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Posted: 8/14/2007 11:12:35 PM EDT
Got a question for you guys. What percentage of your income was for your mortgage (to include property taxes and insurance)? Were you able to live a decent lifestyle with that payment percentage? Honestly, I'm really interested in folks with Less than $50K household income, as I've been approved for a mortgage teh bank says I can afford, but I don't seem to think so.
Link Posted: 8/14/2007 11:17:57 PM EDT
General rule of thumb is your mortgage shouldnt be more than 1/3 of your take home pay. Take home pay being after taxes.
Link Posted: 8/14/2007 11:22:23 PM EDT
My house payment runs about 20% of our take home pay. We were approved for a much more expensive house than we bought.
Link Posted: 8/14/2007 11:35:29 PM EDT
Dave Ramsey recommends no more than 25% of your take home pay on a 15 year note.

That way you have some money left to save.
Link Posted: 8/14/2007 11:46:44 PM EDT
The bank has no clue how much you can afford. They have formulas and whatnot and it's all BS. Do not let anyone tell you that you can afford X amount when you think you can only afford Y. You are right. They are wrong.

Do not figure out what you can afford based on the ideal. You may think you can afford $1200 a month but that's only if your car doesn't break down, the roof doesn't leak, the AC doesn't die, etc.

If you overextend yourself you will regret it for the next 15 or maybe 30 years.

How much do you pay for rent now? Could you pay $500 a month more every month no problem? You're still going to want to buy guns, ammo, blow money at SeaWorld, etc.

Link Posted: 8/15/2007 2:18:02 AM EDT

Originally Posted By MisterPX:
Got a question for you guys. What percentage of your income was for your mortgage (to include property taxes and insurance)? Were you able to live a decent lifestyle with that payment percentage? Honestly, I'm really interested in folks with Less than $50K household income, as I've been approved for a mortgage teh bank says I can afford, but I don't seem to think so.


The mortgage company will ALWAYS approve you for more than you can really afford to pay. Be sensible, but get in now, things are getting tightened up big time.
Link Posted: 8/15/2007 2:32:36 AM EDT
.25 here
Link Posted: 8/15/2007 3:01:19 AM EDT
Link Posted: 8/15/2007 3:09:18 AM EDT
[Last Edit: 8/15/2007 3:10:05 AM EDT by chromeluv]
with my wife and I, our mortage is 29% of our monthly income, that includes property insurance in escrow each month but not home owners/flood insurance on a 30year note.

We might have made a mistake though to be honest, 4bed/2bath, 1800square feet for the two of us and our dogs

Link Posted: 8/15/2007 3:11:11 AM EDT
in the old days (like mid 80's) the ratios were your mortgage payment (PTI) could not exceed 28% and mortgage plus all household debt (like car notes, revolving charge cards) could not excee 36% of your Gross monthly income.

The problems with the housing/lending market today is based on pure greed. Everyone from the developer, home builder, mortgage broker, appraiser, underwriter, etc... tried to keep the pipeline full of deals no matter how risky, and increasingly reduced standards to keep the pipeline full. Increasing home prices were the only thing holding it up.

I cant believe some of the homes people have that we know. They make half of what I make but live in a house worth twice as much. Some dont even have kids and live in a $500K home in the SE.

It is all coming to roost now.

While homeowners bear some responsibilty it is the lenders who put these people into mortgages they knew they could not afford down the road.

It is sad but it will take some time to clean this mess up.

Live within your means, dont let a bank tell you can afford more than you know you can. Keep in mind they are recommending loans that are good for them not but not necessarily for you.


Link Posted: 8/15/2007 3:11:19 AM EDT
You people saying 25% - is that 25% of gross or net?

Link Posted: 8/15/2007 3:30:44 AM EDT
When I bought the place, it was 50% of my net. Now its 40% thanks to a big promotion.

$1278 payment, used to net $1300 every two weeks, it was a little tight for a while as a single guy.

Kharn
Link Posted: 8/15/2007 3:31:36 AM EDT
I think net.

17% of my take home pay here. I could of bought a way more expensive home but it a lot of folks don't factor in the cost of living.

Water, electricity, trash, internent, cable, phone, taxes etc... All cost money.

Upkeep of the home cost money. Pressure washing, painting, unclogging shitters etc...

Some folks are what I call, "House rich, cash poor."

I like to travel so I don't want to have a huge financial burden over my head.

Max
Link Posted: 8/15/2007 3:39:32 AM EDT
Buy into the best neighborhood you can afford, even if it is the smallest house in the neighborhood, and even if it takes 50 percent of your take-home pay.
Link Posted: 8/15/2007 3:41:52 AM EDT
25%
Link Posted: 8/15/2007 3:43:34 AM EDT
We were approved for a $400,000 loan. There was no way in hell I was going to tackle that payment each month. We ended up with a $160,000 house. We don't like a few things about the house but I love the payment so far. I can afford to save a little and do some updating on the house over time.
Link Posted: 8/15/2007 3:46:17 AM EDT
We just bought a house on 27 acres here.


All of our bills combined ( House, taxes, insurance, gas, electric, tv, internet, water, car payment, insurance) is roughly 10% of our gross.

We're living good. It's like being on vacation everyday.
Link Posted: 8/15/2007 3:47:32 AM EDT
When I bought my house 8 years ago, I was a single parent with 2 kids still at home, working 2 jobs. My biggest, least negotiable stipulation what that the house payment not be more than my rent was at that time. The bank and my realtor tried and tried and tried to get me to buy above my means. It took some time and I looked at a TON of houses, but the realtor finally saw that I meant business and started showing me decent houses in my price range.

No one ever really "works for you" or protects your best interest like you can. Bigger selling price, bigger commission. Even Buyer's realtors have a vested interest in turning you over quickly so they can move on to the next client.

Good luck and have fun. (By the way, that saying that goes you will never be so broke as when you close on your first home is ohhhh, sooooo true!! )
Link Posted: 8/15/2007 3:47:59 AM EDT
Ours is 38% and we are really, really stretching it thin. I recommend clearing all your small debt, too. It's better to be "house poor" than "car poor".



roy d....don't piss away money on 20" rims, either
Link Posted: 8/15/2007 4:01:04 AM EDT

Originally Posted By RoyDamnMercer:
Ours is 38% and we are really, really stretching it thin. I recommend clearing all your small debt, too. It's better to be "house poor" than "car poor".



roy d....don't piss away money on 20" rims, either



Roy, I think your off by a few inches on the rims. I believe the in thing are "26in rims."

20" rims are so 90's.

Max
Link Posted: 8/15/2007 4:01:18 AM EDT
.26 of my net here, but that "net" could be a lot bigger since I'm maxing my 401k plan.

Otherwise no other debt.
Link Posted: 8/15/2007 4:13:45 AM EDT
12% of after tax, after 401K, after benefits.

Of course, I bought a $130K condo, not a $300K house, so YMMV.
Link Posted: 8/15/2007 4:16:21 AM EDT
[Last Edit: 8/15/2007 4:22:34 AM EDT by Admiral_Crunch]
After my 401K withholdings and taxes, the mortgage comes to just over 1/3 of my take-home pay. My wife also works, but not year-round. She takes home about 1/3 of what I do. We aren't eating ramen, or anything, but we also do have to watch our spending pretty closely, especially since we're trying to save up to pay off the second mortgage. Having a car payment doesn't help. If that weren't there, we'd feel better.

All in all, we wish we'd bought a little less house, and we could have. Of course, prices have climbed in our area, so once the basement is finished, we may look into selling and downsizing.
Link Posted: 8/15/2007 4:16:54 AM EDT
one weeks income.
Link Posted: 8/15/2007 4:24:13 AM EDT
The bank will always approve you for more than you can comfortably afford. Don't fall into that trap if you like things other than staying at home.

Figure out what you want to comfortably pay and go for that. A friend told me to add 10% to that figure but I did that and not sure it was the best thing.

Link Posted: 8/15/2007 4:25:27 AM EDT
My yearly mortgage payments are about 12% of my yearly gross
Link Posted: 8/15/2007 4:29:33 AM EDT
I agree with the others, roughly 25% of your take home pay. Myself, my mortgage is less than 10% of take home.
Link Posted: 8/15/2007 4:31:51 AM EDT
Danger, Will Robinson, danger!

The bank will lend you more money than you can afford. Dont volunteer to become a slave to your house/mortgage.

Link Posted: 8/15/2007 4:33:38 AM EDT
Both mortgages (two homes) take about 35 hours of work to pay for.
Link Posted: 8/15/2007 4:57:21 AM EDT
right about 25% here...
Link Posted: 8/15/2007 4:59:14 AM EDT
a good way to look at it is what you are paying for rent, plus about 30%.

from wht you pay in interest and prop taxes, you'll get about 30% back from taxes.

If you are comfortable with that, you'll do fine.

And, as stated before EVERYONE will tell you to stretch and buy more than you can afford. Fuck them. They are not in it for you.

Determine what you can afford, and do not stretch above that.

good luck

TXL
Link Posted: 8/15/2007 5:04:04 AM EDT
[Last Edit: 8/15/2007 5:12:00 AM EDT by Templar223]
Under 50K here.

My required payment is about 19%.

I actually pay close to 24%.

With my home equity payment, in this case way, way more than required, 36%.

% are all net.

When my tax refund came this year, I put it all on the home equity loan which is my only non-mortgage debt. (No car, credit card, etc.) That's sucker is comin' down!

J
Link Posted: 8/15/2007 5:06:52 AM EDT
Our mortgage is about 13.5% of our take home pay.
Link Posted: 8/15/2007 5:10:54 AM EDT
14% on monthly net.
Link Posted: 8/15/2007 5:16:17 AM EDT
We have the responsible people posting here.

Where are the arfcommers with ARMs and $2500/m payments on $3500/m income?

Link Posted: 8/15/2007 5:17:04 AM EDT
We are building a house now and our mortgage will be just under 25% of our net income this year, but will only be about 20% or so next year. We will be able to live pretty much as we do now, meaning that we can save 10% of our income and still play.

The bank will always approve you for way more than you can comfortably afford, IMO. We got approved for a ridiculous amount of money, but in reality could only comfortably afford about 70% of that.
Link Posted: 8/15/2007 5:17:22 AM EDT

Originally Posted By Justa_TXguy:
We have the responsible people posting here.

Where are the arfcommers with ARMs and $2500/m payments on $3500/m income?



under the bed crying?
Link Posted: 8/15/2007 5:18:50 AM EDT

Originally Posted By Justa_TXguy:
We have the responsible people posting here.

Where are the arfcommers with ARMs and $2500/m payments on $3500/m income?



They had to give up their internet so they could pay their mortgage!
Link Posted: 8/15/2007 5:26:08 AM EDT
[Last Edit: 8/15/2007 8:09:18 AM EDT by JakeThePimp]
We are about 25% of net with both incomes and it's worth every penny. We do without cable and I drive a shitty car thats paid for. I would say I'm comfortable, bills get paid and what not.

-JTP

ETA when we first got the loan it was about 35% of take home but job advancement has helped.
Link Posted: 8/15/2007 5:31:40 AM EDT
dont have one
Link Posted: 8/15/2007 5:35:47 AM EDT
28% of take home here

(and that take home is after maximizing 401ks)
Link Posted: 8/15/2007 5:38:33 AM EDT
Mine is 26% of net.
Link Posted: 8/15/2007 5:38:43 AM EDT

Originally Posted By graywolf:
dont have one



then why post?
Link Posted: 8/15/2007 5:42:00 AM EDT

Originally Posted By The_Camp_Ninja:
The mortgage company will ALWAYS approve you for more than you can really afford to pay. Be sensible, but get in now, things are getting tightened up big time.


Not only that, they typically calculate your % based on your gross income, not your net pay. Uncle Sam takes a huge bite out of everybody's paycheck -- yours and mine.

Maxing out your 401k/IRA distributions are the smart thing to do but they do not get factored into the bank's calculations either. Same with the pre-tax deductions you get from your employer for medical, dental, FSA ....

I go by the 25% of net pay rule. My income is not totally flat over the year (and a good amount is based in stock options/grants, so it is highly variable). Even so, after maxiing out the pre-tax deductions (401k, etc.) I am under 25% of gross.

Link Posted: 8/15/2007 5:42:00 AM EDT
[Last Edit: 8/15/2007 5:47:42 AM EDT by nucstl1]
About 25%..including a 20k line of credit I took for remodeling, windows, and siding.

ETA...Forgot the wifes income...we sit at about 20%
Link Posted: 8/15/2007 5:42:41 AM EDT
Theoreticly banks won't allow more than 41% of your after-tax income to be spent towards your home mortgage...

For someone to live a fair, comfortable life, it should only be 20-30% of their take home pay. This is all comming from someone who sells real estate for a living.

If you over-extend yourself, get foreclosed on or go bankrupt...you have no choice but to rent....Renting is an absolutely awful idea. My brother and I own/manage rental properties, right now we're renting them back for about DOUBLE what our mortgage payment is (Taxes, insurance, ect). The person renting COULD of bought that house and made 1/2 the payment.
Link Posted: 8/15/2007 5:45:54 AM EDT

Originally Posted By Templar223:
Under 50K here.

My required payment is about 19%.

I actually pay close to 24%.

With my home equity payment, in this case way, way more than required, 36%.

% are all net.

When my tax refund came this year, I put it all on the home equity loan which is my only non-mortgage debt. (No car, credit card, etc.) That's sucker is comin' down!

J




"Tax refund" hahahaha

adjust your witholding so you OWE come April 15th. Sock away the "gain" in monthly paychecks in an online savings account until tax time. Otherwise you're giving the government a loan on which you get a negative return on "investment".
Link Posted: 8/15/2007 5:47:11 AM EDT
23% of our take home pay on a 15 year mortgage.
Link Posted: 8/15/2007 5:48:41 AM EDT
Your DTI (Debt to income ratio) should not exceed 50% of your take home pay. Priciple, interest, taxes and insurance all included. This is what banks like to see, in order to go full documentation rather than stated income. ETA: Stated income takes a hit on your rate.
Link Posted: 8/15/2007 5:53:53 AM EDT

Originally Posted By frankie2times:
Your DTI (Debt to income ratio) should not exceed 50% of your take home pay. Priciple, interest, taxes and insurance all included. This is what banks like to see, in order to go full documentation rather than stated income. ETA: Stated income takes a hit on your rate.



Agreed, my wife and I got our first mortage in January. We are only 24years old, and we did full documentation full knowing it would be worth the bullshit in the long run. We locked in 6% which was damn fine by us
Link Posted: 8/15/2007 6:07:01 AM EDT
I am between 15-17% of my income, if you threw the wife in there we are at about 10%. I don't like to extend myself, although the wife has plans for a remodel which would probably bump us up to 20% of both incomes combined.
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