I am looking to buy a house, but I don't know how much I should try to spend. I will make around $48,000 this year. How much do you make and how much was your house? Answers and advice appreciated.
I am looking to buy a house, but I don't know how much I should try to spend. I will make around $48,000 this year. How much do you make and how much was your house? Answers and advice appreciated.
There are WAY too many other factors to add in there to give you a good answer. Where do you live for instance, that might help some.
With no money down? About $200,000
You should talk to an accountant or financial planner. Generally the 40% rule applies, assuming that you are debt-free (or close to it). Mortgage should not excede 40% of gross income.
When I was looking nine years ago, there was a formula the bank used to determine the max amount they'd lend me. Talking to bank people about this kind of basic stuff is usually free, so make a call.
Seek expert advice wrote:
You should talk to an accountant or financial planner. Generally the 40% rule applies, assuming that you are debt-free (or close to it). Mortgage should not excede 40% of gross income.
That's total mortgage payment, which includes R.E. tax and homeowner's insurance, right?
Net monthly income divided by 3 is a common way to determine what you're able to afford.
Alan
It depends on a number of things.
1) How much can you make for a down payment? If you can't pay down 20% or more of the home's value then you have to pay PMI or take out a second mortgage. Neither of which is a good thing. If you don't have a lot to put down, you are still better off paying PMI then renting, but the maximum amount you can borrow goes down by quite a bit.
2) How much debt do you have what is your monthly debt payment? Fannie Mae guidelines stipulate that your total monthly payment on all debts plus your monthly mortgage payment (principle, interest, property taxes, and insurance) cannot be more the 50% of your pretax income, $2000 in your case.
3) What type of loan are you looking for? With interest rates on the rise, in most cases you are better off with a fixed rate. That is unless you think that you will be moving with in the fixed term of an adjustable rate mortgage.
If you had 60k-70k to put down and no debt, then the most expensive home that you could buy on a 30 year fixed mortgage would be in the $300-$350k, depending on tax and insurance rates in your area.
Really it depends on your situation. Some say 28% of your pretax income is the most you should spend on a house. But if you are single, have a steady secure job, and have no debt then there is no reason not to spend 50% of your income on a house. If our have kids, and lots debt then 28% might be too high. It just depends.
I live in Cincinnati, Ohio. I have college loans totalling 14,000. I still owe about 12,000 on my car and my credit card is at 1200. That is all I owe. I will probably only put down 5-7k since I haven't really started saving yet. I just got promoted, so I was used to only making 30k a year.
Pay off your loans, Save up for a downpayment, 20% is the minimum if you don't want to get screwed on your loan, so for a 300k house, you will need to save $60,000. You are not even close to ready, save up for a few years.
First you have to ask yourself what type of lifestyle you
want.
Do you want to fill your house with fancy furniture?
Do you want a new car out front?
Is your wife/girlfriend a Shopaholic?
Are you prepared to live a simple uncomplicated life.
In otherwords are you prepared to sacrifice bad debt(disposables)for good debt(assets)?
I own three houses by working on this basic analysis.
My income has been similar to yours and I have raised 4 kids.
If you are happy with debt then make it good debt and borrow as much as you can.
Start with an el cheapo and upgrade as the years go by is my advice to a first timer.
Good Luck
Do you rent those other two houses out?
I am going to be brutally honest here: most people spend way too much on a house. If you live in Ohio, housing prices should be reasonable.
I live in Indianapolis. I bought my house 6 years ago for $90,000. It's a nice house in a nice neighborhood -- not large, but very nice for two people. At the time, I was making around $60,000/yr. My mortgage payment is $634, of which, my live-in girlfriend kicks in $300/month. So, my living expenses are around $350/month, which was cheaper than what I paid for rent in college, 15 years ago.
My suggestion is to under-buy, and put that extra money into your retirement account. A lot of people will tell you to spend $200k or $300k on a house, which is generally a lot more house than you will need. Buy a reasonably priced home, keep yourself from being strapped down by a huge mortgage, and have fun with your life.
Yes.
So you bought a house, lived there, upgraded and then rented the old one out? And you did this twice? That was a pretty good plan.
It's a good way to become wealthy, actually. I bought a junker house at a tax-sale for $6500 (no kidding) 3 years ago. I've been working on it when I have time, I've put about $15k into it so far. It's about a year away from being done, nd I should be able to sell it for $60-$70k at that time, and I'll only have about $25k into it. I'd rent it out, but I don't want to deal with tenants.
Each to their own,You have a good attitude to want you want in life.
I feel I have missed nothing and although I stiil work fulltime,I have plenty of options.
My houses have appreciated way faster than any retirement fund.
I also have the flexibility of selling part of the asset(ie
a house) at anytime.
Mostly I am in control of my assets and I am very comfortable with that.
i make 40K and have ~17K to put down. i got pre-approved for 240K. no way i could afford it but they will give you way more than you should spend.
I would suggest saving a little more. I don't know what houses are selling for in the Cincinnati area, but I would imagine that you could find a house or condo in the 100s to 150s. I would recommends saving a little more so that you can get close to a 20% down payment. PMI sucks and you don't get to write it off of your taxes, so you don't to have to pay that. The poster who suggested that you buy something that you can easily afford offers you good advice. Just be mindful of neighborhood you buy in as the neighborhood plays a large factor in whether your home gains or loses value.