high mortgage?

[lovemygoofy]

I would like to comment on the schools. If Catonsville is in Baltimore County (which I think it is) the schools are...pretty bad (not as bad a Baltimore City, but that is really bottom of the heap)

Okay, so going with this sounds like private education could be in the future. We all know that isn't cheap by any means and should be a factor in whether the mortgage can be done and keep a decent lifestyle.

 

[ducklite]

OP is looking at a 30 year fixed. I'm the one with the ARM (with approximately the same mortgage payment). If you can guess (even semi-accurately) where interest rates will be in 4 years (when mine adjusts) you can get a very lucrative job on Wall Street. I know, I have no idea where they will be in 4 years. I don't even know if I'll still be in my house in 4 years.

Ah--sorry about that! If you're not sure you'll even be in the house for as long as it takes for an ARM to adjust, then I agree, it's a great mortgage program. When we bought our first hosue we bought with a 3/1 ARM. DH was planning on going bac for his masters a couple months after we closed, so we needed to keep the payment as low as possible--and also knew that our income would rise drastically over the next three years (it tripled) so we knew that we'd be able to cover the higher interest rate if it did adjust up until we could refi.

Anne

 

[punkin]

Ah--sorry about that! If you're not sure you'll even be in the house for as long as it takes for an ARM to adjust, then I agree, it's a great mortgage program. When we bought our first hosue we bought with a 3/1 ARM. DH was planning on going bac for his masters a couple months after we closed, so we needed to keep the payment as low as possible--and also knew that our income would rise drastically over the next three years (it tripled) so we knew that we'd be able to cover the higher interest rate if it did adjust up until we could refi.

Anne

Yes, our 5/1 makes sense in our situation as well. Also, I should add that I can afford the fully indexed rate, but it will kill my savings rate and pretty much kill me. I hate being that tight with money.

 

[JuneChickie]

 

[java]

Yikes! That would make me lose sleep too! We have a low mortgage for just that reason. (paying about a third of what you are paying for a house with a higher value by about $100,000.) But we made a HUGE down payment on the house. We didn't want to have to LIVE for the house. So unless you are making big $$ as in the $200,000 area I wouldn't overbuy. In this economy you can't be guaranteed a future salary at a higher rate. I would buy what I could currently afford. I have seen many many sales in my area because people overbought on variable rate mortgages and when rates went up they got in deep trouble. But if you can afford it on a fixed rate- and you are confident that the taxes are not going up in your area(meaning you would be paying even more a month) then only you know how you would sleep at night. I know I couldn't do it- but that is me.

 

[C.Ann]

Nope - wouldn't do it.. (Unless of course you have a HUGE amount of cash tucked away somewhere..)

 

[zalansky]

I would not buy it if I were in your shoes. Of course, we don't know what salaries are here, but if you're asking and you're worried, there must be cause for concern.

That payment actually sounds low to me for a $600,000 home, unless you're putting down an awful lot. Like others have said, don't forget taxes (they are always higher than what they say they'll be, it seems) insurance, bills, etc. And those kids, they do cost more as they get older. Oh and decoarting those 5 bedrooms can add up.

We were in similar shoes to you a month or two ago and I was asking myself these same questions and asking anyone else who would listen. Really, the only person who knows if you can afford it and if you should do this is you. Like another person here said, trust what your gut is telling you. We backed out of our deal and I feel a whole lot better when I got to bed at night.

 

[Stein]

The best advice I heard was not to buy for the future, buy what makes sense now. Rates may go up or down, income may double or you may be laid off, but one thing for certain is that every month, the bank will be looking for a check.

For me to buy that house, I would want to be taking home a relatively secure $10k a month, preferably $14k.

It all depends on what you make and how secure you believe that income is.

 

[MrsPete]

okay I am freaking out we are about to buy a house. It is a big step up from our townhouse that we live in now it will double our mortgage. So my DH says it is a good move because in a few years he feels we will have less buying power so I trust him. SO our mortgage will be 3,500 a month does anybody else have a mortgage like that and how do you make it work? He also told me that we will grow into our payment. I just feel like I can't breath we are very comfortable now and it just sucks to go back to wondering if you will have enough money to pay the bills. Can anyone make me feel less stressed out. does anyone know anything about rates if I do an 5 yr arm do you think rates will go up or down. The 3500 payment is a 30 yr fixed.

As a general rule of thumb, your mortgage should be no more than 25% of your income. So if you're earning $14,000 per month, you're fine; otherwise, reconsider.

This has nothing to do with where you live. It's about not buying more than you can afford. If you buy "what you can afford", you'll be house-poor and will be unable to afford the house COMFORTABLY. There are other factors though: how secure are your jobs? do you have children? plan to have more children? have other significant debt?

If the house is making you worry this much BEFORE you even own it, I think that's a good reason to take a good look at whether it's a good choice or not.

 

[punkin]

As a general rule of thumb, your mortgage should be no more than 25% of your income. So if you're earning $14,000 per month, you're fine; otherwise, reconsider.

Doyou figure net or gross?

 

[pweyl36]

boy,my house payment is only $936.00 a month. For a 3bdr,2 1/2 bth,fr,dinning rm. but i also live in delaware.I really dont think if i could afford a house at that price, I would buy it. Just too much house.

 

[barkley]

i've yet to ever meet anyone whose adjustable rate mortgage went down. for the most part it seems like even if the rates have gone down the mortage company will jack it up at least a little bit because they figure if you want a lower rate you will re-fi.

allot of the foreclosures around our area were because of people that got 'great' deals on adjustable rate mortgages, but when it came time that the initial period was over they found that either their income had'nt gone up quite as much as they anticipated, their expenses went up allot more-or in most of the cases, the market tanked so much their houses did'nt qualify for a re-fi (owed way more on it than the house was now valued at). you have to look at the fine print on an adjustable and see how often it can be adjusted once that fixed period is over-we had neighbors for whom a quarter percent was'nt a big issue, but when it kept going up a quarter every six months-that was a big issue. buying with one because you figure you'll move before it jacks up can be problematic too-buyers of our home found that by paying their's off even a few months early they had to pay a penalty of 6 months of interest

even with a fixed rate, i don't think someone should buy more than they are comfortable with-unless they have the liquid assetts to make payments in time of need. i thought i was covered in 'time of need' cuz i had decent savings and short and long term disability insurance if anything happened to me or dh. it did'nt make up the shortfall when the kids had illnesses that kept me off (rotten monkeys-never got sick at the same time, always timed it so one had me off and just as he/she was headed back to school the other one came down with it ), when i did end up off sick myself i found that between the waiting period and the processing time for those policies you can be looking at as much as 6 months without pay (nice once you get it retro-but that does'nt wiave those late mortgage fees or the impact they have on your credit rating).

i look at the people who bought our home (619,000)-they could afford it on paper, but if one of them lost their job, their health insurance premiums went up significantly, commute costs increased significantly (and gas and tolls have almost doubled since they bought), one had to or wanted to be a sahp (and that seemed to be an issue with allot of the parents in our area-the kids got older, their were more negative issues in the public schools that were influencing them...had a good number of moms decide to become sah's as the kids aged)-it was'nt going to be a choice on keeping the house or not-it was going to be a matter of hoping they could sell it and clear enough to pay the realtor and then come up with deposits for subsequent housing.

 

[HeatherC]

If you are worried now, think how you will feel in a few months?

My thinking is to buy a house based on one salary. That way if anything happens in the future you will still be able to afford it and sleep at night. We did this with both our first home and the house we are in now. By doing this, I have been able to stay home with my 3 kids for the past 10 years. While this is not for everyone, it sure was nice to have that choice and option.

Good luck to you.
Heather

 

[punkin]

i've yet to ever meet anyone whose adjustable rate mortgage went down. for the most part it seems like even if the rates have gone down the mortage company will jack it up at least a little bit because they figure if you want a lower rate you will re-fi.

My 5/1 ARM is based off the 1 year treasury as reported by the Federal Reserve Board as of a certain date with a 45 day look back. It is 275 basis points over the said rate. The servicer does not have the ability to arbitrarily raise the reset rate if, in fact, interest rates have gone down. In fact, in the US, all ARMS are based off of some formula, which is clearly stated in the contract. I have no idea what you are talking about unless you are referencing Australian or UK mortgages.

 

[Kickapoo Joie Juice]

Might want to sit down with a financial advisor and understand exactly what you're getting into.

The fact that your husband thinks he can "grow into" a mortgage is evidence he needs to sit down with one, too.

I'm not trying to flame you; I want you to make an informed decision on a SIX HUNDRED THOUSAND DOLLAR PURCHASE.

 

[shelly3girls]

What is the square footage of the house and what is the style (are there raised or cathedral ceilings? If you are concerned about affording it now then do not buy it. I promise you that your costs will be more than you expect. You will be shocked at how expensive things are from decorating to utilities and yard upkeep.

We went from a 2000 squ. ft. house to 5500 squ. ft. We were shocked at how underestimated the costs were. Fortunately we could afford it but we were shocked none the less. We sold the house b/c we realized how much we were wasting in utility costs and taxes (10% increase in a year ends up being a lot more money on the bigger house). We had winter months when our heat bill (propane) cost over $900! We are not even home for 10 hours a day and we kept it on 62 at night. We now realize how wasteful the two story foyer and 10' ceilings were.

 

[stitchlovestink]

Oh, I would be careful about buying that much house in today's market. I also live in MD in Harford co. Here in Bel Air, our high end houses are sitting for a loooooooonnng time waiting to sell and we are in an excellent school district. It is definitely a buyer's market and if you need to sell you could be in serious trouble. I had an acquantance (sp?) who's hubby was transferred and it took them 15 mo to sell. They had a very large beautiful home, but the prices are dropping and they needed a certain amount for the home just to break even. I would try to find a doable pre-existing home (I am assuming that at that price, it is a new home). Also, remember that our BGE rates are going up by 50% I am very unnerved by how much more my gas & electric is going to cost me each mo. Predictions are that some of the larger homes are going to have G&E bills well in excess of $500 a mo. since the rate increase as of June 1
I'd really think twice before doing this, but best of luck w/ your decision.

 

[MrsPete]

Doyou figure net or gross?

Gross -- that's the figure about which the bank cares.

 

[MrsPete]

i look at the people who bought our home (619,000)-they could afford it on paper, but if one of them lost their job, their health insurance premiums went up significantly, commute costs increased significantly (and gas and tolls have almost doubled since they bought), one had to or wanted to be a sahp (and that seemed to be an issue with allot of the parents in our area-the kids got older, their were more negative issues in the public schools that were influencing them...had a good number of moms decide to become sah's as the kids aged)-it was'nt going to be a choice on keeping the house or not-it was going to be a matter of hoping they could sell it and clear enough to pay the realtor and then come up with deposits for subsequent housing.

Yep, things come up -- things you don't really expect, or things that you underestimate. It's always going to be something, and if you're just scraping by, you won't be prepared for the day that the refrigerator breaks or the car dies. Just today I took my oldest to the orthodontist, and I'm VERY GLAD that we're not "maxed out" on our housing costs. If we were, we would have some tough decisions on our hands.

Keep in mind, too, that if you decide you want out, it can be tough to sell a house -- especially an expensive house! On this board right now there are 2-3 threads about people having trouble selling a house. It took us more than a year to sell our first house.

 

[ducklite]

That payment actually sounds low to me for a $600,000 home, unless you're putting down an awful lot.

Agreed.

Like others have said, don't forget taxes (they are always higher than what they say they'll be, it seems)

That's the truth. When we bought our home the estimated taxes were $4000 a year. Here we are 4.5 years later, paying almost $11,000 a year. Had we known when we signed on the dotted line that we'd be paying that much, I'm not sure that we would have gone through with it. And it has made a difference in our lifestyle. We had to make a choice of cutting back on our savings or cutting back on our spending, and obviously made the responsible choice of cutting back on non-essential spending.

Anne