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post #1 of 23 (permalink) Old 06-05-2019, 10:47 AM Thread Starter
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Buying a house

Iíve never owned a house. I have no idea what the rule of thumb is for deciding your budget. All I know is just Bc you can ďaffordĒ it, doesnít mean you should get it and stretch your money thin. Iíd rather be safe then sorry.
So any advice on how much money I should spend based on my yearly income? Letís say I only have $10,000 to put down.

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post #2 of 23 (permalink) Old 06-05-2019, 11:19 AM
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Re: Buying a house

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Originally Posted by Girl_power View Post
Iíve never owned a house. I have no idea what the rule of thumb is for deciding your budget. All I know is just Bc you can ďaffordĒ it, doesnít mean you should get it and stretch your money thin. Iíd rather be safe then sorry.
So any advice on how much money I should spend based on my yearly income? Letís say I only have $10,000 to put down.
One of the financial advisor type people I know says that your house payment should not be more than 20% of your monthly income.

I have read somewhere that the house should not exceed 2 times your annual income.
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post #3 of 23 (permalink) Old 06-05-2019, 11:30 AM
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Re: Buying a house

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Originally Posted by Girl_power View Post
Iíve never owned a house. I have no idea what the rule of thumb is for deciding your budget. All I know is just Bc you can ďaffordĒ it, doesnít mean you should get it and stretch your money thin. Iíd rather be safe then sorry.
So any advice on how much money I should spend based on my yearly income? Letís say I only have $10,000 to put down.
Be sure you get a fixed interest rate if you finance.
Adjustable rates go up or if your lucky down. (never happens )

Consider the square footage of the house and heating and air
conditioning cost. If you finance then your homeowners insurance
and taxes will be included in your monthly payment. Get your own
insurance, check if flood insurance is needed, That is an extra policy,
not included in regular insurance. There is a small creek near my house
and two years ago the gov. decided I was in a food zone now. Your finance
company will require several things to close, insurance, closing costs, lawyers
fees etc. You will pay or fiance these.

Monthly cost such as heating, water, sewage, and just lawn care also.
Maintenance if needed also ( things happen and break )

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post #4 of 23 (permalink) Old 06-05-2019, 11:35 AM
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Re: Buying a house

The conservative rule of thumb is your payment (including property taxes and insurance) should be around 25% of your take home pay. Also, a bigger down payment is your friend.




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post #5 of 23 (permalink) Old 06-05-2019, 11:36 AM
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Re: Buying a house

It totally depends on your age and the amount of money you bring in. Also how secure your employment is. Would be great if you had a crystal ball and know what is going to happen with house prices in your area!

If you are in a lower income bracket, then I would look at monthly costs when renting vs buying. Often you can buy a property and your monthly costs don't go up. Might even go down.

Look at the mortgage in regards to how much each month is paying interest and how much is going to paying down the mortgage. Look at the amount you are paying down as savings.

If you are middle class or upper class, then it comes down to personal preference. Some people want a nicer home, some people want a smaller house and more toys, some people want a smaller house and save more money for retirement.

The $10,000 down payment will limit you to what you can buy. Your bank/mortgage broker will let you know how much you can borrow with that amount as a down payment.

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post #6 of 23 (permalink) Old 06-05-2019, 12:05 PM
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Re: Buying a house

Agree with others that its very situation dependent. If you expect you income to increase substantially over time (lets say you just graduated from college and are going into a technology field) you can stretch a lot further than if you are in a long term stable job where you will only be getting minor pay raises.

Keep in mind also that other plans can change your finances. If you are planning to have kids for example, that represents a large new expense you will be facing.
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post #7 of 23 (permalink) Old 06-05-2019, 12:16 PM
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Re: Buying a house

I will not repeat what others have already suggested in terms of your monthly mortgage and your monthly salary, enough already said on that point. I would like to add, that like a car, houses also require maintenance from time to time (mostly emergency type of situations). You want to consider saving at least $40/month (high end) if possible for any future maintenance issues that suddenly come up. They will cost you more than $40 but since they donít happen every month, that monthly savings will come in handy when the expensive situations come your way. Do not think of this as ďif it happensĒ rather ďwhen it happensĒ, and they will happen. The inconvenience of things breaking down is one thing, not having the money to repair it is another problem altogether.


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post #8 of 23 (permalink) Old 06-05-2019, 12:20 PM
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Re: Buying a house

I agree about the down payment. This is certainly not set in stone, but my finance friend used to say "If you cannot do at least a 10% down payment, you can't afford a house."
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post #9 of 23 (permalink) Old 06-05-2019, 12:49 PM
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Re: Buying a house

If you put less than 20% down (that is have less than 20% equity ownership) you will more than likely have an additional PMI payment added onto your mortgage. Even though these payments are only 0.5% to 1% of your mortgage, it can add up and it does not go towards your principle or interest payments. You can have it taken off (which you often have to actively pursue) once you reach near the point of 20% equity.


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post #10 of 23 (permalink) Old 06-05-2019, 01:54 PM
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Re: Buying a house

Itís a cliche but when it comes to buying property itís location location location.
You donít say where you live but if ten grand is the most you can put down then I assume you donít live in the US and if you do then certainly not in one of the bigger cities.
What rent are you paying right now and what percentage of your income is this.Generally itís recommended that when you add your monthly mortgage repayment,property taxes and home insurance then it shouldnít be more than thirty three percent of your take home pay. Also itís recommended that you shouldnít borrow more than two and a half times your annual salary if you are a single person buying your first home.


When someone says itís not the money itís the principle,itís always the money.
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post #11 of 23 (permalink) Old 06-05-2019, 02:06 PM
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Re: Buying a house

Unless you're buying a new home, you will need to establish the age of the appliances and determine their usual life span plus the age of the plumbing, electrical, heat & air system, water heater and the roof. These are the major systems that keep your home running and that can knock your wallet for a loop. For instance, a water heater has a life span of 10 years or so and cost me about $1500 to replace.

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post #12 of 23 (permalink) Old 06-05-2019, 02:13 PM
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Re: Buying a house

You can guestimate what your mortgage payment would be allowing for $1000 for each $100,000 in house cost. So a $200,000 house would have a monthly payment of about $2000. The monthly payment will be more than just the loan payment and will typically include:

- The amount for the loan itself
- The cost of the mortgage insurance (insurance in case you default on the loan)
- Homeowner's insurance (your insurance in case the house burns down)
- Taxes

Your actual payment will depend on your situation, but figure on your monthly payment being about 1% of the purchase price.

Keep in mind that when you own a house, it's up to you to fix and maintain everything. If you don't do it yourself, it can be costly to hire someone to do it. A bad gasket in a leaky toilet can be hundreds of dollars for a plumber or a few cents if you buy the gasket and install it yourself. If you are not much of a handyperson, it might be good to consider a condo as your first home. There will be fewer maintenance issues to deal with, although there is typically a condo fee to pay for building/site upkeep.
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post #13 of 23 (permalink) Old 06-05-2019, 03:05 PM
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Re: Buying a house

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Originally Posted by Girl_power View Post
Iíve never owned a house. I have no idea what the rule of thumb is for deciding your budget. All I know is just Bc you can ďaffordĒ it, doesnít mean you should get it and stretch your money thin. Iíd rather be safe then sorry.
So any advice on how much money I should spend based on my yearly income? Letís say I only have $10,000 to put down.

@Girl_power, donít let all the information discourage you from buying a house, but it is good to be informed and enter into this long term financial contract with your eyes wide open.

My biggest piece of advice prior to and at least five years after buying a house is to set a budget and stick to it.


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post #14 of 23 (permalink) Old 06-05-2019, 03:20 PM
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Re: Buying a house

If you tell us where you live,what age you are and what you do/have done for a living then you will get better advice.
Depending on where you live there are various grants available for first time buyers.
The US dept of agriculture provides loans to people wanting to live in rural areas and they donít require any down payment but mortgage protection insurance is required, however theirs is less than FHA policies and you can qualify for a higher loan.
The VA provide mortgages in certain cases and they also donít require a down payment OR mortgage protection insurance. There are also loans available to native Americans to build/buy houses on recognized trust land.

When someone says itís not the money itís the principle,itís always the money.
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post #15 of 23 (permalink) Old 06-05-2019, 04:17 PM
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Re: Buying a house

Not to discount anything anyone said, but I would speak with a professional. There's different types of loans you could qualify for, and they can tell you exactly how much. Or, if you dont qualify currently, they will tell you what you need to fix, or what you need to do to qualify.

Your first step should always be to get prequalified before you start looking at houses and thinking about all the rest of it. Monthly pmts and all that, you can get to a number you want only to realize you don't qualify anyway.
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