Since the teenage daughters were in on the decision, the one in college, at least, should be working all summer to help the family out. But I don’t know how much of a dent that would make, if any.

400k is not affordable with nothing down on 90k gross with four people to feed and put into vehicles. 3x income is a ceiling of loan affordability and that is a stretch for the early years. 270k loan and they should have made it work, they paid twice that and are suprised that it didn’t work out. I can’t believe they didn’t realize the taxes would be raised based on the purchase price. On 90k gross their take home is about 4-5k a month after health insurance, minimal 401k, etc. And their interest only payment for two years would be 3800/mo. before it resets. Even if they didn’t have the new tax rate it was 3200, how do you buy a house where you can’t afford the temporary teaser rate. When I made 90k gross I bought a house for 200k and money was tight for a few years.

These stories are becoming so common and every person in this situation has friends, relatives and co-workers that know their story, what is that going to to do the buyer psyche even when prices get in line with rent. Joe six pack isn’t going to understand the details and why it happened they will just equate R/E with financial ruin.

400k is not affordable with nothing down on 90k gross with four people to feed and put into vehicles. 3x income is a ceiling of loan affordability and that is a stretch for the early years. 270k loan and they should have made it work, they paid twice that and are suprised that it didn’t work out. I can’t believe they didn’t realize the taxes would be raised based on the purchase price. On 90k gross their take home is about 4-5k a month after health insurance, minimal 401k, etc. And their interest only payment for two years would be 3800/mo. before it resets. Even if they didn’t have the new tax rate it was 3200, how do you buy a house where you can’t afford the temporary teaser rate. When I made 90k gross I bought a house for 200k and money was tight for a few years.

These stories are becoming so common and every person in this situation has friends, relatives and co-workers that know their story, what is that going to to do the buyer psyche even when prices get in line with rent. Joe six pack isn’t going to understand the details and why it happened they will just equate R/E with financial ruin.

I don’t understand how all these people thought that they could “afford” $500K-plus homes on such low salaries. I was absolutely terrified when I bought a $115K home in 2000 on a $50K annual salary. My payment (including impound) was like $950, a $300 increase over the rent I was paying at the time(in Sacramento things used to be cheap). Even now, with an annual income four times what I was making then, I would not take on that kind of mortgage unless the house was on several acres of land or riverfront.

These stories are getting old….fast

These stories are getting old….fast

Allow me to speak from experience. Before departing San Diego, I was making exactly 90k and owned a home with exactly a 400k mortgage. Here’s how we lived:

Yearly Costs
-$37,200 – 7yr., IO Loan, Mello Roos, HOA, Taxes, (3,100/Mo)
-$25,000 – 28% deducted for taxes, soc.sec., Medicare etc.
-$9,000 – Groceries/Dining, Family of four
-$4,000 – Gas
-$4,500 – 5% 401k investment
-$500 – Auto repair, oil change etc.
-$2,000 – Home/Auto/Life insurance
-$1,000 – Yearly vacation, travel costs
-$500 – Gifts
-$4,000 – Utilities
-$750 – Clothing
-$1,500 – Household stuff (yard, plants, trash bags etc.)
——–
$89,950

Savings = 25 cents/Month

Note: I had no debt other than the home, no ccard balances, no student loans, no car pmts.