telephus44
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Post by telephus44 on Jan 26, 2011 11:54:49 GMT -5
I put in our numbers from when we bought the house, and it said we could afford a $477K house. We were trying to stick to $210-$225, but ended up buying one at $231K. Honestly, I never asked the bank what they thought we would qualify for - we just went in with a picture of the house and said "We want to buy this house." and they said "Ok."
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hcj
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Post by hcj on Jan 26, 2011 19:12:05 GMT -5
"I hvae no debt whatsoever and fully fund Roth's each year (no 401K) and other investments"
This is why you qualify for so much. I think it would be really difficult to buy what you qualify for and still max these out. Our mortgage is less than we qualified for, yet it still is tight after maxing. Sure, there are plenty of places we could cut back, but if our mortgage was 50% more, we would be forced to slash and count every penny in order to continue saving for retirement at the rate we do.
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hcj
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Post by hcj on Jan 26, 2011 19:16:06 GMT -5
Why would you want to buy a $400k house? Why not buy something more reasonable, just a nice house that you can pay off quickly with an $85k down payment. You are doing well but a $102k salary isn't that high to take on debt like that. I would buy more reasonable and pay it off quick as possible. It depends on where you live. Where I am, a nice 2br condo is $200k+ A nice house (3/2) with even 1/4 acre starts at closer to $300k. If I wanted to live closer to where I work, I would easily get into the $400k+ range No kidding! We live in a working class neighborhood and the only SFR you would be able to buy south of $400K is a tear down on a 6,600 sq/ft lot.
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Deleted
Joined: May 2, 2024 5:17:24 GMT -5
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Post by Deleted on Jan 29, 2011 17:22:12 GMT -5
DH and I had dinner last night at the home of a member of our church. It's in a gated community very close to the church and we'd never been beyond the gates before. Wow. It was a beautiful house, of course- the entire public area of the first floor was 2-story, with a balcony on the second floor overlooking the lower floor family room, foyer and dining area. Granite countertops, stainless steel appliances, the dark wood 4-poster plantation bed in the MBR (they put our coats in there and I went in to retrieve ours). I later looked the area up on realtor.com. (Their street is called "Street of Dreams". I am not making this up.) It was probably a $1.4 million house, although DH and I realized we could afford one of the more modest homes in the area (only 3 BR, 3 bath) for $700K. Of course, or monthly housing expenses would probably triple, leaving us little to save for retirement or travel.
It was an interesting mental exercise. Unless you're a CEO or a trust fund baby, most of your wealth is tied up in the real estate market. Your ability to make the monthly payment lasts as long as you're employed at your current job. Then there's the furniture. DH and I have a comfortable mix of high-quality pieces and hand-me-downs that we just comfortably mushed together in our new house when we married. What did these people spend on their furniture? And what are their utility bills and the HO association costs? How do they afford membership in the attached golf course, too? It really boils down to a decision that your house is going to be your biggest financial priority.
A former boss of mine lives in that community- he told me there were a lot of foreclosures up for sale right now. He and his wife also owned a house at a lake community in the Ozarks and they had considered selling this place. The estimate of a professional appraiser they hired came in considerably below the cheery valuations of the realtors who wanted the listing. I'm glad DH and I went cheap.
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jk70
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Post by jk70 on Jan 29, 2011 17:50:36 GMT -5
The lowest priced home to go in my area in 2010 was 354k to give you an idea (and the average lot size is only 7,100 sq. ft)....I do make more than 102k but the 102k is my base salary and what I estimate and calculate everything off of. I get distributions every year but I never know what they will be so I always assume that my base is all I will get
I think people are getting off the subject. The point of my post was mainly that I was surprised that Bankrate.com is so liberal in their estimations. They are consider one of the more legitimate sites out there and I was surprised. I found others that seem to "get it" better and said the higest I could afford was ~422,000...This is not shocking. $541k is.
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phil5185
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Post by phil5185 on Jan 29, 2011 18:47:02 GMT -5
They aren't telling you what you can afford, they're telling you how much you can borrow. Using the 28% standard, they are telling you that the maximum loan that you could qualify would be $456,247. And if you have other considerations - a high property tax area (NJ), a high insurance area (FL), toxic HOA area, etc - you would correct to account for them. And after you learn your corrected maximum, you are allowed to apply common sense to that number What is the sq footage of that $354,000 house?
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jk70
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Post by jk70 on Jan 29, 2011 18:50:23 GMT -5
1,800 Sq. Feet
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midjd
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Post by midjd on Jan 29, 2011 20:27:24 GMT -5
I like this thread, DH and I just closed on our new house last Wednesday!
The mortgage (which is in my name only) is about 2.5x my annual income and the payments are 23% of gross and 34% of net. The crazy thing is, they were willing to lend me 30% of gross, which would have been 44% of net and completely unmanageable on just my income (DH is in school (no SLs, thankfully) and my SLs eat up about 20% of net.). That would have left us with about $900 per month to live on, unless I lowered my retirement contributions (currently $800/month)... we're in a LCOL but that would still be extremely tight.
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