[quote=AN][quote=captcha]There is a difference between two income family making $125K combined and one-income family with college-educated stay-at-home-by-choice parent making the same amount of money and the latter is more common than the former in 4S Ranch.
PITI on $500K with 25% down in 4S is ~$2600-$2800. With tax deductions we are talking $2-$2.2K month. It would be nicer if it was $1,500, but $2,200 on one salary of $10K/month is doable without much stretching.[/quote]
It doesn’t matter if it’s dual income $125k HHI or single income $125k HHI. What matter, is if it’s before or after tax. $125k before tax, even with single income is still not enough to comfortable afford $600k (w/out HOA/MR), much less $600k in areas like 4S/SEH where HOA+MR comes out to be another ~$400.
Why did you use 25% vs 20%? Does that help your numbers? Using conventional 20%, $400k loan on a $500k house with today’s rate (assuming you have great credit), the P+I is $1900. Tax should be about $450 + ~$400 for HOA+MR + ~$100 for insurance, and you’re looking at $2850/month. Tax deduction is ~$330/month. So, we’re looking at ~$2500/month after tax deduction. $125k before tax would be about $100k after tax. That’s $8300/month. So, we’re looking about $5800/month after tax to spend on other things besides your shelter. How much do you think a typical family spend on eating, gas, student loans, car loan, etc? Now, about medical expenses? Then, how about retirement? If you’re prudent and max out your 401k AND IRA (assuming Roth for both spouses), that would come out to $3600/month. So, just after retirement, you only have $2200/month to spend on eating, gas, student loans, car loans, entertainment, after school activities, travel, medical expenses. I’m ONLY using a $500k house example too. Imagine how much tighter it’ll be if I use a $600k house example.[/quote]
Single vs. dual matters because part of the ‘comfortable’ is psychological. I am more comfortable spending $X/month if I know that I can easily generate another $50K/year income stream.
I used 25% because that’s what it takes to get the best rate. Your tax deduction is rather conservative. Assuming $600 in principal payment and $100 insurance (and skipping the MR deductible-or-not discussion) the deduction should be ~25-30%, i.e. ~$500-600/month.
Looking around, most 4S families are either families of retired/active military officers or immigrant engineers working at major SD companies. Usually with limited medical bills (decent insurance) and no student loans (foreign educated, government paid, etc).
I am not saying what you are getting in 4S Ranch is worth the money, just that fiscally-responsible single-income $125K/year family can rather comfortable afford $500K place.
