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Mommys who comfortably own a home...

Posted by on Jun. 3, 2010 at 5:30 PM
  • 47 Replies

I just need a vague idea of how to pick a house that we can comfortably afford and still have money left to make other investments. It is like the 'engagement ring rule' where its supposed to cost 3 mos pay?

For example is your house supposed to cost 300,00 if you make 100,000yr?

Is there some formula for it when looking?

by on Jun. 3, 2010 at 5:30 PM
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Replies (1-10):
NEWMOMOF1
by on Jun. 3, 2010 at 5:31 PM

BUMP!

Brianav
by on Jun. 3, 2010 at 5:31 PM
I have no clue. We just talked to our realitor and they told us how much we could afford.
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dosthepost
by on Jun. 3, 2010 at 5:34 PM

Yep. Get preapproved through a mortgage company BEFORE shopping... that way when you find a home you love you know you can afford it (b/c Ideally you're only looking at homes you can afford).

Quoting Brianav:

I have no clue. We just talked to our realitor and they told us how much we could afford.


LilGina
by on Jun. 3, 2010 at 5:34 PM

they tell you how much you QULIFY for not what you can AFFORD big difference lol

Quoting Brianav:

I have no clue. We just talked to our realitor and they told us how much we could afford.


AES514
by on Jun. 3, 2010 at 5:34 PM
my advice ¤and I am by no means an expert¤ take your monthly bills you have now. Add 100 for each house bill you will take on a month. Add it up. Subtract from monthly income. That's how much you will have left. Don't forget taxes, interest,and all the shit that breaks in houses.
And good luck!!!!!!!!!!!!!!!!
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DVD
by on Jun. 3, 2010 at 5:37 PM

ok well ladies, i know this is really personal but maybe you can give a ratio instead, whatever you were 'approved' for, what is the ratio of your yearly income to the total cost of your home?

MomToBeISaMom
by on Jun. 3, 2010 at 5:38 PM

Do you have any debt now? 

Do you have a savings account of 3 - 6 months' expenses saved up?

What are your other monthly expenses? 

I can afford a lot more home than my friends that make twice as much as I do because I have less debt and fewer expenses than they do, so a formula based on income wouldn't pertain to most situations.

You should have at least 10% but preferably 20% saved for the down payment.  You should have a fixed-rate mortgage.  Keep the payments to no more than 25% of your take-home pay.  There are mortgage calculators out there, so you can figure out what your monthly payments will be.  Many times banks will tell you that you qualify for a bigger loan, but don't take it if you don't feel comfortable making those payments.  Have an emergency fund in place.  Once you own a home, it's yours, and so are its problems.  If the water heater or furnace breaks, you have to replace it.  Don't forget to calculate taxes and insurance in the price of the home.

Good luck!

MomToBeISaMom
by on Jun. 3, 2010 at 5:40 PM

LilGina is right on in this statement!

Quoting LilGina:

they tell you how much you QULIFY for not what you can AFFORD big difference lol

Quoting Brianav:

I have no clue. We just talked to our realitor and they told us how much we could afford.

 


SierraNevadaMom
by on Jun. 3, 2010 at 5:42 PM

Your house payment/taxes/insurance should be no more than 30% of your monthly take-home pay.  Otherwise you'll be "house poor" -- meaning you can barely make your mortgage payment but have no money left over for savings, entertainment, emergencies, etc.

Before you buy a house, make sure you have at least 3 to 6 months salary in your saving accout just in case of an emergency (illness/injury, job lay-off, etc)

Before signing on the dotted line, make SURE (double SURE) you understand your mortgage documents completely.  Don't fall for a variable interest rate loan.....or an "interest only loan for 3 years"..... or any other kind of mortgage scam out there.

NEVER EVER EVER allow your real estate agent (or loan processor person) to tell you what you can afford -- the only thing they care about is their commission (and your signature on the dotted line)

Be very careful buying a house.  It's a huge investment and something that could ruin your credit and your LIFE if you aren't EXTREMELY careful !!  (speaking from personal experience here)

Good luck

DVD
by on Jun. 3, 2010 at 5:44 PM

Thanks, this helps! We actually dont have a lot of debt compared to most ppl, our biggest one is my school loan but thats on deferment till i graduate and start working again. Other than that we only have piddly little bills, no biggie.

I am anticipating a promotion in October for DH, then we will save for the down payment and the other savings as well, no problem. I just dont know what neighborhoods i should be looking in.I figured the bank wasn't the one to ask about the 'real world', they just want money.

I dont care to have anything extravagant cuz like i said i want plenty left over for other things as well. however i will pay extra for a better school district and safety, ect...

Quoting MomToBeISaMom:

Do you have any debt now? 

Do you have a savings account of 3 - 6 months' expenses saved up?

What are your other monthly expenses? 

I can afford a lot more home than my friends that make twice as much as I do because I have less debt and fewer expenses than they do, so a formula based on income wouldn't pertain to most situations.

You should have at least 10% but preferably 20% saved for the down payment.  You should have a fixed-rate mortgage.  Keep the payments to no more than 25% of your take-home pay.  There are mortgage calculators out there, so you can figure out what your monthly payments will be.  Many times banks will tell you that you qualify for a bigger loan, but don't take it if you don't feel comfortable making those payments.  Have an emergency fund in place.  Once you own a home, it's yours, and so are its problems.  If the water heater or furnace breaks, you have to replace it.  Don't forget to calculate taxes and insurance in the price of the home.

Good luck!


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