get ourselves in those situations.  If we hadn't rented it out the payments were so low we could have afforded them and the place we bought.  We sold our other house and had enough equity to pay it down.  If we buy a cheap house, we fix it up ourselves and move up.  The house we left, we built ourselves, took us a year and a half to do so.

I don't see how even if you make quite a lot of money you can ever afford payments on all the stuff people do and save any money.  Yes, I'm sure we are wierd.  I was trying to tell my handyman today that we are paying him enough that he could pay off his truck, he has 3 more payments.  But then he could start saving that money back each month and in about a year have enough for repairs or money back so he isn't always broke.  He is going to buy a motorcycle!  He rents from us too and likely in a couple of months he won't be able to pay the rent.  So many people just have to have instant gratification.

I'm sure many of you do well while both are working but we always wanted to be prepared in case one of us wasn't or couldn't for some reason.  And when I had to quit way early in my career because of mom and DD we were still able to swing it.  I guess I just don't want to live on the edge ever.  We sure started out poor though.

To me its just common sense and looking ahead and if that makes it look like I think we do better, well maybe in many cases we do.  We always plan and plan for about any eventuality so we don't end up in a hole financially.

  Sanctimonious much?  The OP didn't post her budget. She is talking about one aspect of her budget.  Is she saving? Is she spending frivolously?  Who knows. 

I also don't know how you plan for any eventuality. I mean everything?  I'm sure there is something you have missed that could have happened to you.  I like to think we are prepared and have planned, but I'm sure there is something that would absolutely rock my world that we even if we were prepared for it, it would drain us financially. Shoot my DH's medical problems over the last 6 years have taken a toll on us financially. That is $40k we could have been saving towards something else. But hey I'm sure you could have easily absorbed $40k over 6 years in your late 20s/early 30s too. 

[Deleted]

Mar 19, 2013 21:48:34 GMT -5 @patstab said:

I don't see how even if you make quite a lot of money you can ever afford payments on all the stuff people do and save any money.  Yes, I'm sure we are wierd. 

They make 230K a year.  That gives them a lot of discretionary spending.  Yeah, they could go live in a trailer, but I am failing to see why they would want to.  That mortgage isn't a stretch.  They can still fund their retirement account, save for college, go on vacations... I do not get debt aversion to that level. 

[gooddecisions]

Mar 20, 2013 10:49:46 GMT -5 @pooks1976 said:

Mar 19, 2013 21:48:34 GMT -5 @patstab said:

I don't see how even if you make quite a lot of money you can ever afford payments on all the stuff people do and save any money.  Yes, I'm sure we are wierd. 

They make 230K a year.  That gives them a lot of discretionary spending.  Yeah, they could go live in a trailer, but I am failing to see why they would want to.  That mortgage isn't a stretch.  They can still fund their retirment account, save for college, go on vacations... I do not get debt aversion to that level. 

Thank you. Our housing has been around 5% and as a result we have more than a million in assets. So, we're not exactly getting in over our heads. Networth does not really change from buying a house unless it loses value. Cashflow does, but we have plenty of room in our budget to increase housing expenses.

Housing didn't matter to us much before having a child, but now that we do- it's time to upgrade. I don't want to do what each of our parents did- and get the big home when the kids are in high school just to need to downgrade a few years later. I'd rather do it now while we have a nice runway to enjoy it. What good is money if we never spend it.

I find patstabs posts depressing since they have worked so hard saving all their lives and there still seems to be a fear of spending any money or retiring/enjoying retirement. I fear that will be me and I will have regrets.

[muttleynfelix]

And yes, in our 20's and 30's we could have absorbed $40k of medical debt because back then we had union insurance and it paid everything.

And that is the same as you having to pay for it?  I wasn't talking just medical bills, I was speaking in general. 

[midjd]

Mutt, just go join a union! Duh!

[muttleynfelix]

Mar 20, 2013 12:54:37 GMT -5 midjd said:

Mutt, just go join a union! Duh!

Well crap, why didn't I thnk of that.   Unions for Civil Engineers working for consultants are so prevalent you know.

[Phoenix84]

As others have said, it's all relative.  If you're making 6 or 7 thousand a month net then a 2k mortgage should be no big deal.  If you're only making 3k a month net, then that might be a different story.  I thought the general rule of thumb was your mortgage should never take more than 1/3 of your monthly net or something like that. 

[Deleted]

"And yes, in our 20's and 30's we could have absorbed $40k of medical debt because back then we had union insurance and it paid everything."

Paying out of pocket and having insurance cover it for you are not the same. If they were, then I can say I could afford $500k in medical bills.

You keep saying you anticipate and plan for everything. I am curious what if when you were staying at home with your mom and DD something happened to your DH that he couldnt work or care for your mom or DD, then what? My guess is you would have been screwed. Who in their 30s/40s would think that they would have to pay 40k out of pocket for medical expenses like muttleyn has? How do you plan for unlikely scenarios and every possible thing that can happen? I would have never in a million years thought I would give birth at 25 weeks because I have always been very healthy but it happened. No matter how much I planned, I would have never planned for this.

[gooddecisions]

It's depressing because over the course of 30+ years, you've made high incomes, kept your overhead very low by living in mobile homes or fixer uppers, have amassed a high networth and still lack the confidence that you have enough to retire (according to threads I've read over the years). Half the posts I read from you make it sound like you're poor- it would be a hardship when your husband's next gig is up and he can never retire, but the other half brag about your net worth and the money you have from rentals.

[gooddecisions]

And, I'm not doxie- so you don't need to treat this post like I make all those mistakes. We have two 10+ year old cars that have been paid off for 10 years, phones provided by work, internet provided by work, no pets to feed/take care of, pay off credit cards monthly (and always have), and can pay all 3 mortgages on all 3 properties tomorrow if we thought that was a good use of money.

[Deleted]

"no pets to feed/take care of"

Nothing wrong with having pets!  I would get pets if I were you

[muttleynfelix]

I could have drawn SS as a widow with a challenged child and got a healthy sum per month

BUt what if he had just been disabled (which from everything people is more likely)?  Essentially that is what has happened to my husband. Oh not to the point that he couldn't do any work, but over the course of swinging a sledge hammer for 20 years he developed some chronic health problems.  It doesn't fall to workmans comp because there was not one specific event that caused it.  It isn't disabled enough to qualify for SS, but it is enough that he shouldn't go back to work doing the work he did.  Of course the market tanked around the same time the issues became too much for him to ignore.  ETA: We figured out we could live on one income and he would be a SAHD. It has all worked out, but to sit there and say "stupid young people just don't plan" is pretty insulting.

we old foogies   you were different.

Fixed it.
We are talking about a mortgage. Most old foogies I know, even debt averse ones, had a mortgage for a good length of time. Even my "live in the most disgusting place I can find while I fix it up" BIL has had a mortgage from time to time.  And he is too cheap for cable or a cell phone.  Also, my MIL is older than you and is up to her eyeballs in debt. It is not a generational thing, it is a personal thing.