re: Rule Of Thumb For Mortgage

New build cost for most of the Southeast was $110-150 a square foot until this year. Developers will definitely sell you a home for $200 a square foot but you are overpaying. I looked at several homes around $75 a square foot before I purchased my current home in 2017 for $39 a square foot as a foreclosure. Even after major renovations and upgrades like $30,000 in landscaping I was all in at $109 a square foot for a greater than 3,000 square foot house in a great neighborhood in a city of 200,000 people. I acted as my own GC and pulled my own permits before subbing out work. I’m not gonna lie, that was a pain in the arse. But buying a good house for $100 a square foot can be done but you have to be patient and a smart buyer.

My mortgage note is currently about 9% of my gross income. We bought it when we were making almost half of our household income. This level allows us to save liberally and never really question our everyday purchases.

It's pretty simple to me. Look at your monthly budget and see what note will allow you to continue saving and spending to the degrees you feel comfortable, and then don't spend more on a mortgage than that.

Common mistakes:

(1) People who expect a raise in income that never happens. "I make 80k now, I'll be making 120k in 2 years!" Gets laid off. *shocked pikachu*

(2) People who set their budget at the top they can afford, then "fall in love with" a house that costs 20-30k more. Will justify the extra cost with any number of reasons "everything on our list, good schools, best neighborhood, great resale, so much character, etc"

(3) People who think they'll be so happy in a nicer house that they'll spend less on clothes, electronics, cars, etc.

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4) Household should spend a maximum of 28% of its gross monthly income on total housing expenses and no more than 36% on total debt service

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Let’s say someone is curious about how much mortgage (not house) they might qualify for. Use #4 as a guideline, because that’s typically what a mortgage banker or broker will use to qualify them as a starting point. As for the house itself, things like cash on hand or downpayment ability and personal payment comfort level will affect that, along with mortgage amount.

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Let’s say someone is curious about how much mortgage (not house) they might qualify for. Use #4 as a guideline, because that’s typically what a mortgage banker or broker will use to qualify them as a starting point. As for the house itself, things like cash on hand or downpayment ability and personal payment comfort level will affect that, along with mortgage amount

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Yup.

One thing that never gets mentioned with "how much can i buy" is payment shock.
28% gross income might be double what someone is currently paying in rent or smaller home. Just because someone else says you can afford it doesnt make it "easy" or "adviseable".

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Just because idiots in New Orleans pay ridiculous prices for houses

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To each his own. Enjoy Ruby Tuesdays.

Depending where you live/ taxes... you would expect $2-4k in utilities, upkeep, HOA, insurance, property taxes even if you purchased it outright.

Never ate at Ruby Tuesday’s again after they pulled their ads off Tucker Carlson. I did just eat at several high end restaurants in Key West. Key West is a lot like New Orleans…except it’s clean and no is getting killed. Also the mayor seems competent.