How much debt do you have?

[Piney]

This. A 300k house gets us a nice house. We could find a 200k house 20 miles away, but she wants to be able to go home for lunch and works 60 hours a week so she doesn't want a commute. Alternatives are an old house in the town eek. Or a brand new 250k (no frills) house in a builder development on .0000001 acres. A 2100-2400 mortgage payment puts us at about 30%

Yeah, where you live makes a big difference in cost. One reason I bring up using real figures versus %. Create a quick excel spreadsheet and throw together a potential budget. See the dollar figures so you know what you have.

Just a quick note... don't build a new house. ALOT of start up costs that you don't realize. You have to have extra cash on hand to really pull it off right. I have a newly contructed home and there is alot of things that add up quickly as you try to fill that house. Then everyone underestimates basic landscaping costs. And while a no frills new home might be 250k... those no frills homes kinda suck on the quality and force you to upgrade certain basics. Before you know it that 250k house becomes 275k.

Also... yes, the wife normally gets what she wants.

 

[Mac]

God, I love Columbus. Our real estate market is so much more reasonable. I can't wait to sell my house and buy a cabin in the woods to start working on my manifesto

I would love to build a log cabin in the woods by a lake. I guess I should start chopping now

 

[Fungo Squiggly]

I heard that this one can be had for a reasonable price

The I would really be a dazzling Urbanite in a rustic setting.

I would love to build a log cabin in the woods by a lake. I guess I should start chopping now

Cordwood homes.

 

[muffler dragon]

The I would really be a dazzling Urbanite in a rustic setting.



Cordwood homes.

Moving up from picnic tables, huh whore?

 

[Fungo Squiggly]

Moving up from picnic tables, huh whore?

It's like living inside a sex toy!

 

[jlb1705]

Wife's car, my student loans, joint AmEx and a soon-to-be mortgage will put as at obligations around 24% of our gross income.

That sounds like less debt than it actually is, but there's a huge mitigating factor. Put simply, my total student loan debt is about equal to the mortgage we're about to take out. The mitigating factor though is that about 80% of that student loan debt is eligible for Public Service Loan Forgiveness. Once I've made 10 years of qualifying monthly payments, the remainder of the eligible debt will be forgiven. I'm on the lowest income-based payment plan, simply trying to run out the clock. I'm four years in so far and last year was the first year I was required to pay an amount that didn't result in negative amortization. Needless to say, I won't be paying back nearly what I would normally owe on those student loans.

The wife's car has less than a year left before it's paid off, and for the AmEx we're making triple payments every month.

 

[Fungo Squiggly]

Had wanted to ask if that was pretty general for the city and outlying areas or does it vary greatly?

There are some areas that are unreasonably high, in my IMO, but for the most part, I would say it is reasonable across the board. I just laugh whenever I see one of those "buy my first home" shows in Chicago or SF or NY. $350k for a two bedroom place that needs a lot of work? No thanks!

AND start paying the child support!

Yeah....I don't like them THAT much.

 

[THEWOOD]

Man, I envy those who can get a "decent" house in a "decent" area for sub 300k. Like Bucklion posted above, that would REALLY be stretching it in Chicago.

With my monthly mortgage payment, property taxes, car payment(wife's is paid off) and condo association dues--we are at 18.3%. I pay off the credit card balances every month. I also max out my 401k and save a pretty big chunk of cash in different investment vehicles.

 

[muffler dragon]

There are some areas that are unreasonably high, in my IMO, but for the most part, I would say it is reasonable across the board. I just laugh whenever I see one of those "buy my first home" shows in Chicago or SF or NY. $350k for a two bedroom place that needs a lot of work? No thanks!

My sister lives in Pickerington, and I know what she paid for their place. Just wasn't certain how much it was similar to elsewhere in the vicinity. For comparision sake, they have a nice 1980s home on about a 0.25 acre lot. In my estimation, that same home would go for no less than 325k here in Salem, OR area. And it's all because of the land. If you can find a lot larger than 0.06 acre, then you pay a shitload for it regardless of the house condition, because they have an Urban Growth Boundary which synthetically inflates pricing.

Yeah....I don't like them THAT much.

They're well aware as I ingrain it in them daily. By the time they're both of age, you'll have a helluva whoopin' coming your way. May even be fatal, but I'll attempt to get them to restrain to just a few degrees before that. Either that or have an EMT ready for resuscitation.

 

[buxfan4life]

300K sounds like a lot for a house, especially if it is your first home. Aren't there any others in the area for less that are maybe not as new/big?

Where I live, housing prices were through the roof when I moved down here, but now have come back to reasonable levels. The one I currently have in contract is 1850sqft, 3BR/2BA with a pool and they were asking 200K, I got it for 170K but will have to upgrade, well, everything. Back when I first moved, I would not even have been in the ballpark for buying in the neighborhood as this particular house probably would have sold for close to 300K at the peak.

Also, be aware of PMI/MMI if you don't have 20-30% to put down, and runs about 1% of the mortgage value at closing (so mine will be an extra 1500-1600 a year on top of homeowners and flood insurance that are borderline ridiculous down here due to hurricanes and such, until I get 28% equity built up.)

Other items you need to consider are electric costs, trash/water/sewer (which are forgotten about when renting as they are usually included in your rent), association fees (if any), and how have the property taxes gone the past 5 years in that area. If they have increased each year, then your payment will go up every time they do if you choose to escrow everything (which some mortgage lenders make you do).

All in all, don't be quick to pull the trigger unless you are absolutely comfortable with how much the monthly costs are going to be.

Good luck!!

 

[sandgk]

We just got finished on a refi for the residue of mortgage on primary residence. Had equity, so into a near 3% 15-yr term, still paying less than the older 30-yr note. The lien itself is probably equal to about 1.5 times annual gross income for me alone. There's a loan associated with number one son's edumacation. That barely takes 5% of gross and will be paid down soon enough. No car loans - though that may change soon enough.

If I had to hazard a guess our current debt:income ratio is sub 15% - basically small enough to be considered not worth quantifying.

One thing surprised me in the preliminaries for refi, asked the banker what the debt insurance tax ratios would be these days.

Figured it would be some lower figure - as banks were stung once by loaning too much to those with too little to spare. The answer I heard shocked me - 45%.

They still haven't learned.

 

[Fungo Squiggly]

They're well aware as I ingrain it in them daily. By the time they're both of age, you'll have a helluva whoopin' coming your way. May even be fatal, but I'll attempt to get them to restrain to just a few degrees before that. Either that or have an EMT ready for resuscitation.

It'll be just like "A Boy named Sue"!

 

[OneBuckeye]

300K sounds like a lot for a house, especially if it is your first home. Aren't there any others in the area for less that are maybe not as new/big?

Where I live, housing prices were through the roof when I moved down here, but now have come back to reasonable levels. The one I currently have in contract is 1850sqft, 3BR/2BA with a pool and they were asking 200K, I got it for 170K but will have to upgrade, well, everything. Back when I first moved, I would not even have been in the ballpark for buying in the neighborhood as this particular house probably would have sold for close to 300K at the peak.

Also, be aware of PMI/MMI if you don't have 20-30% to put down, and runs about 1% of the mortgage value at closing (so mine will be an extra 1500-1600 a year on top of homeowners and flood insurance that are borderline ridiculous down here due to hurricanes and such, until I get 28% equity built up.)

Other items you need to consider are electric costs, trash/water/sewer (which are forgotten about when renting as they are usually included in your rent), association fees (if any), and how have the property taxes gone the past 5 years in that area. If they have increased each year, then your payment will go up every time they do if you choose to escrow everything (which some mortgage lenders make you do).

All in all, don't be quick to pull the trigger unless you are absolutely comfortable with how much the monthly costs are going to be.

Good luck!!

PMI was included in the number, although the lender said we could pay it up front for 4500, which seems like a no brainer since its 230 a month or so.

If I were to listen to the first poster, who said my mortgage should be 20% or so of gross income i would be looking at a 2900$ monthly payment which would put us into a 400k+ house. Thus why the other half sees it as affordable at 300k.

 

[BuckStocksHere]

I owe nothing but my house. Just started refi paperwork 2 weeks ago so I'll have a 15 year mortgage at 2.75%.

We rented for 7 years before buying 2 years ago. Best, best, BEST move I've ever made.

We built up an emergency fund, paid off every ounce of debt free and clear, and then bought after the housing market and interest rates plummeted. Now in Pittsburgh, they didn't really go down because they never really went up.

If you spend 300K in Pittsburgh, you are in a high end area. No need to spend quite that much and be in the best school districts in nice developments.

I'd argue that for what you get in Pittsburgh, there isn't any place better to buy a house. My mom's house in Chicago at half the size is probably 1.5 times as much as mine. Insane and no thank you.

 

[calibuck]

Just be careful about dual incomes. If one of you loses your job, can you still afford the strokes on mortgage and other debt? Assess what you can do, and the relative percentages of keeping your jobs for say, five years. With the economy you can never tell, and government jobs are not all that secure nowadays.

Paying off high interest debt is a guaranteed rate of return (finance 101), and right now is a great time to finance a home. Wife and I remodeled our home in a great neighborhood, upgraded value, etc. and got out even. Buying the location is probably more important than the house. If you are in a great school district, you will be able to sell it easier, so make sure you buy something for a family (minimum 3 br 2 baths).

Also, make sure you LIKE the home. If you buy for the wrong reasons, you will not want to come home to something you dislike. The percentages are more for the bankers than not, but pencil out the costs of home ownership, and make certain that you have enough disposable income. Budget of expenditures is extremely helpful, but make sure you and your spouse agree! Make sure she has her share to spend however she chooses (an allowance), as do you, and then make sure you put away enough for rainy day and or retirement......if your company makes a 'match' maximize that, as you young'uns will be too soon old, and a dollar put away today is worth over $100 when you retire (or somesuch amount). Enjoy, as it's a great thrill to live in something that you 'own'. We've been lucky to own more than the bank owns for quite some time, and neither of us like debt. Oh yeah, make sure you budget for 'fun' a vacation, scuba or ski or golf......whatever your passions are.....and what you can do with your spouse......qualify for the best rates on your mortgage, and never miss an opportunity to refinance when it is in your interest (and you can amortize your closing costs in two years).....chances are you won't be 'lifers' in your house or city, so any improvements you do, DO NOW, so you can enjoy them, rather than the person that you sell to (we learned that through experience)....

Could go on and on, actually it seems I did....sorry. But do enjoy, home ownership is one of US of A's great benefits.

:gobucks3::gobucks4: Make sure you have a front porch so you can fly your Buckeye flag on gamedays!