I currently make $30,000 in an industry where I won't advance much beyond that pay. I am beginning to wonder how I will ever be able to buy a house with the cost of mortgage, tax, and insurance. So, I'm curious how much everyone makes Vs. How much there home is worth. Anyone overextend themselves?
My wife and I make ~$100,000, and our house is worth ~$140,000.
Twice your annual income. Any more than that is lacking personal responsibility.
We just bought an investment property for 10K. You don't need a fortune to buy a house.
prediction pete wrote:Twice your annual income. Any more than that is lacking personal responsibility.That's flat out ridiculous as a generalization. I don't know I'd want to mortgaged for much more than twice our combined income, but what you can afford depends both on what you make (income) and how much you can put down (savings).
I meant "no more" than twice your annual income. Even if you have a huge amount of money saved it is poor economics to buy a larger house. The taxes will kill you. It is not just the amount that you need to finance that needs to be taken into account.
I make $100k a year and I could not afford a $500k house if it was given to me.
Gross overgeneralization.I make $55k and my mortgage is $230k. This is for a modest 3/2.5 in NoCal. This is the price for living in CA.
prediction pete wrote:
I meant "no more" than twice your annual income. Even if you have a huge amount of money saved it is poor economics to buy a larger house. The taxes will kill you. It is not just the amount that you need to finance that needs to be taken into account.
I make $100k a year and I could not afford a $500k house if it was given to me.
Still, your generalization is weak, or at least oversimplified.
Our house is worth roughly 2.8 times our combined base income (680 vs 240), but our mortgage (370ish) is only a little more than half the value of the house. The mortgage payments are EASILY affordable, and we are paying for a kid to be in university and still covering the taxes (4k/yr), condo fees (3k/yr), utilities etc and putting more away for savings and living a comfy lifestyle.
I will grant you, I wouldn't want to carry this house with only 5% down.
As long as you don't buy into a bubble, you can grow into a house. I make the low 100s and have been in a house that started with a 265k mortgage. Each raise makes life easier and easier. And the house is close to a big city. The property will appreciate significantly as the burbs fill up and everyone wants to move into my neighborhood (in fact, everyone already does).
prediction pete wrote:
Twice your annual income. Any more than that is lacking personal responsibility.
My wife and I live in a $1.1 million house. We don't earn anywhere near $500,000/year.
The house, btw, is very nice, but it's probably not what you are thinking of when you think $1.1 million house (unless you live in the SF Bay Area in which case you think that 4 bedrooms, 3 bathrooms, 2300sq feet sounds about right).
In this current 2008 George W. Bush Economic Recession, housing prices are still falling, foreclosures are at a constant rate, large state gov'ts are becoming insolvent, public employee pension funds are insolvent, etc. Personally I own my two homes outright which I bought 30 and 20 years ago. I would not get a mortgage for more than 15% of my net worth, and only buy for the if you have young kids and the public schools are very good.
We have about a 2.6 to 2.7 pre-tax gross income to home value ratio right now. We put 20% down and the mortgage really isn't that bad.
Wife and I make $90,000. House is $110,000.
wife and i make a little over 300k(250k me, 60k her). we bought last summer for 350k. a nice house in a nice area. it's more than good enough for now. taxes aren't terrible and the schools are great. and since i do most of the financials, we're saving a nice chunk. you don't have to buy the max you could afford. we like vacations and doing things around the city.
Another rule that my father taught me was to have your house paid off before any kids in the household begin college.
Make about 250K, house is worth about a mil give or take a hunnert-K (Bay Area, Ca - 5br/2.5bath 2500sqft). Bought it a long time ago and have no mortgage. Hmmm, I've learned that I can't afford it. Shit, thanks for telling me that.
appx. $265k gross combined annual income : $330k house value (dropped about 1% in value from when we bought it in 2003; benefit of good location and desirable school system). When we bought, it was approximately $230k:$333k.
We could have afforded more house, but didn't feel it was wise. Retirement savings and our one child's college education funding are priorities.
Good advice. Paid ours off 18 months ago...still have 18 months until the first of our 2 kids hit college.
Hope your father also told you about 529 or similar college savings plans.
prediction pete wrote:
Twice your annual income. Any more than that is lacking personal responsibility.
If you did that over here you would buy nothing - I got 4 x salary 10 yrs ago. The property has doubled in value since I just wish I could have got 2 at the same time
Net Worth wrote:
In this current 2008 George W. Bush Economic Recession, housing prices are still falling, foreclosures are at a constant rate, large state gov'ts are becoming insolvent, public employee pension funds are insolvent, etc. Personally I own my two homes outright which I bought 30 and 20 years ago. I would not get a mortgage for more than 15% of my net worth, and only buy for the if you have young kids and the public schools are very good.
I would check your calendar. It's 2011.