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Started By
Message
How much home can I afford?
Posted on 10/16/11 at 4:16 pm
Posted on 10/16/11 at 4:16 pm
estimated annual income ~ $92,000
savings ~ $30,000
single
cars paid for
have a property note ~$600 month
Thinking of buying a home?
savings ~ $30,000
single
cars paid for
have a property note ~$600 month
Thinking of buying a home?
6
Posted on 10/16/11 at 4:29 pm to vettegc
Get the downpayment up to $50,000 and then $250k.
Posted on 10/16/11 at 4:45 pm to vettegc
Hey everyone, look at my annual income! 
Posted on 10/16/11 at 4:49 pm to lnomm34
Meh, I don't think that was his purpose. Seems like a legitimate question to me.
Posted on 10/16/11 at 5:14 pm to LSUtoOmaha
quote:
Get the downpayment up to $50,000 and then $250k.
Whats your basis for this advice?
Posted on 10/16/11 at 5:16 pm to vettegc
since you're single, I wouldn't want to be tied down with a home in case opportunities came up. But you can afford anywhere from 200 - 300K depending on your other monthly payments.
Posted on 10/16/11 at 5:24 pm to C
He can probably afford a 200k house on a 15/yr note.
Using my budget calculator, he has roughly ~$5,800 available to him each month AFTER taxes.
Much of what he can afford depends on where he is living. If he is in a fairly lost cost of living state, then $6k a month for one person is ridiculous.
He could stink $2500 into his house payment if he wants and still live very comfortably without pinching pennies.
Using my budget calculator, he has roughly ~$5,800 available to him each month AFTER taxes.
Much of what he can afford depends on where he is living. If he is in a fairly lost cost of living state, then $6k a month for one person is ridiculous.
He could stink $2500 into his house payment if he wants and still live very comfortably without pinching pennies.
Posted on 10/16/11 at 11:40 pm to lynxcat
My basis is:
$50,000 in cash to get the downpayment to 20%.
Then I have him financing $200,000 at 4.5 percent interest for a 30 year mortgage.
That's $1,013 a month.
His monthly income is $7670 a month, which is, as you said, about $5800 a month after taxes.
So the $1,000 monthly note is quite affordable, as it comes out to about 17% of his take-home pay.
I think he could afford more, but this is quite a comfortable level.
$50,000 in cash to get the downpayment to 20%.
Then I have him financing $200,000 at 4.5 percent interest for a 30 year mortgage.
That's $1,013 a month.
His monthly income is $7670 a month, which is, as you said, about $5800 a month after taxes.
So the $1,000 monthly note is quite affordable, as it comes out to about 17% of his take-home pay.
I think he could afford more, but this is quite a comfortable level.
Posted on 10/17/11 at 12:13 am to LSUtoOmaha
Thanks for putting pen to paper on what the payment would be.
If a 200k house fits his needs, I would considering putting a 15 year note. While the benefits of a 30 year mortgage can be argued from a tax and investment perspective, this is a scenario where being free and clear would outweigh the potential financial benefit, IMO.
As I have mentioned on this board, I am fairly risk averse, hence this stance. I imagine some would approach the decision from a purely financial perspective that would impact their decision.
If a 200k house fits his needs, I would considering putting a 15 year note. While the benefits of a 30 year mortgage can be argued from a tax and investment perspective, this is a scenario where being free and clear would outweigh the potential financial benefit, IMO.
As I have mentioned on this board, I am fairly risk averse, hence this stance. I imagine some would approach the decision from a purely financial perspective that would impact their decision.
Posted on 10/17/11 at 3:06 pm to lynxcat
Why not get the 30 year and pay it off in 15? That way if he loses his job he can fall back on the lower payment of the 30 year loan.
Posted on 10/17/11 at 4:57 pm to LSUtoOmaha
quote:
So the $1,000 monthly note is quite affordable, as it comes out to about 17% of his take-home pay.
I think he could afford more, but this is quite a comfortable level.
This is good advice. Don't fall into the trap of spending too much on a house. You won't get as much enjoyment out of it if it's 40-50% of take home. The extra $$$ is very nice to invest, go on trips, etc. JMHO.
Posted on 10/18/11 at 2:44 am to LSUtoOmaha
Thanks for the replies! So what if I only want to stay in the house a couple years? Same advice? I was hoping to find something undervalued in the down market and being able to sell later? Oh and this would be in Baton Rouge or close by. Eventually I'd like to build on my property but I'm not ready to build my final home yet.
Posted on 10/18/11 at 6:18 am to vettegc
quote:
Thanks for the replies! So what if I only want to stay in the house a couple years? Same advice? I was hoping to find something undervalued in the down market and being able to sell later?
Well now you are out of my scope of knowledge, as I have no clue what the housing market will be like in a couple years. Being risk averse as well, I'd just rent most likely if this were the case.
That being said, just know that the houses that resell the most quickly are the ones that are similarly priced to others in the neighborhood. Just very generally speaking, it's going to be easier to sell a 250k house. Like I said though, I would never plan to do something like you are doing.
Best of luck
Posted on 10/18/11 at 7:55 am to vettegc
92000yr / 12months x .28 (28% of income) = 2146 is the most you spend a month on your house note, including taxes and insurance.
With that $600 note plus all the new expenses that arise from home ownership, might want to stay around 2k a month. At today's rate
30 yr around 4% 375k
15 yr around 3.5% 270k
With that $600 note plus all the new expenses that arise from home ownership, might want to stay around 2k a month. At today's rate
30 yr around 4% 375k
15 yr around 3.5% 270k
Posted on 10/18/11 at 12:08 pm to ItNeverRains
quote:
92000yr / 12months x .28 (28% of income)
I would not consider his gross income as the important metric. His take-home is the important metric.
Posted on 10/18/11 at 12:09 pm to vettegc
I would rent if you don't want to stay in the house very long. Flipping a house right now is a dangerous business.
Posted on 10/18/11 at 12:46 pm to vettegc
quote:
So what if I only want to stay in the house a couple years?
Rent. I was lucky enough to sell my house after living in it for 2.5 years for about the same as I bought it for. Still lost money due to realtor fees. And consider cost of ownership (not only the obvious such as taxes, insurance, etc.) but other things you need to buy (blinds/curtains, lawnmower, weedeater, etc.).
Posted on 10/18/11 at 12:56 pm to vettegc
Buy a home that fits your needs instead of buying what you think will impress the OT/society.
Posted on 10/18/11 at 1:09 pm to lynxcat
quote:
I would not consider his gross income as the important metric. His take-home is the important metric.
28% -- The Housing Ratio
According to the Federal Fannie Mae guidelines, a client should be spending no more than 28% of monthly income for housing payments. The 28% Housing Ratio is calculated by taking 28% of the borrower's gross monthly income (e.g. $50,000 a year = $4166 per month X 28% = $1166).
Mortgage 101
Posted on 10/18/11 at 1:23 pm to ItNeverRains
Take home is more accurate for several reasons, including variations in state income tax, employee contributions to health insurance, etc. All of those things on your pay stub that vary by location, place of employment, etc. I would even include 401k money in this as well, since contributions at least up to the match are darn near automatic.
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