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What would you consider a reasonable mortgage?
Posted on 5/18/19 at 9:25 pm
Posted on 5/18/19 at 9:25 pm
My wife and I (both late 20’s) are looking to buy our first home and I’m debating what would be a reasonable mortgage for us.
Together, we have a combined pre tax income of about $150k. Possibly more depending on bonus but the $150k is a safe bet. We have a total of just over 12k in debt. 6k on a car loan and another 6k in student loans. Total monthly payment is 300 bucks.
My credit is 720 and hers is in the 760’s
We could in theory take out a lot more than we need. Wondering what would be safe amount to go with given the fact that shite can happen (like one of us lose our jobs or unable to work).
Also we don’t have any kids but I would say they are in the future 2-4 years
ETA: have about $30k for a down payment
Together, we have a combined pre tax income of about $150k. Possibly more depending on bonus but the $150k is a safe bet. We have a total of just over 12k in debt. 6k on a car loan and another 6k in student loans. Total monthly payment is 300 bucks.
My credit is 720 and hers is in the 760’s
We could in theory take out a lot more than we need. Wondering what would be safe amount to go with given the fact that shite can happen (like one of us lose our jobs or unable to work).
Also we don’t have any kids but I would say they are in the future 2-4 years
ETA: have about $30k for a down payment
This post was edited on 5/18/19 at 9:41 pm
16
Posted on 5/18/19 at 9:31 pm to HarveyBanger
$1467/month
This post was edited on 5/18/19 at 9:32 pm
Posted on 5/18/19 at 9:40 pm to TheWiz
quote:
1467/month
Where did you come up with that exact number?
Posted on 5/18/19 at 10:31 pm to HarveyBanger
2,377 25% of estimatesd post tax take home
2,815 30% of estimatesd post tax take home
2,815 30% of estimatesd post tax take home
Posted on 5/18/19 at 10:40 pm to Larry Gooseman
Whatever the OP does, make sure you are factoring in everything and not just the mortgage. HOA fees, property tax, insurance, maintenance, etc.
Posted on 5/18/19 at 11:41 pm to HarveyBanger
$1,850 - $2,100
Posted on 5/18/19 at 11:49 pm to HarveyBanger
What’s are your preferences for family? Do you plan on having children? Do you want to live in a certain area? Are you both planning on staying in the area long term?
You need to stop thinking in terms of your gross income and start thinking in after tax take home pay monthly. As someone else said, homeowners insurance, HOA fees, possibly flood insurance and other housing expenses need to be kept in mind.
Also, do you foresee additional debt via another car note? Potentially taking on additional expense like a bigger car note for newer or updated cars? Find a monthly note you think you can afford by working with a mortgage broker to get prequalified for a mortgage, and then ask for suggestions and interview a few realtors.
Happy hunting...
You need to stop thinking in terms of your gross income and start thinking in after tax take home pay monthly. As someone else said, homeowners insurance, HOA fees, possibly flood insurance and other housing expenses need to be kept in mind.
Also, do you foresee additional debt via another car note? Potentially taking on additional expense like a bigger car note for newer or updated cars? Find a monthly note you think you can afford by working with a mortgage broker to get prequalified for a mortgage, and then ask for suggestions and interview a few realtors.
Happy hunting...
Posted on 5/19/19 at 7:11 am to HarveyBanger
For me, I like to set the mortgage limit based on lifestyle choices. So I would go about it like this:
Start with your monthly take home pay (preferably 2 paychecks if paid biweekly), then:
1) subtract how much you spend eating out each month
2) subtract how much you spend on groceries per month
3) subtract how much you spend on cars per month (loan, fuel, maintenance & insurance)
4) subtract estimated utility costs per month
5) subtract how much you spend on traveling per month
6) subtract any other set monthly expenses
7) subtract how much you spend on clothing per month
Take what is left over. Subtract another $1k-$2k for discretionary spending per month (or whatever value you want). This is vital IMO. If you dont have this set discretionary spending each month you become house poor real quick.
What you have now is a good starting point for how much you can spend on the mortgage, home insurance, property taxes, HOA and maintenance per month.
You also have two extra paychecks per year for fun spending or emergencies doing it this way.
Start with your monthly take home pay (preferably 2 paychecks if paid biweekly), then:
1) subtract how much you spend eating out each month
2) subtract how much you spend on groceries per month
3) subtract how much you spend on cars per month (loan, fuel, maintenance & insurance)
4) subtract estimated utility costs per month
5) subtract how much you spend on traveling per month
6) subtract any other set monthly expenses
7) subtract how much you spend on clothing per month
Take what is left over. Subtract another $1k-$2k for discretionary spending per month (or whatever value you want). This is vital IMO. If you dont have this set discretionary spending each month you become house poor real quick.
What you have now is a good starting point for how much you can spend on the mortgage, home insurance, property taxes, HOA and maintenance per month.
You also have two extra paychecks per year for fun spending or emergencies doing it this way.
This post was edited on 5/19/19 at 7:13 am
Posted on 5/19/19 at 8:10 am to HarveyBanger
OP with the amount y’all make you can probably find a nice starter home and be able to comfortably have a couple kids for even under $1,000 a month. Figure out the max you can afford a month and when you buy a house try to get your note to be half that. Y’all could probably buy a decent house for under 200k depending on your area and put 30k down and have a comfortable note with a 20 year loan.
ETA: I know negotiating monthly note is bad with cars and I don’t mean negotiate your note with a house or anything. But 10,20,30 year loans are the standard. Check house prices and find out how much it’s gonna cost you a month based on interest rates and price of house. Try and get one where your note is fairly cheaper than what y’all can afford. Y’all make enough to live in a decent starter home for a good price for y’all
ETA: I know negotiating monthly note is bad with cars and I don’t mean negotiate your note with a house or anything. But 10,20,30 year loans are the standard. Check house prices and find out how much it’s gonna cost you a month based on interest rates and price of house. Try and get one where your note is fairly cheaper than what y’all can afford. Y’all make enough to live in a decent starter home for a good price for y’all
This post was edited on 5/19/19 at 8:19 am
Posted on 5/19/19 at 10:56 am to HarveyBanger
Advice from an old person of 58: Never take as much mortgage as you qualify for.
We always lived below our means and had a large emergency fund. This gave us peace of mind the times my husband was out of work during his career.
Even we we upsized houses, we never had a mortgage more than $100,000. When we were ready to retire and downsize, we paid cash for our house. What a great feeling to be debt free before 60.
Now I realize a $100,000 mortgage doesn't go far these days but the point is not to get a $300,000 house if you really don't need it.
We always lived below our means and had a large emergency fund. This gave us peace of mind the times my husband was out of work during his career.
Even we we upsized houses, we never had a mortgage more than $100,000. When we were ready to retire and downsize, we paid cash for our house. What a great feeling to be debt free before 60.
Now I realize a $100,000 mortgage doesn't go far these days but the point is not to get a $300,000 house if you really don't need it.
Posted on 5/19/19 at 11:12 am to HarveyBanger
I have zero debt. Am looking at making a purchase which would result in 25% of take home (all housing expenses included) with 20% down on a 30 year. Not sure if that’s too much but it’s hardly more than my rent and I still save a crap ton of money.
Posted on 5/19/19 at 11:13 am to HarveyBanger
A huge factor is the cost of living in your area. It could be hundreds of dollars per month in additional property taxes, insurance, utilities etc from one place to another
Posted on 5/19/19 at 11:47 am to HarveyBanger
1/5th of take home pay.
Posted on 5/19/19 at 12:00 pm to HarveyBanger
Your down payment is a significant factor. If I were you I’d go smaller house to minimize the PMI and interest rate. Bump up to a bigger house once you’ve built some equity, which you should do quick with that income
Posted on 5/19/19 at 12:01 pm to Dawgfanman
Appreciate all the advice here guys. I agree with a lot of what was said.
A mortgage payment of about 1500/month I believe is where we want to be after a 30k down payment. That 1500 to include insurance, PMI, and any HOAs.
With that being said my math puts us in a house for around 225k-250k. Which in our area we can get a nice 1500-2000 SQ FT house.
A mortgage payment of about 1500/month I believe is where we want to be after a 30k down payment. That 1500 to include insurance, PMI, and any HOAs.
With that being said my math puts us in a house for around 225k-250k. Which in our area we can get a nice 1500-2000 SQ FT house.
Posted on 5/19/19 at 2:10 pm to HarveyBanger
quote:
My credit is 720
Get your score above 740
Shouldn't be hard with your income.
Posted on 5/19/19 at 3:13 pm to LSU6262
quote:
Get your score above 740
Should be there soon
Posted on 5/20/19 at 9:43 am to HarveyBanger
quote:
We have a total of just over 12k in debt. 6k on a car loan and another 6k in student loans. Total monthly payment is 300 bucks.
Pay this off first.
Your future self will thank you.
Posted on 5/20/19 at 9:50 am to HarveyBanger
don't forget about property taxes
Posted on 5/20/19 at 10:00 am to Snipe
quote:
Pay this off first. Your future self will thank you.
Agreed. With that income shouldn't be a problem to get rid of it quickly. You could do that first, up the credit score then go for the house. Especially if you already have a down payment saved up it shouldn't take you long.
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