high mortgage?

[IDoDis]

Our price includes taxes and insurance. Yes Baltimore does have some bad schools but Catonsville actually has good schools. The area of Catonsville we are moving to is actually similar to some of the neighborhoods in towson. So we won't have to do private school. We may send them to private highschool because it is tradition. Okay what else can I cover um right now I stay at home we would be doing this on one income. I am planning on going back to work in a year or two so we would add a lot to our income. Right now my DH makes just over six figures so it would be tight but this house in theory should be the one we stay in. Housing prices in this area are high yes there are some parts of Catonsville that you can buy the same type of house for half the price but they are not in good areas. Because they have the same zipcode they get included as being called Catonsville. Our 1200 sq foot townhouse just sold for 335,000 in a week houses do not stay on the market long when you live in the right areas. The only reason we were able to get the new house was because we knew someone. My DH's job is very secure and we are both still young so we feel like we have plenty of earning potential. We are very lucky my DH's parents treat their children to vacations and we will still save for our Disney vacation. I was hoping to get more positive advice but I think all the negative vibes righted my ship anyway so Thanks I think. Oh we thought about going farther out we even looked at houses and loved a few but our life revovles around this area so after much soul searching we decided to stay here even though it would cost us more and we get less. I forgot we don't have any other debt besides the house everything is paid off.

Oh my gosh -- I would not have that mortgage payment with a little over 100K per year. DH and I make 100K together and our mortgage is $800 per month. We have no other debt. I could not even imagine spending that kind of money on our salaries. While we can afford a more expensive home and have contemplated moving, we love the location and have decided to wait. When/if we do move, we want to keep our mortgage payment similar so that means we will continue to save to add to our equity/downpayment amount. It's also nice having money to pay for other things and to be able to save for emergencies.

It sounds like it's too late though for you to change your plans, so what we are all saying is a moot point. My advice now then would be for you to get back out into the job market right away. Good luck!

 

[ducklite]

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.

So true! One of the homes in my neighborhood I think is heading to foreclosure--long story but they've been trying to sell for nine months, and the market is flat. They lived in the house for one week last fall then moved. About a month ago they stopped having the lawn done. After three weeks I called the property management company. She told me I was the fifth person to call about it, and she had sent the owners a letter the week before. She said if they didn't have it done by a certain date, she'd have it taken care of.

Last weekend I saw the guy who does most of the lawncare in the neighborhood over there mowing, trimming and edging. My guess is that the property manager hired him to take care of it--she mentioned that he does a great job during our conversation. Of course the other homeowners will have to foot the bill for it until the house sells and they can collect.

Of course if they aren't paying the lawncare bill they've probably also stopped paying the HO association fees. Amazing that people build a $750K home, decide they don't like living in Florida, move back to New England a week after they move in. I just don't understand the logic. Suck it up until you can sell, then move so you don't end up ruining your credit over your lack of foresight.

ETA: They have an interest only, adjustable rate mortgage note for $435K. The first adjustment happened two weeks ago. They bought at the height of the market, and at this point might be lucky to get the money they put into it out of it. This is a prime example of how to get into deep financial trouble. Their payment went from $1632 to $2811. That doesn't include taxes and insurance which will be at least another $1000/mo.

Anne

 

[KelNottAt]

I am going against the pack. In your favor you already live on one income, you have no debts and you are a young family. This is great. It shows you know how to budget. Also I am assuming you would be in the professional job market when you go back to work. So you have the potential of substantially increasing your income. Then you have a strong family network.

I think with the base realignment in Ft. Meade and Aberdeen that the prices will not go much lower. I think in this area this is the dip year for housing. Also with the realignment will come not only a larger influx of military but also of contractors. There are only so many homes in our area and very few new places to build.

I know $3500 is high but has anyone looked at the rentals in our area? A single family house is at $2400 or more. Townhouses rent for $1600 and up.

It will be difficult for a few years but not impossible. I am wondering why you are not looking in Howard County? The housing market seems comparable and the school system in better than Baltimore County. Why did you choose Catonsville?

I'm leaning toward this opinion. Yes, it's true, no question about it, the OP's family will be house poor. But, I think it's a rush to judgement to talk upside down or foreclosure.

The Balt/Wash market is slumping like the rest of the country, but it's not quite as volitile. In fact, this area has been called "recession proof" before due to the stability of (federal government) employment, among other things. Further, Baltimore County property taxes aren't really the expensive, unpredictable wild card you see in other places. If $3,500 is the PITI on a 30yr fixed, that's a pretty safe budgeting number.

So, in my opinion the OP can afford this mortgage. The downside is that she and her DH will probably have to sacrifice something more important in order to do it: retirement savings. All the rest (dining out, vacations, furnishings, etc.) are secondary. But, risking retirement later for the sake of a nice shelter now is unwise.

If retirement savings are in order (talk to your financial advisor for a definition of "in order"), then who am I to object?

 

[punkin]

I'm leaning toward this opinion. Yes, it's true, no question about it, the OP's family will be house poor. But, I think it's a rush to judgement to talk upside down or foreclosure.

The Balt/Wash market is slumping like the rest of the country, but it's not quite as volitile. In fact, this area has been called "recession proof" before due to the stability of (federal government) employment, among other things. Further, Baltimore County property taxes aren't really the expensive, unpredictable wild card you see in other places. If $3,500 is the PITI on a 30yr fixed, that's a pretty safe budgeting number.

So, in my opinion the OP can afford this mortgage. The downside is that she and her DH will probably have to sacrifice something more important in order to do it: retirement savings. All the rest (dining out, vacations, furnishings, etc.) are secondary. But, risking retirement later for the sake of a nice shelter now is unwise.

If retirement savings are in order (talk to your financial advisor for a definition of "in order"), then who am I to object?

Well, frankly, none of us is in a position to object. We can only offer advice.

I have heard that this area is "resession proof" but I do not buy it. Government spending has been astronomical in the past sveral years. The deficit and the cost of Iraq will make sure spending is not as lavish in the future.

 

[ducklite]

The downside is that she and her DH will probably have to sacrifice something more important in order to do it: retirement savings. All the rest (dining out, vacations, furnishings, etc.) are secondary. But, risking retirement later for the sake of a nice shelter now is unwise.

If retirement savings are in order (talk to your financial advisor for a definition of "in order"), then who am I to object?

That's a huge concern that we should all have these days. Most analysts feel that the average American is underestimating what they'll need for retirement by at least 50%. Retirement savings should be considered "untouchable" both in terms of the cash already on deposit and the continued savings.

Anne

 

[goofyforlife]

DH says "watch the lawns" Most of these houses will have very tall grass.

Ironic you say that because that the first thing we noticed come spring...

They were just fined by the city and our HOA and then someone came and mowed it all.

I drove by everyday wanting to yell "Mow your yard." Then my DD heard from one one of the girls on her bus that they were fined.

At a neighborhood SHA presentation i met the lady who lives next to them and she told me about the foreclosure.

 

[mickeyfan2]

Well, frankly, none of us is in a position to object. We can only offer advice.

I have heard that this area is "resession proof" but I do not buy it. Government spending has been astronomical in the past sveral years. The deficit and the cost of Iraq will make sure spending is not as lavish in the future.

No place is resession proof. I have heard that used in many areas and guess what - a resession hit.

 

[srgibbs]

Ok I'm going to chime in again here. I have read people say that on $100,000 you can make that payment. I will say you cannot make that payment with all utilities,groceries, clothing, basic other necessities unless you start mounding up cc debit and rob peter to pay paul. You will not be able to put into 401k, save for any emergency, and start any sort of college savings. This is actually what the problem is people live way above there means. I'm not trying to be ugly but just give a reality check. You are asking for problems unless you want to go back to work now and can make around $100,00 yourself.

 

[BellePrincessBelle]

My Dh makes 6 figures(more than low 6 figures) and I wouldn't consider that mortgage. Depending on where in the low 6 figures you are keep in mind that you can be hit with the AMT Tax at anytime and thats a killer. 2 1/2 times your salary is what you should pay. I live in the most expensive area of the nation per all financial sources & I wouldn't consider it and I still have a great house with top notch schools.

 

[punkin]

My Dh makes 6 figures(more than low 6 figures) and I wouldn't consider that mortgage. Depending on where in the low 6 figures you are keep in mind that you can be hit with the AMT Tax at anytime and thats a killer. 2 1/2 times your salary is what you should pay. I live in the most expensive area of the nation per all financial sources & I wouldn't consider it and I still have a great house with top notch schools.

At 100K, 2.5X is only $250K. With all due respect, that is not a realistic price for a house in this area.

 

[BellePrincessBelle]

It may not be realistic but neither is paying more than one can truly afford. That is mortgage price you should have a down payment as well. Put down $150,00 and you've now got a 400,000 house. I'm my area $600,000 is getting you a fixer. We saved until we had enough down to have a reasonable mortgage. It only took us 3 years to save and we started saving at 21(when we had our 1st baby) and invested well so that by the time our kids reached school age we were all set.

 

[mickeyfan2]

Ok I'm going to chime in again here. I have read people say that on $100,000 you can make that payment. I will say you cannot make that payment with all utilities,groceries, clothing, basic other necessities unless you start mounding up cc debit and rob peter to pay paul. You will not be able to put into 401k, save for any emergency, and start any sort of college savings. This is actually what the problem is people live way above there means. I'm not trying to be ugly but just give a reality check. You are asking for problems unless you want to go back to work now and can make around $100,00 yourself.

ITA

The OP is at an age where the need to save for retirement. To max out the 401K in a $100K salary would be putting in 15% (really 15.5 but lets use the easier number). Now they gross $85K. Say with all of their write-off they pay 20% in total taxes (again not exact but an estimate). That is $17 to the government. Now they are down to $68 net. Paying $3500/ month is $42K. Now we are down to $26K to pay utilities, food, repairs, car insurance, braces, and on and on.

Lets estimate more bills - car insurance $2K/year, homeowner's insurance $2k/year, electric $250/month - $3K/year, cell phone - $60/month - 720/year, auto gas $50/week - $2600/year, food $150/week - $7800/year --- Those add up to $18120.

Down to $7880. We have yet to make a car payment, do a car repair, pay for Dr or Dentist co-pays, buy anybody in the family clothes, no gifts bought yet, no vacation paid for yet....all to be done with the remaining $657/month.

Way to risky and tight IMHO.

I am only telling you I would not do this, but the fact that you sold your townhome is making this an even tougher decison. You do need to find a place to live - rental or purchase now. Could you move in with all those relatives in Catonsville and save up an additional downpayment and could they watch the kids so you could go to work ASAP to speed the process along?

The only way to make this work would be for you to get a job now that makes $50K+ and get free or very low cost daycare (relatives).

 

[mickeyfan2]

It may not be realistic but neither is paying more than one can truly afford. That is mortgage price you should have a down payment as well. Put down $150,00 and you've now got a 400,000 house. I'm my area $600,000 is getting you a fixer. We saved until we had enough down to have a reasonable mortgage. It only took us 3 years to save and we started saving at 21(when we had our 1st baby) and invested well so that by the time our kids reached school age we were all set.

I wish I had jobs that paid that well at 21!!!

 

[BellePrincessBelle]

I wish I had jobs that paid that well at 21!!!

DH worked 7 days a week and I worked 1 full time & 2 part time jobs to do it. Now he earns enough for the 2 of us.

 

[mickeyfan2]

DH worked 7 days a week and I worked 1 full time & 2 part time jobs to do it. Now he earns enough for the 2 of us.

Who took care of the baby? Did you live with family or on your own while you saved your downpayment?

 

[punkin]

DH worked 7 days a week and I worked 1 full time & 2 part time jobs to do it. Now he earns enough for the 2 of us.

good for you, but that won't work for someone with 3 small children.

 

[MrsPete]

At 100K, 2.5X is only $250K. With all due respect, that is not a realistic price for a house in this area.

But you're coming at the housing question from the wrong angle -- your income (your ability to pay) matters more than the housing costs in your area. If the houses are expensive, then you have to look farther out, look at fixer-uppers, or ask yourself whether you can afford this area at all. Ugly thoughts? Yeah, but realistic.

Here's an analogy: Let's say you're going out to eat and you have only $20, it doesn't do any good to say, "But it'll cost $75 for my family to eat at Outback Steakhouse -- I'll just have to pay it." Even if you want to eat at Outback, even if you family loves Outback, even if all your friends eat at Outback, even if Outback is the most convenient restaurant . . . if you only have $20 in your pocket, you have to seek out a McDonald's. Maybe it's off the beaten path, maybe it's not as nice a meal as you wanted, but it is suited to what's in your pocket.

A house is no different. You have to buy according to your income; if you buy "too much", it'll hurt you in the long run.

 

[BellePrincessBelle]

My family took care of the little ones(we had #2 shortly after).We bought a condo when the market was really really bad so we got a steal and paid less than a rent to own it. Sold it for a profit(little one) Bought a house while the market was still bad and got another steal. Kept that until the market picked up and sold for twice what we paid. Bought in the area that we wanted. Divorce sale fixer now worth 3x's what we paid.

 

[BellePrincessBelle]

good for you, but that won't work for someone with 3 small children.

I did it with 2 little ones they're less than a year and a half apart.

 

[MrsPete]

DH worked 7 days a week and I worked 1 full time & 2 part time jobs to do it. Now he earns enough for the 2 of us.

Yep, we did the same things when we were younger. We only had one car between us, we both worked like crazy (and I went to school too) . . . but we paid down our house and saved. By the time we had our kids (first one was born when I was 27), we were comfortable financially. We made it to 100% debt-free just before age 40, and though we worked very hard in our early years, I wouldn't change a thing about the choices we made!