high mortgage?

[punkin]

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.

Agreed, but I could always eat at home, I still have to live somewhere. 2.5X income is an outdated measure anyway. 25% of gross at 100K is over 2K per month payment. That's a $350K mortgage. With a solid down payment, that's a house for about $425K. Completely affordable in my opinion and over 4X annual income.

 

[punkin]

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

How?

ETA: never mind. I saw your other post. Not everyone has family help.

 

[BellePrincessBelle]

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!

We did the 1 car thing for a while too. It stunk but hey it was well worth it. I was in school 2 night a week with #1 but with #2 I couldn't manage. DH had already finished school. When #3 goes all day I'll go back to school.

 

[Stein]

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

In 1950, the average new house was 983 square feet. In 2005, it was 2,414, so "realistic" has taken on a drastically expanding definition. In the Northeast, the average house is 2,601 square feet.

I only know of one family that would be happy in a 983 square foot house. They lived there for 5 years while making very good money. They now live in a great house on acreage with a very low mortgage because they saved money and moved up only when it made sense for them. Sure, living in a one bathroom house with a family of four is cozy, but the secret to happiness is to always compare your family to families with less.

It is easy to see how people in the 1950's lived comfortably on a single, modest income. At the end of the day, there is a rich end of town, a not so rich end of town, and something in between. Everyone can and should shoot for the stars and try for whatever they want, but be honest about where they are today.

 

[BellePrincessBelle]

How?

I worked Mon. Tues. Thurs, Fri, & 1/2 Sat(got paid for a full day) for my full time job and 6:45-10:15p for on Sat & Sun for 1 part time job and the other was Wed. all day & Mon. Tues night from 8-12p. Tiring but it had to be done. My family was great for juggling the kids around as well as DH & I since he worked 12hour nights at the time.

 

[mickeyfan2]

Agreed, but I could always eat at home, I still have to live somewhere. 2.5X income is an outdated measure anyway. 25% of gross at 100K is over 2K per month payment. That's a $350K mortgage. With a solid down payment, that's a house for about $425K. Completely affordable in my opinion and over 4X annual income.

The rule was you could borrow 2.5xs your income. The house could be far more depending on your downpayment. Also as the income goes higher you can borrow more since everyday expenses don't go up linearly with income.

 

[MrsPete]

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

Despite what advertisers say, none of us can have everything. Choosing to have the children (which means lessening your work ability /income) may mean "settling for less" on the house.

My husband and I've chosen to live in a modest, middle-class house (while most of our co-workers live in mini-mansions); for us, being debt-free and having retirement savings is more important than the status house. I'd be lying if I said I don't occasionally wish we had something nicer, but I know we made the right decisions for our family.

But everything's a trade off. The question here is, which do you want: This house or to know you're financially secure? Some of us would choose security; others would take the risk, figuring that they can sell if necessary.

 

[MrsPete]

Agreed, but I could always eat at home, I still have to live somewhere. 2.5X income is an outdated measure anyway. 25% of gross at 100K is over 2K per month payment. That's a $350K mortgage. With a solid down payment, that's a house for about $425K. Completely affordable in my opinion and over 4X annual income.

I don't think the 25% is outdated at all -- it's just that lenders have become much more liberal in what they're willing to lend, and people have become more comfortable with taking on excessive debt (and using revolving credit card debt when "necessary"). Being debt-free is not even on the horizon for many people.

The 25% thing still works. Yes, housing has increased, but so has everything else -- wages included. If you're spending more than 25% on housing, then you have less for all those other things, and you're going to be in a financial pinch.

Didn't someone write a book about that very concept? The basic premise was that you should allot X % for necessities, etc.

 

[wdwcoltsfan]

I don't think you will find any reputable financial advisor/planner who would say this is a wise decision. The mortgage payment is too much for the annual income. How long can you remain debt free? At some point you may need a car(and the payment that goes with it). If money is tight, will credit cards start to be utilized?

I agree with others that this is cutting it too close. This is a time when savings/retirement should be the focus. It's always easier to work out a budget in your head than it is to actually make it work. On paper, the payment could be made, but at what expense?

Many times homes are purchased based on an emotional decision. People will convince themselves that they can make it work because they want the house so much--then reality sets in. Have you ever seen the commercial that says "life comes at you fast."? If you are set it purchasing this house, make very sure that you can make your regular payments as well as any unexpected expenses that may pop up.

I know this sounds very negative, but this is a decision that could have serious ramifications in the future. Look at all the negatives now rather than later.


Rachel

 

[mickeyfan2]

Despite what advertisers say, none of us can have everything. Choosing to have the children (which means lessening your work ability /income) may mean "settling for less" on the house.

My husband and I've chosen to live in a modest, middle-class house (while most of our co-workers live in mini-mansions); for us, being debt-free and having retirement savings is more important than the status house. I'd be lying if I said I don't occasionally wish we had something nicer, but I know we made the right decisions for our family.

But everything's a trade off. The question here is, which do you want: This house or to know you're financially secure? Some of us would choose security; others would take the risk, figuring that they can sell if necessary.

ITA

But this poster is saying one can buy a home for far less in an inflated housing market. Wrong!! But then we find out they had young kids and free daycare, so they could both work and go to school. Try to do the same thing without the relatives and see how far they would be now. They also bought in a very down market. All are great for them but not all can have a great job in the same town as their family, get free daycare and be able to buy in a down market. How would they fare if they were 21 today?

Beleive me the year DH and I graduated from college the recession was horrible and it has been labeled as one of the worst years ever to graduate college. It was just the luck of the draw and we lost. BTW the previous year was a good year for graduating.

 

[ptrbryant]

I worked Mon. Tues. Thurs, Fri, & 1/2 Sat(got paid for a full day) for my full time job and 6:45-10:15p for on Sat & Sun for 1 part time job and the other was Wed. all day & Mon. Tues night from 8-12p. Tiring but it had to be done. My family was great for juggling the kids around as well as DH & I since he worked 12hour nights at the time.

I'm not judging, just trying to understand this post. Your children weren't with either parent for four nights a week? I understand how family can help out,...but this was the norm for the children?

Karla B.

 

[BellePrincessBelle]

It is true they were with my mom 4 nights a week(at our house) but they don't remember anything but me being a stay at home mom now. They were babies. I stopped working when my oldest was 3. Kids are without parent all day long in other situations so night really is no different. They went to bed at 7:30 when they were babies.

 

[ckoncurat]

I live in Harford County, 1/2 hr north of baltimore. $600,000 sounds pretty average for a five bedroom house, to me..but do you really NEED that much house? Do you have a large family? Is your husband in a lucrative field? The housing market around here is in a slump, so you might actually lose money if you plan to sell in the next few years. I would get into a single family house if you can afford it, but maybe consider one a little less expensive. Just pick a good school ditrict and go from there. JMHO

 

[goofyforlife]

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.

It's one thing to settle for something smaller, in this area though, we were looking 2 yrs ago, even the crappy little fixer-upper 2 bedroom 1 bath townhouses were over $300K (in gaithersburg/germantown area anyway) And even if you could find one...these units are getting bought up by flippers with cash in hand for prices more than the overpriced asking prices. After loosing 3-4 contracts we didn't even bother anymore when we knew someone had 7 contracts over asking price.

Realistic is just not a word you use in our RE market.

At the end of the day, there is a rich end of town, a not so rich end of town, and something in between. Everyone can and should shoot for the stars and try for whatever they want, but be honest about where they are today.

I'm going to be honest.... i refused to even look at neighborhoods where i knew crime and kids and/or schools would be a problem. In the first neighborhood we lived in, both our cars were vandalized and the kids just ran rampant with no supervision.

Forget rich/not so rich sometimes you have to just bite the bullet/pay the higher price for your own sanity and for the safety of your family.

My co-worker lives in a modest 2 bedroom apt for $950 a month. Unfortunately that complex and the neighborhood is riddled with theft/grafetti/gangs/drugs/you name it and every school is on the left behind list. It's so bad that they've redistricted some of those kids to better districts to balance the test scores. (Thanks, now my MS gets your gang-like kids; and no offense to the few kids who live there that really are nice but if it walks like a duck, (and steals from your children like a duck.)
The teachers in my dd's school even went so far to imply that she was much "safer" in honors classes even even the work was a little too hard at times.

 

[goofyforlife]

It is true they were with my mom 4 nights a week(at our house) but they don't remember anything but me being a stay at home mom now. They were babies.

Hmmm and here i got blamed by my dd's therapist (for ADD)about her having more than one caregiver before the age of two.
They told me i should have quit my job for two yrs and stayed home.

 

[BellePrincessBelle]

Hmmm and here i got blamed by my dd's therapist (for ADD)about her having more than one caregiver before the age of two.
They told me i should have quit my job for two yrs and stayed home.

I'd get a new therapist!!! My kids are great well rounded, and in the gifted program at school so I don't think it harmed them in any way. We had my mom & one other relative on a regular basis and a cousin as a sub. My oldest just deals with adults really well and is very comfortable around them.

 

[QT Pooh]

Sorry, I don't really like to chime in on these types of posts, but I'm going to. No one knows what is right for you except for you and your husband. I would suggest that you both need to do a little soul searching and evaluate what your priorities are. If your number one or number two priority is to own a large home, then by all means, go for this house. BUT...if your priorities are something other than that and this mortgage might hinder your ability to get to your top priorities, then do not buy this house. It will remove you from what you really want to accomplish in life.

For example...my husband and I qualified to have a large mortgage; however, we sat down and figured out that we a) wanted to retire comfortably and by age 60, b) wanted to pay for at least 80% of our children's education, c) wanted to be able to take at least one great family vacation a year and d) wanted to be able to survive if anything happened to either one of us or either of our jobs, and e) stay debt free except for the mortgage. With all that, we were able to buy a lovely home that we are thrilled with and took out a mortgage that was $200K less than what they said we were qualified for. We are able to max out on our 401Ks, invest heavily in our kids' 529 plans, and pay an additional amount on our mortgage every month. We expect to meet every single one of the goals that were set forth at the beginning.

Just something to think about. Good luck with whatever decision you arrive at!

 

[MrsPete]

Forget rich/not so rich sometimes you have to just bite the bullet/pay the higher price for your own sanity and for the safety of your family.

And sometimes you have to say, "I love this city, this state, this area, but the cost of living is just too insane. Wonder about ____?"

Buying something you can't afford for the sake of your sanity is . . . well, insane! It may solve one problem, but it'll cause others!

 

[MrsPete]

I'd get a new therapist!!! My kids are great well rounded, and in the gifted program at school so I don't think it harmed them in any way. We had my mom & one other relative on a regular basis and a cousin as a sub. My oldest just deals with adults really well and is very comfortable around them.

I agree! She obviously hasn't met my kids or many others who not only survived daycare, but THRIVED in it! They're super-smart, polite, good kids.

Even if you HAD done something detrimental when they were younger, why bother to guilt you about it now? It's not like you can go back and re-do it.

 

[MrsPete]

For example...my husband and I qualified to have a large mortgage; however, we sat down and figured out that we a) wanted to retire comfortably and by age 60, b) wanted to pay for at least 80% of our children's education, c) wanted to be able to take at least one great family vacation a year and d) wanted to be able to survive if anything happened to either one of us or either of our jobs, and e) stay debt free except for the mortgage. With all that, we were able to buy a lovely home that we are thrilled with and took out a mortgage that was $200K less than what they said we were qualified for. We are able to max out on our 401Ks, invest heavily in our kids' 529 plans, and pay an additional amount on our mortgage every month. We expect to meet every single one of the goals that were set forth at the beginning

Yeah, I could say essentially the same thing. When my husband and I were engaged and were looking at houses, we were shocked at what "they" said we could afford, and we started to look at some really, really nice houses! I don't know how many times since then we've said to ourselves, "Thank goodness we didn't "max out" a mortgage bill." Sure, we could be in a nicer house, but it'd be a negative in many other areas of our lives.