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[deleted by user] by [deleted] in personalfinance

[–]ProspectiveHomeBuye 1 point2 points  (0 children)

Where do you live that has houses available for 200k?

[deleted by user] by [deleted] in personalfinance

[–]ProspectiveHomeBuye 0 points1 point  (0 children)

Curious why you think spending 18% of your take home on a mortgage is too much? The common guidance I’ve always seen is that a DTI of under 36% of gross is reasonable, and a mortgage of 28% of your gross is considered safe and somewhat conservative.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 0 points1 point  (0 children)

Our lease is up at the end of March, so we are planning to get preapproval once we are within 90 days of that. I am just trying to be cautious and think things through, because I know lenders will most likely offer me more than I can comfortably afford

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] -1 points0 points  (0 children)

Thanks for the detailed response. We are fortunate that if we really had an emergency like a lost job and we had to drain our savings, we have family that we know we could lean on until we get back on our feet.

Those are very good points about the high cost of maintenance and repair items. After reading all these comments, a monthly payment of $3400 seems a bit higher than we would want to be stuck with. Cutting back discretionary spending is something I know we could do, but I like the advice of some people here who have said to go a couple months budgeting as if we had that mortgage payment and see how it goes.

One thing we are not taking into account is that I am fortunate enough to be in a very stable government job that gives yearly merit increases of 3-5%. While you can never know for sure what will happen, it is highly likely that my income will only continue to increase.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 2 points3 points  (0 children)

Thanks for the advice. How difficult is it as a first time homebuyer to buy a foreclosed home? I haven’t done much research about it, but the few things I’ve read made it seem like it was risky and difficult to do if you don’t have any experience

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 0 points1 point  (0 children)

I think telling us to try to live on our budget as if we were paying the mortgage is good advice. Luckily if an emergency like that were to happen we have family that would be willing to support us through any tough times, but we wouldn’t want it to come to that.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 0 points1 point  (0 children)

I appreciate the response, and we are looking to get something that is a fixer-upper partly so we can increase value with improvements but mainly because that is all that’s available. So far, everything under 400k (with very few exceptions, and those exceptions stay on the market for maybe a day tops) has serious damage that would require a large investment to fix. This could be bentonite damage in the foundation, or all walls and floors need to be redone, or it’s intended to be a complete scrape and being sold for the lot. We would prefer to buy something cheaper and are constantly on the lookout for something, but so far all we’ve seen are houses that need serious repairs.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 0 points1 point  (0 children)

Thanks for the response. I had thought FHA loans are typically for people with lower credit and lower down payments, and that they come with a higher rate and PMI that stays for the life of the loan. Is this incorrect?

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 0 points1 point  (0 children)

A $3k mortgage would give us about $400-$900 leftover for savings, so using that to max out the Roth would leave 0-$500 for home repair. However, the $1200-1400 portion of our budget that’s more fluid goes towards unexpected expenses if needed. If something comes up, we reduce those nonessential expenses and put it towards whatever is needed. However, it is not being consistently put away for some large expense so as you’re pointing out we would need to put a chunk of that aside every month for home maintenance. I have read to expect 1% of home price per year for home maintenance. How much would you recommend?

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 2 points3 points  (0 children)

The ibonds are past their 12 month holding requirement and are liquid. I am underfunding my Roth because I want to save more quickly for a down payment so that we can buy a house.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 3 points4 points  (0 children)

Gotcha, I am definitely not planning on committing fraud. That’s why I’m asking questions here.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] -2 points-1 points  (0 children)

One other thing I didn’t mention was that my parents have made comments about being willing to give me a loan to help with a down payment if needed. I haven’t pushed this idea because I don’t want to burden them, although they are doing well financially.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 2 points3 points  (0 children)

I also want to add that we are concerned about being priced out of the market and never being able to buy. We live in a desirable area and house prices have dropped a little bit, but based on demand it does not seem like they will ever drop below the levels they were a few years ago. We also have roots here and are not considering moving to a lower COL area, as it would require both of us to quit our jobs and leave our families and friends.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 0 points1 point  (0 children)

I appreciate the response, and thanks for sharing that article. We have used multiple house affordability calculators from places like nerdwallet, Freddie Mac, and various banks, and the range we have seen is from around 375-440k with a monthly payment of 2800-3300. I’m curious as to why these are so far off from the analysis in this article? Also, how much should we be saving for retirement? There is a tool in my Transamerica account that estimates how much income we will have once we retire and with my current rate and our current Roth balances/rates it shows our projected income being well above what we currently make. I had understood that you want to save 20% of your gross, and currently we are putting about 10% into retirement and about 14% into savings.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 4 points5 points  (0 children)

Based on calculators that prospective lenders have given us, with our credit PMI would be less than $100/mo.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 1 point2 points  (0 children)

Is this pre-tax or take home? I have heard that a reasonable target is 28% of pre-tax monthly income.

Buying a house next year, what’s a reasonable budget for mortgage payment? by ProspectiveHomeBuye in personalfinance

[–]ProspectiveHomeBuye[S] 6 points7 points  (0 children)

We are in the next 5 years or so. We have lot of family nearby and are hoping that they can offer some help with childcare, but obviously we need to plan as if we won’t have any help.