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Additional Posts in The Real Estate Bowl
Can I get a commercial loan without 25% down?
Are the <3.5% rates gone for good?
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Subject Expert
Depends on property taxes, mortgage rate and term, monthly expenses, and a whole lot of other variables.
I bought my current home at $700k with significantly lower HHI, but had a lower rate and more than 20% down in a state with relatively low property taxes. So it’s do-able in the right circumstances.
I pay slightly more (3300) with a lower rate (2.99%) than SPM1, but my taxes and insurance (1500) are almost equal to my principal and interest (1800), so as SPM1 said, the non-loan stuff can kill you.
2 years ago, I bought 750k with 20% down and 220k HHI. No problems at all, but I'm at 4.125%, which you can't get now and have no other debt. My payment is $3540 all in.
A common personal finance industry recommendation is to keep your housing cost (PITIA) below 25% of your gross HHI.
Americans are really living their life aren’t they?
That’s really not true living on one of the side sides of the Atlantic. You get charged 50% on taxes. That’s literally after your income that’s gone.
Sounds completely reasonable if you don’t have a ton of other debt.
Rule of thumb is buy a house which is 1.5x your HHI.
2x is stretching, anything beyond is no no
*does not
That’s what I did, with only 5% down. The house exploded in value and is now worth roughly double.
A little bit, because my mortgage was almost double my rent so there was definite sticker shock. This was why I tried really hard to get rid of PMI, and this was possible after a year or so because the value of the house went up so much. I understand that this is a unique case though because I think the more common way is to put more down to eliminate PMI.
Sounds reasonable. 560k loan. So like 3.6k mortgage against pretax 20k monthly
Mentor
It’s hard to say. You just need to crunch the numbers. Your take home pay minus your expenses and the mortgage & taxes, see how much you have left.
Seems expensive, unless you never plan to move out of this house. People get killed in the transaction costs and costs of ownership vs renting. For us, we make more than that but we aren't willing to pull the trigger given the lack of quality we're seeing at similar prices in our market. So, we'll just add a bedroom to the apartment if we need an upgrade and keep waiting.
We have a household income of 300K for a home of 745K with 5% down and we rent the downstairs to my sister and it would be super tight without her. And I’ll add we’re at 6.1% interest
Easy
It's the unexpected bills you need to have a cushion for. Increase in property taxes, fluctuations in utilities, general maintenance around the home, if a sprinkler line breaks, unexpected flood outside your home that insurance won't cover. Just make sure you have a cushion and coverage. We have spent thousands fixing the little things the builder should have, but we were between homes. All of our NEW appliances had issues. So please pay extra for the extended warranties. Sorry, I digress but I spent $770k just to have other nightmares.
Agree with being prepared for unexpected expenses.
Vehemently disagree with getting extended warranties.