high mortgage?

[maedelken]

We did look at Howard county but decided to stick with Catonsville because that is where we are from. The schools in the Catonsville area are very good so we will be fine. Between the powerlines, petroleum lines and haphazard districting we decided to stay with something we knew. We found a house we liked but the middle school and Highschool were Hickory ridge which is a bad school. There are really only two outstanding highschool's in the Howard region and four good ones. We know that Catonsville is a very good school.

 

[mrsltg]

Hmmmm.. you are in quite a quandry. So your townhouse is sold - how long until you have to be out? Would you consider a month-to-month apartment rental? Even if you wait a few months the market can be completely different. It may go down, it may go up. But by waiting a few months you don't risk too much either way. Also, what kind of a downpayment are you looking at? Would you consider cutting the down payment slightly in favor of keeping some cash in reserves in case you get into trouble?

I am generally of the opinion that when you are young is the time to stretch - not to the breaking point - but enough so you will not outgrow this house in 10 years. However, a $600k house on a $100k salary is tight. I live in NoVa and have a home we purchased for $380k - but we make close to $200k and there a times when it's tighter than I'd like it to be (daycare is expensive!)

I would really urge you to consider this long and hard. I went to Towson State (show's my age!) and love the Towson area so I know what you are looking at! Just buy yourself a little bit of time and go from there.

Good luck!!!

 

[mickeyfan2]

The best way to see how this will effect you is to look at the difference in payments and see how you will get that money out of your present day budget. Add 50% to all your utilities too.

 

[punkin]

The best way to see how this will effect you is to look at the difference in payments and see how you will get that money out of your present day budget. Add 50% to all your utilities too.

More than that on utilities. Remember your rates are about to go through the roof because of the deregulation of BE&G. I would count on double my utilities in the new house.

 

[zalansky]

Sorry, I think a $100,000 salary going into a $600k house is insane and frankly, I don't see how it can be done even without any debt. My husband makes that figure roughly, and we backed out of a house that was $450k and we were going to put down $150k. With taxes and insurance, our payments would have been close to $3000 a month. So I am having a hard time trying to figure out how a $600k house will run $3500 a month.
There may be no debts now. Cars don't run forever. Illlnesses happen. You need a life. Not be a slave to a house payment. I try and look at life 30 years ago. Life back then didn't require 5000 square foot homes and somehow we all survived living in small homes without thinking we were deprived.
Don't be put off. If you come here asking for advice and get some honest answers, don't be offended. If you feel ok with your decision, the by all means, go ahead.

 

[punkin]

Sorry, I think a $100,000 salary going into a $600k house is insane and frankly, I don't see how it can be done even without any debt. My husband makes that figure roughly, and we backed out of a house that was $450k and we were going to put down $150k. With taxes and insurance, our payments would have been close to $3000 a month. So I am having a hard time trying to figure out how a $600k house will run $3500 a month.
There may be no debts now. Cars don't run forever. Illlnesses happen. You need a life. Not be a slave to a house payment. I try and look at life 30 years ago. Life back then didn't require 5000 square foot homes and somehow we all survived living in small homes without thinking we were deprived.
Don't be put off. If you come here asking for advice and get some honest answers, don't be offended. If you feel ok with your decision, the by all means, go ahead.

It can be done, but it is extremely tight. If half the salary is going for the house, that only leaves $50K pre tax (probably about $30K net) for everything else and this is not a low cost area to live. The OP has 3 children. Just the food budget (let's make it pretty low at $400 per month) comes to almost $5K for the year and this does not count clothes, entertainment, what if the car breaks or the roof leaks? How about savings? I would not want to live this way.

 

[CarolA]

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.

.

Meet me

My first ARM went down twice (talk about good timing LOL!)

Now I have an ARM now that if I stay for the full time I expect to go up. (Considering the size of the mortgage I am not worred LOL!)

(That said I think the OP is heading towards a real disaster based on what I read here.)

 

[zalansky]

It can be done, but it is extremely tight. If half the salary is going for the house, that only leaves $50K pre tax (probably about $30K net) for everything else and this is not a low cost area to live. The OP has 3 children. Just the food budget (let's make it pretty low at $400 per month) comes to almost $5K for the year and this does not count clothes, entertainment, what if the car breaks or the roof leaks? How about savings? I would not want to live this way.

I couldn't live that way either, which was why we cancelled our contract! I was literally losing sleep at night about it. Sure, we could scrape by for a few years and then hopefully be in a better position down the road. But not knowing where life is going to take us, there are no guarantees. All employees are disposable, even though they may not think so. Layoffs happen. I would rather have my smaller home and the comfort of knowing we can always afford it, no matter what life throws at us. And also, enjoy life. Quality of life is a must for me.

 

[shamrock30]

There is only so much you can cut out of a budget, even if you live frugally. I just don't see how those numbers can work. Best of luck to you though, whatever you decide.

 

[dvcgirl]

It can be done, but it is extremely tight. If half the salary is going for the house, that only leaves $50K pre tax (probably about $30K net) for everything else and this is not a low cost area to live. The OP has 3 children. Just the food budget (let's make it pretty low at $400 per month) comes to almost $5K for the year and this does not count clothes, entertainment, what if the car breaks or the roof leaks? How about savings? I would not want to live this way.

I agree....possible, but very tight. Net salary is probably in the 7K per month range with deductions, and so nearly 50% of the net is going toward mortgage, taxes and insurance. No other debt certainly helps, but expenses will go up considerably with a house that is much larger. I'd wait on a big jump like that until you are back to work and the salary is closer to the mid 100s at least...

 

[ptrbryant]

I don't think most posters here are deliberately trying to be "negative". But, the fact is that housing prices are going down across the country...in some areas sooner than others. Even with no debt and the other positive factors you mentioned, it sounds like a huge financial burden. It's always better to live below your means rather than above them, no matter what the mortgage companies tell you! We're in the club where we bought a home for 1/2 the price the mortgage lenders recommended and we're so glad we made that decision.

I know it must be hard not to feel defensive when so many people are cautioning you against something that, not just your husband, but you seem to really want. It just would seem that your gut feeling in your original post was the correct one.

Karla B.

 

[srgibbs]

I posted earlier and I have to add more. Again it sounds like your husband makes about what we do and we do live in a much cheaper area of the country, (AL.). We built our 3,000square foot brick house 7 years ago for about 212,00 and currently owe around 100,000 over about 10 more years. We were given our property by family so that does not figure into the payment. Our house is worth about $450 today. Again, we have 1 in Private Christian school and one in MDO who will eventually be in school at the same place. No other debt and our house payment goes up with taxes about $75 a month every year. WE tithe to our church, and have moderate vacations, buy cloths, groceries, do 401k, save some, and do 529 plans and our money at the end of the month is gone. I know you are probably younger than we are but that is just way to much money on what you are making! My husband is a banker and I cannot tell you the stories he comes home with about how much trouble people get themselves into. He is a Credit officer and the mortgages people take out and then banks forclose on is incredible. This will ruin your credit forever. Find a house you can easily afford now with more space than your townhouse, and when you go back to work reevaluate the situation. Kids just get more expensive. Enjoy them and enjoy having the freedom to do fun things without being a slave to your mortgage and utilities and think towards the future. You will be able to find a house like that in the future. Houses come and go on the market and the market is slowing down. With all these ARM's out there and forclosures you should be able to find something easy when you get back to work. Plus speaking from a child in school life only gets busier when they get older and you may decide you don't want to go back. I know it would be very hard on me to do that at this point. Hope I didn't sound negative I'm just trying to help you think this through.

 

[budbeerlady]

You stated it was a step up from your current place. But with bigger steps come bigger costs. Your electric, water, heat will most likely be more. So not only is your mortgage uping so are all your other bills.

 

[barkley]

does the proposed payment also include pmi? i you're putting less than 20% down you need to figure that in and it can jack the payment up a couple of hundred a month. if the home is new and is'nt landscaped/fenced you need to find out if there's any laws or cc&r's that say it has to be done within so many days of escrow closing (don't know how common that is in other states, but in california that was getting to be hugely popular-it ensured people did'nt just leave their front yards bare dirt and weeds). some new homes if they don't come with window coverings carry similar requirements (some of the homes near us had to have windows covered within 30 days of occupancy-and 'no sheets' ) on the windows that were seen from the street-all that costs initialy.

don't forget to include in the budget things you want/need that entail monthly costs-security system, pest service, the items you need to maintain a yard (we found we could pay a yard service less to do a 10,000 square foot highly landscaped yard over purchasing all the equipment ourselves-and then having the time to do it)...and a decent amount set aside for upkeep and repairs (we opt to have a home warranty-at $36 a month it covers everything-including the big ticket appliances that did'nt come with the house, we have a $50 deductable for any repair, but thats allot better than paying someone several hundreds to diagnose a problem with the underground pipes or in wall electrical).

 

[barkley]

I don't think most posters here are deliberately trying to be "negative". But, the fact is that housing prices are going down across the country...in some areas sooner than others. Even with no debt and the other positive factors you mentioned, it sounds like a huge financial burden. It's always better to live below your means rather than above them, no matter what the mortgage companies tell you! We're in the club where we bought a home for 1/2 the price the mortgage lenders recommended and we're so glad we made that decision.

I know it must be hard not to feel defensive when so many people are cautioning you against something that, not just your husband, but you seem to really want. It just would seem that your gut feeling in your original post was the correct one.

Karla B.

no kidding-the house we sold for $619,000 one year ago last month (and it was considered underpriced and a steal)-could'nt be listed for as much as $80,000 less today. it would still sit there for months and be competing with all the foreclosures (we had lots of high income people who had the choice of relocating for their jobs or becoming unemployed-lots walked away from their homes after trying to sell or rent for upwards of a year).

 

[punkin]

no kidding-the house we sold for $619,000 one year ago last month (and it was considered underpriced and a steal)-could'nt be listed for as much as $80,000 less today. it would still sit there for months and be competing with all the foreclosures (we had lots of high income people who had the choice of relocating for their jobs or becoming unemployed-lots walked away from their homes after trying to sell or rent for upwards of a year).

I am in complete agreement with you there. Now is not the time to stretch into a more expensive house. The OP may well be upside down within a year. In my area I personally know 3 houses currently in some stage of forclosure (neighborhood gossip, not personal friends). That will depress housing prices for everyone in the neighborhood and we are in an area with very low unemployment with a lot of people having very secure government jobs.

 

[kfeuer]

Check out this news article on foreclosure rates:

http://abcnews.go.com/Business/IndustryInfo/story?id=3270561

"In another sign that the housing market is taking a major tumble, Americans across the country are getting foreclosure notices at a record pace.

New data released this afternoon indicates that one in every 656 homes in the United States went into foreclosure during May.

Irvine, Calif.-based RealtyTrac says more than 176,000 people got foreclosure notices last month. That is the highest figure they have ever recorded in their monthly report and is 90 percent higher than the numbers from a year ago.

"Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year," said James Saccacio, CEO of RealtyTrac, in a release accompanying the data.

Experts say the boom in foreclosure was expected.

Millions of Americans with poor or undocumented credit were given mortgage loans during the height of the housing bubble, and now that their adjustable rates are resetting higher, many face the prospect of losing their homes.

Six of the nation's largest lenders who specialized in these high-risk borrowers filed for bankruptcy earlier this year after investors lost confidence in the $600 billion subprime market when default rates started to rise.

For the past six months economists have been watching the mortgage market closely, attempting to gauge the impact of the shakeout in the subprime mortgage market.

"The principal source of the slowdown in economic growth that began last spring has been the substantial correction in the housing market," said Fed Chairman Ben Bernanke in a speech in late March. Bernanke has said the downturn in the housing market has shaved 1 percent off the nation's overall economic growth in the past year.

But the shakeout in the market is far from done.

First American CoreLogic analyst Chris Cagan said he believes about 1.1 million Americans will lose their homes to foreclosure in the next seven years because they cannot pay the increasing monthly mortgage bills after a reset.

Banks have started to tighten lending standards, making it harder for subprime borrowers to get a loan, but housing analysts say the damage has already been done. Several years of easy-to-get financing deals attracted many people into the market even though they would not have traditionally qualified for a home loan.

A RealtyTrac spokesman tells ABC News the nation's foreclosure rates will remain at elevated levels for at least another year."

I'm sure alot of these people getting foreclosed on thought they'd grow into their payments, too. Hopefully it wouldn't happen to you OP, but what a risk! And how long would it be before you could afford to save for retirement? Being house poor is a horrible position to be in...

 

[MEM]

Just wanted to chime in that here in the Boston area there are a HUGE number of foreclosures. Most are people who bought way more house than they could afford. Some were victims of what are being called "predatory lenders". After a real estate boom in this area that seemed to have no end in sight, the market has cooled and values are declining. We are considering selling our house and using the equity to trade up (we have no mortgage) but the thought of taking on a mortgage that my salary can handle is still uncomfortable for me, let alone a mortgage that will stretch it to the limit.

 

[goofyforlife]

I am in complete agreement with you there. Now is not the time to stretch into a more expensive house. The OP may well be upside down within a year. In my area I personally know 3 houses currently in some stage of forclosure (neighborhood gossip, not personal friends). That will depress housing prices for everyone in the neighborhood and we are in an area with very low unemployment with a lot of people having very secure government jobs.

Happening in our neighborhood too...

One family bought in to one of the single homes across the street. (IMHO the house was really overpriced for what it sold for.) The yard wasn't huge or nice or fenced and the house wasn't the largest model, yet the house sold in the low $500's. I found out from the neighbor that the family moved out less than 6 months later and the house is now in foreclosure.

There's a townhouse around the corner from me that the same seems to have happened to. House has been vacant for some time but no for sale or rent signs.. Wondering if the same happened there too...

 

[punkin]

Happening in our neighborhood too...

One family bought in to one of the single homes across the street. (IMHO the house was really overpriced for what it sold for.) The yard wasn't huge or nice or fenced and the house wasn't the largest model, yet the house sold in the low $500's. I found out from the neighbor that the family moved out less than 6 months later and the house is now in foreclosure.

There's a townhouse around the corner from me that the same seems to have happened to. House has been vacant for some time but no for sale or rent signs.. Wondering if the same happened there too...

DH says "watch the lawns" Most of these houses will have very tall grass. The owners don't care and the bank doesn't want to spend the money until they can put it on the market.


OP, we are not ganging up on you, just giving opinions based on our own experiences. You have to make the final decision.