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DWCAP.
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September 30, 2008 at 10:55 AM #278391September 30, 2008 at 12:40 PM #278124
BGinRB
Participant[quote=esmith]
520K mortgage at 6.25% (you can get 6.00% without points, but let’s be conservative)
Interest $2708
Principal $493
Insurance $50
Property tax $921 (tax rate 1.7% including Mello Roos)
HOA say $100
—
total housing $4272/month. And only $2800-2900 of that is “effective rent”, the rest is tax deduction and principal payments.At some point the house will start to appreciate with inflation. Normal monthly appreciation of a 650K house is around $1600/month.
130K income is take-home pay around $9000 after social security, medicare, etc. (married, 2 dependents). You have almost 5 grand per month left on food, utilities, clothing, entertainment. Not too shabby. Besides, incomes tend to rise and housing payments are fixed for 30 years.
[/quote]$130K is take-home pay under $7.5K/month after taxes and $10K in 401k, assuming generous employee match, married, 2 dependents w/ standard deduction, $0 for wifey’s IRA and employee covered insurance. Your marginal rate is 25%, but since you itemize you forfeit your standard deduction and assuming you cheat by claiming MR your “effective rent” is closer to $3.5K.
Your fixed monthly expenses are:
$3500 “effective rent”
$500 principal
$100 HOA
$300 cable, phone, misc utilities
$600 car payment (entry level sedan and minivan)
$500 food
$300 gas & car maintenance
————————
$5800
You are left with $1700/month to cover medical bills (two kids – what are the chances at least one will need braces?), landscaping, clothing, electronics, furniture for your new house, vacation, preschool/school supplies, birthday parties… you will be able to set asside few hundreds/month, if that, to recover your $130K downpayment.I am not saying it is impossible, but it sounds very risky and the engineering types with a spouse and two kids, that you count on, are usually risk-aware and rarely accept prayer as a convincing risk mitigation plan.
September 30, 2008 at 12:40 PM #278388Participant[quote=esmith]
520K mortgage at 6.25% (you can get 6.00% without points, but let’s be conservative)
Interest $2708
Principal $493
Insurance $50
Property tax $921 (tax rate 1.7% including Mello Roos)
HOA say $100
—
total housing $4272/month. And only $2800-2900 of that is “effective rent”, the rest is tax deduction and principal payments.At some point the house will start to appreciate with inflation. Normal monthly appreciation of a 650K house is around $1600/month.
130K income is take-home pay around $9000 after social security, medicare, etc. (married, 2 dependents). You have almost 5 grand per month left on food, utilities, clothing, entertainment. Not too shabby. Besides, incomes tend to rise and housing payments are fixed for 30 years.
[/quote]$130K is take-home pay under $7.5K/month after taxes and $10K in 401k, assuming generous employee match, married, 2 dependents w/ standard deduction, $0 for wifey’s IRA and employee covered insurance. Your marginal rate is 25%, but since you itemize you forfeit your standard deduction and assuming you cheat by claiming MR your “effective rent” is closer to $3.5K.
Your fixed monthly expenses are:
$3500 “effective rent”
$500 principal
$100 HOA
$300 cable, phone, misc utilities
$600 car payment (entry level sedan and minivan)
$500 food
$300 gas & car maintenance
————————
$5800
You are left with $1700/month to cover medical bills (two kids – what are the chances at least one will need braces?), landscaping, clothing, electronics, furniture for your new house, vacation, preschool/school supplies, birthday parties… you will be able to set asside few hundreds/month, if that, to recover your $130K downpayment.I am not saying it is impossible, but it sounds very risky and the engineering types with a spouse and two kids, that you count on, are usually risk-aware and rarely accept prayer as a convincing risk mitigation plan.
September 30, 2008 at 12:40 PM #278401Participant[quote=esmith]
520K mortgage at 6.25% (you can get 6.00% without points, but let’s be conservative)
Interest $2708
Principal $493
Insurance $50
Property tax $921 (tax rate 1.7% including Mello Roos)
HOA say $100
—
total housing $4272/month. And only $2800-2900 of that is “effective rent”, the rest is tax deduction and principal payments.At some point the house will start to appreciate with inflation. Normal monthly appreciation of a 650K house is around $1600/month.
130K income is take-home pay around $9000 after social security, medicare, etc. (married, 2 dependents). You have almost 5 grand per month left on food, utilities, clothing, entertainment. Not too shabby. Besides, incomes tend to rise and housing payments are fixed for 30 years.
[/quote]$130K is take-home pay under $7.5K/month after taxes and $10K in 401k, assuming generous employee match, married, 2 dependents w/ standard deduction, $0 for wifey’s IRA and employee covered insurance. Your marginal rate is 25%, but since you itemize you forfeit your standard deduction and assuming you cheat by claiming MR your “effective rent” is closer to $3.5K.
Your fixed monthly expenses are:
$3500 “effective rent”
$500 principal
$100 HOA
$300 cable, phone, misc utilities
$600 car payment (entry level sedan and minivan)
$500 food
$300 gas & car maintenance
————————
$5800
You are left with $1700/month to cover medical bills (two kids – what are the chances at least one will need braces?), landscaping, clothing, electronics, furniture for your new house, vacation, preschool/school supplies, birthday parties… you will be able to set asside few hundreds/month, if that, to recover your $130K downpayment.I am not saying it is impossible, but it sounds very risky and the engineering types with a spouse and two kids, that you count on, are usually risk-aware and rarely accept prayer as a convincing risk mitigation plan.
September 30, 2008 at 12:40 PM #278437Participant[quote=esmith]
520K mortgage at 6.25% (you can get 6.00% without points, but let’s be conservative)
Interest $2708
Principal $493
Insurance $50
Property tax $921 (tax rate 1.7% including Mello Roos)
HOA say $100
—
total housing $4272/month. And only $2800-2900 of that is “effective rent”, the rest is tax deduction and principal payments.At some point the house will start to appreciate with inflation. Normal monthly appreciation of a 650K house is around $1600/month.
130K income is take-home pay around $9000 after social security, medicare, etc. (married, 2 dependents). You have almost 5 grand per month left on food, utilities, clothing, entertainment. Not too shabby. Besides, incomes tend to rise and housing payments are fixed for 30 years.
[/quote]$130K is take-home pay under $7.5K/month after taxes and $10K in 401k, assuming generous employee match, married, 2 dependents w/ standard deduction, $0 for wifey’s IRA and employee covered insurance. Your marginal rate is 25%, but since you itemize you forfeit your standard deduction and assuming you cheat by claiming MR your “effective rent” is closer to $3.5K.
Your fixed monthly expenses are:
$3500 “effective rent”
$500 principal
$100 HOA
$300 cable, phone, misc utilities
$600 car payment (entry level sedan and minivan)
$500 food
$300 gas & car maintenance
————————
$5800
You are left with $1700/month to cover medical bills (two kids – what are the chances at least one will need braces?), landscaping, clothing, electronics, furniture for your new house, vacation, preschool/school supplies, birthday parties… you will be able to set asside few hundreds/month, if that, to recover your $130K downpayment.I am not saying it is impossible, but it sounds very risky and the engineering types with a spouse and two kids, that you count on, are usually risk-aware and rarely accept prayer as a convincing risk mitigation plan.
September 30, 2008 at 12:40 PM #278451Participant[quote=esmith]
520K mortgage at 6.25% (you can get 6.00% without points, but let’s be conservative)
Interest $2708
Principal $493
Insurance $50
Property tax $921 (tax rate 1.7% including Mello Roos)
HOA say $100
—
total housing $4272/month. And only $2800-2900 of that is “effective rent”, the rest is tax deduction and principal payments.At some point the house will start to appreciate with inflation. Normal monthly appreciation of a 650K house is around $1600/month.
130K income is take-home pay around $9000 after social security, medicare, etc. (married, 2 dependents). You have almost 5 grand per month left on food, utilities, clothing, entertainment. Not too shabby. Besides, incomes tend to rise and housing payments are fixed for 30 years.
[/quote]$130K is take-home pay under $7.5K/month after taxes and $10K in 401k, assuming generous employee match, married, 2 dependents w/ standard deduction, $0 for wifey’s IRA and employee covered insurance. Your marginal rate is 25%, but since you itemize you forfeit your standard deduction and assuming you cheat by claiming MR your “effective rent” is closer to $3.5K.
Your fixed monthly expenses are:
$3500 “effective rent”
$500 principal
$100 HOA
$300 cable, phone, misc utilities
$600 car payment (entry level sedan and minivan)
$500 food
$300 gas & car maintenance
————————
$5800
You are left with $1700/month to cover medical bills (two kids – what are the chances at least one will need braces?), landscaping, clothing, electronics, furniture for your new house, vacation, preschool/school supplies, birthday parties… you will be able to set asside few hundreds/month, if that, to recover your $130K downpayment.I am not saying it is impossible, but it sounds very risky and the engineering types with a spouse and two kids, that you count on, are usually risk-aware and rarely accept prayer as a convincing risk mitigation plan.
September 30, 2008 at 1:59 PM #278159Eugene
ParticipantOk, if you insist, let’s do everything accurately.
Assumptions:
130,000 gross income, married, 2 kids, single income (mom stays at home with children), 10,000 into 401kPurchase price $650,000 with 20% down, 6.25% for 30 years, property tax + MR 1.7%, HOA $100/month, insurance $600/year
Scenario 1. Buying a 4S Ranch McMansion
Expenses(monthly):
Interest $2,708.33
Principal $493.40
Insurance $50.00
Property tax $920.83
HOA $100.00
— Housing 4272.56Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $2,720
Federal tax paid $8,216
— Net income $8405/monthCash left after paying off housing: $4132
Contributed towards principal (forced savings): $493Scenario 2. Renting a house in 4S Ranch. The cheapest detached I see is $2700.
Expenses (monthly):
Rent $2700
— Housing $2700Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $6,770
Federal tax paid $19,037
— Net income $7165Cash left after paying off housing: $4465
As you can see, there’s not much cash-flow difference between buying and renting. Surely you wouldn’t make an argument that it’s very risky to rent in San Diego if you have a $130,000 salary.
Ultimately, what matters is whether you have the down payment and whether you can qualify for a mortgage. If you qualify at 40% gross DTI, you will be able to pay off your mortgage without stressing too much (unless you lose your job).
September 30, 2008 at 1:59 PM #278423ParticipantOk, if you insist, let’s do everything accurately.
Assumptions:
130,000 gross income, married, 2 kids, single income (mom stays at home with children), 10,000 into 401kPurchase price $650,000 with 20% down, 6.25% for 30 years, property tax + MR 1.7%, HOA $100/month, insurance $600/year
Scenario 1. Buying a 4S Ranch McMansion
Expenses(monthly):
Interest $2,708.33
Principal $493.40
Insurance $50.00
Property tax $920.83
HOA $100.00
— Housing 4272.56Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $2,720
Federal tax paid $8,216
— Net income $8405/monthCash left after paying off housing: $4132
Contributed towards principal (forced savings): $493Scenario 2. Renting a house in 4S Ranch. The cheapest detached I see is $2700.
Expenses (monthly):
Rent $2700
— Housing $2700Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $6,770
Federal tax paid $19,037
— Net income $7165Cash left after paying off housing: $4465
As you can see, there’s not much cash-flow difference between buying and renting. Surely you wouldn’t make an argument that it’s very risky to rent in San Diego if you have a $130,000 salary.
Ultimately, what matters is whether you have the down payment and whether you can qualify for a mortgage. If you qualify at 40% gross DTI, you will be able to pay off your mortgage without stressing too much (unless you lose your job).
September 30, 2008 at 1:59 PM #278435ParticipantOk, if you insist, let’s do everything accurately.
Assumptions:
130,000 gross income, married, 2 kids, single income (mom stays at home with children), 10,000 into 401kPurchase price $650,000 with 20% down, 6.25% for 30 years, property tax + MR 1.7%, HOA $100/month, insurance $600/year
Scenario 1. Buying a 4S Ranch McMansion
Expenses(monthly):
Interest $2,708.33
Principal $493.40
Insurance $50.00
Property tax $920.83
HOA $100.00
— Housing 4272.56Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $2,720
Federal tax paid $8,216
— Net income $8405/monthCash left after paying off housing: $4132
Contributed towards principal (forced savings): $493Scenario 2. Renting a house in 4S Ranch. The cheapest detached I see is $2700.
Expenses (monthly):
Rent $2700
— Housing $2700Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $6,770
Federal tax paid $19,037
— Net income $7165Cash left after paying off housing: $4465
As you can see, there’s not much cash-flow difference between buying and renting. Surely you wouldn’t make an argument that it’s very risky to rent in San Diego if you have a $130,000 salary.
Ultimately, what matters is whether you have the down payment and whether you can qualify for a mortgage. If you qualify at 40% gross DTI, you will be able to pay off your mortgage without stressing too much (unless you lose your job).
September 30, 2008 at 1:59 PM #278472ParticipantOk, if you insist, let’s do everything accurately.
Assumptions:
130,000 gross income, married, 2 kids, single income (mom stays at home with children), 10,000 into 401kPurchase price $650,000 with 20% down, 6.25% for 30 years, property tax + MR 1.7%, HOA $100/month, insurance $600/year
Scenario 1. Buying a 4S Ranch McMansion
Expenses(monthly):
Interest $2,708.33
Principal $493.40
Insurance $50.00
Property tax $920.83
HOA $100.00
— Housing 4272.56Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $2,720
Federal tax paid $8,216
— Net income $8405/monthCash left after paying off housing: $4132
Contributed towards principal (forced savings): $493Scenario 2. Renting a house in 4S Ranch. The cheapest detached I see is $2700.
Expenses (monthly):
Rent $2700
— Housing $2700Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $6,770
Federal tax paid $19,037
— Net income $7165Cash left after paying off housing: $4465
As you can see, there’s not much cash-flow difference between buying and renting. Surely you wouldn’t make an argument that it’s very risky to rent in San Diego if you have a $130,000 salary.
Ultimately, what matters is whether you have the down payment and whether you can qualify for a mortgage. If you qualify at 40% gross DTI, you will be able to pay off your mortgage without stressing too much (unless you lose your job).
September 30, 2008 at 1:59 PM #278486ParticipantOk, if you insist, let’s do everything accurately.
Assumptions:
130,000 gross income, married, 2 kids, single income (mom stays at home with children), 10,000 into 401kPurchase price $650,000 with 20% down, 6.25% for 30 years, property tax + MR 1.7%, HOA $100/month, insurance $600/year
Scenario 1. Buying a 4S Ranch McMansion
Expenses(monthly):
Interest $2,708.33
Principal $493.40
Insurance $50.00
Property tax $920.83
HOA $100.00
— Housing 4272.56Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $2,720
Federal tax paid $8,216
— Net income $8405/monthCash left after paying off housing: $4132
Contributed towards principal (forced savings): $493Scenario 2. Renting a house in 4S Ranch. The cheapest detached I see is $2700.
Expenses (monthly):
Rent $2700
— Housing $2700Income:
Gross $130,000
401k contribution $10,000
Social security tax $6,324
Medicare tax $1,885
State tax paid $6,770
Federal tax paid $19,037
— Net income $7165Cash left after paying off housing: $4465
As you can see, there’s not much cash-flow difference between buying and renting. Surely you wouldn’t make an argument that it’s very risky to rent in San Diego if you have a $130,000 salary.
Ultimately, what matters is whether you have the down payment and whether you can qualify for a mortgage. If you qualify at 40% gross DTI, you will be able to pay off your mortgage without stressing too much (unless you lose your job).
September 30, 2008 at 2:57 PM #278214peterb
ParticipantDeck chairs on the Titanic…. very important that they be arranged correctly, from what I’ve been told.
September 30, 2008 at 2:57 PM #278478ParticipantDeck chairs on the Titanic…. very important that they be arranged correctly, from what I’ve been told.
September 30, 2008 at 2:57 PM #278490ParticipantDeck chairs on the Titanic…. very important that they be arranged correctly, from what I’ve been told.
September 30, 2008 at 2:57 PM #278528ParticipantDeck chairs on the Titanic…. very important that they be arranged correctly, from what I’ve been told.
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