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re: Homebuyers are now spending 40% of their gross income on mortgage and interest costs
Posted on 7/23/23 at 11:43 am to Epic Cajun
Posted on 7/23/23 at 11:43 am to Epic Cajun
quote:
That still leaves you with ~7k
After taxes?
1
Posted on 7/23/23 at 11:49 am to HailToTheChiz
A lot of these don’t scale up just because you have a larger house or make more money. You can’t live on 4k for living expenses? It depends on how many kids you have in terms of private school, but the rest of those bills shouldn’t add up to much more than 2-3k if you are reasonable with car purchases.
Posted on 7/23/23 at 11:51 am to TDTOM
quote:
After taxes?
Yeah, at 200k gross you should be bringing home around 11-12k each month.
Posted on 7/23/23 at 11:56 am to ellesssuuu
quote:That’s awesome. My wife and I are mid 20s, bought beginning of 2022, 3.25% rate, 15% of combined gross income. House estimated value $365K.
Bought 10 years ago and refinanced 3 years ago to a 20 year term and I am 50 now.
Comparatively to you, my situation looks not so great. Compared to my peers I think I’m sitting pretty good considering what things could be.
Things aren’t great right now and I feel bad for my peers. I know there are quite a few who are idiots, but even in this younger generation there are still millions of us trying to just live comfortable. Nothing fancy or keeping up with the Jones. Just comfortable. And everyday that just seems to be harder and harder.
Posted on 7/23/23 at 11:58 am to TDTOM
quote:
I understand all that. However, at some of these numbers they are a 2 month layoff from defaulting.
Probably true but they see the risk as an acceptable tradeoff to the alternatives of renting or owning in a bad neighborhood.
The key is to follow basic financial wisdom:
1. Build an emergency fund
2. Eliminate non-secured debt
3. Max out tax advantaged retirement accounts
4. Then decide how you want to allocate disposable income based on their importance to you - housing, travel, hobbies, style, toys, etc...
Posted on 7/23/23 at 11:58 am to Epic Cajun
quote:
A lot of these don’t scale up just because you have a larger house or make more money. You can’t live on 4k for living expenses? It depends on how many kids you have in terms of private school, but the rest of those bills shouldn’t add up to much more than 2-3k if you are reasonable with car purchases.
No money to do anything else and really no savings
Posted on 7/23/23 at 12:00 pm to Epic Cajun
quote:
Yeah, at 200k gross you should be bringing home around 11-12k each month
Not if one is maxing out their 401k as they should be when making 200k gross.
Posted on 7/23/23 at 12:10 pm to Vacherie Saint
quote:
Let’s be generous and assume net income is 70% of gross. Meaning the debt is an even higher percentage of net. Close to 60% if you gross 10K per month for round numbers. This doesn’t include utilities, internet, phone, gas, insurance, etc. How do people live like this?
Gifts from family, credit card debt, unreported income
Posted on 7/23/23 at 12:16 pm to LSUFanHouston
quote:
Gifts from family, credit card debt, unreported income
Bingo
Posted on 7/23/23 at 12:21 pm to ellesssuuu
quote:
Bought 10 years ago and refinanced 3 years ago to a 20 year term and I am 50 now.
Almost exact same here. Except I’m 49 and refied to a 15 year note. House payment actually dropped about $10 dollars. We’re locked in at 2.3%.
Posted on 7/23/23 at 12:26 pm to Deuces
quote:Okay, so that's appealing. A 3 BR, 2 Ba , 1500sf house with a single garage in an iffy neighborhood in Zwolle vs. a place in the Bay area.
You can buy a house in Louisiana for 150k that’s 1.4 million in the Bay Area.
Posted on 7/23/23 at 12:48 pm to stout
What no one talks about is the surging cost of home & flood insurance in this equation. And taxes!
Posted on 7/23/23 at 2:29 pm to stout
Good thread.
More people, especially young people, should grasp the importance of the info posted by the OP.
More people, especially young people, should grasp the importance of the info posted by the OP.
Posted on 7/23/23 at 8:49 pm to hondapa26
quote:
The highest % we ever paid was 66%. Our mortgage and interest and taxes were $4100 per month or $49,200 per year. Out income was $74,000 per year.
quote:
How are you getting 66%? I got a different number there
Sorry, I was writing quickly. I fixed it. Our income was just under 75k. It was the year before my wife and I got our first jobs out of residency.
Posted on 7/24/23 at 2:15 am to cgrand
quote:
wealth building has never been more accessible than it is right now
Can you share some strategy? Or are you saying because stocks were down, you could buy them at a discount?
Posted on 7/24/23 at 5:48 am to jbgleason
quote:
So my question is this. Using history as a guide, if I have cash and am about to start shopping for a "forever home" in the next 6 months, what is my best play?
If you're going to keep the place long term or permanently, go ahead and buy. You can't time the market without a DeLorean.
If interest rates drop significantly you can refi.
If prices drop, you might end up paying just as much in rent while you waited for prices to drop, so you didn't gain anything by waiting.
Posted on 7/24/23 at 10:06 pm to jbgleason
quote:
So my question is this. Using history as a guide, if I have cash and am about to start shopping for a "forever home" in the next 6 months, what is my best play? 1. Buy now. 2. Rent something and wait for a potential crash? How long could that be? If there is a crash, what kind of advantage will cash give me? Is waiting going to be worth it? 3. If I wait and the market survives, what do I lose by waiting?
Buy now but make sure you’re willing to stay there if you’re buying a “forever home”. I’ve lived in Phoenix, Charlotte and Baton Rouge. Been in baton for 12 years and built my “forever home” 2.5 years ago and now I’m moving to Houston.
With that being said I made some and lost some with having to move over the years but anyone who has stayed in a house in those markets has made a good amount of money.
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