How much house should I buy?

[CogSciGuy]

Hey guys,

I mostly lurk, but thought I’d post something for once. I’ve seen a few different rules of thumbs regarding how much home one should try to buy, but I’d be interested in what some of you would advise as well.

My gross income is 120K and my only debt is 20K in student loans (I pay 200/month on them). I’ve heard 36% of gross monthly income as a rule of thumb for all debt payments. That’d be $3400/month PITI! That feels like a lot to me–not at all conservative. What kinda PITI range would you be comfortable with?

Thanks for your input.

[CogSciGuy]

Oops, meant to post this in the general “housing market” forum. Oh well.

[CogSciGuy]

Oops, meant to post this in the general “housing market” forum. Oh well.

[CogSciGuy]

Oops, meant to post this in the general “housing market” forum. Oh well.

[CogSciGuy]

Oops, meant to post this in the general “housing market” forum. Oh well.

[CogSciGuy]

Oops, meant to post this in the general “housing market” forum. Oh well.

[HLS]

Have you got 20% for a down payment and reserves beyond that and a credit score above 680 and same job for 2 years+ ?

[CogSciGuy]

I’ve had the same job for 4 years. My FICO is like 675 right now (bankrupcy 4 years ago). I have $10K saved for down payment.

I’m not sure on the timing of when I’ll buy just yet. I’ll probably be waiting at least a year to save another $20K or so and boost the FICO a bit–assuming prices don’t start to increase.

[HLS]

Any loan (max $417K) over 80% of the purchase price will require mortgage insurance or a higher rate to compensate.
Depending on the rest of your profile, you may or may not qualify for a loan next year.

Do you actually know how to raise your credit score ?

I don’t think that you need to worry about prices going up around here.

A lender might allow you to borrow with total monthly payments and debt up to 60% of your gross income, more than you are comfortable with.

[kev374]

I would say with 20% down your front-end/back-end ratios should be 28/36. In addition you need 6 months reserves at a minimum (i.e. 6 months of your monthly outflows), $5k or so emergency fund for unexpected maintainence, closing costs and you *may* need funds for furnishings and moving costs.

So, buying a home is not the *JOKE* many people have made it out to be in recent years, it is a HUGE commitment.

[CogSciGuy]

What are “front-end/back-end ratios”?

[CogSciGuy]

What are “front-end/back-end ratios”?

[CogSciGuy]

What are “front-end/back-end ratios”?

[CogSciGuy]

What are “front-end/back-end ratios”?

[CogSciGuy]

What are “front-end/back-end ratios”?

[kev374]

I would say with 20% down your front-end/back-end ratios should be 28/36. In addition you need 6 months reserves at a minimum (i.e. 6 months of your monthly outflows), $5k or so emergency fund for unexpected maintainence, closing costs and you *may* need funds for furnishings and moving costs.

So, buying a home is not the *JOKE* many people have made it out to be in recent years, it is a HUGE commitment.

[kev374]

I would say with 20% down your front-end/back-end ratios should be 28/36. In addition you need 6 months reserves at a minimum (i.e. 6 months of your monthly outflows), $5k or so emergency fund for unexpected maintainence, closing costs and you *may* need funds for furnishings and moving costs.

So, buying a home is not the *JOKE* many people have made it out to be in recent years, it is a HUGE commitment.

[kev374]

I would say with 20% down your front-end/back-end ratios should be 28/36. In addition you need 6 months reserves at a minimum (i.e. 6 months of your monthly outflows), $5k or so emergency fund for unexpected maintainence, closing costs and you *may* need funds for furnishings and moving costs.

So, buying a home is not the *JOKE* many people have made it out to be in recent years, it is a HUGE commitment.

[kev374]

I would say with 20% down your front-end/back-end ratios should be 28/36. In addition you need 6 months reserves at a minimum (i.e. 6 months of your monthly outflows), $5k or so emergency fund for unexpected maintainence, closing costs and you *may* need funds for furnishings and moving costs.

So, buying a home is not the *JOKE* many people have made it out to be in recent years, it is a HUGE commitment.

[CogSciGuy]

I already got qualified for a loan with a couple different mortgage brokers a month or so back, before I backed out and decided it was dumb to go with an IO ARM, esp. with the market tanking for the foreseeable future. So I’m not too worried about what a bank is willing to lend me–I’m sure I can get much more loan than I actually want.

As far as raising my score…I’m just making regular credit card payments on two cards and then my car and student loan payments. Is there something you’d recommend above and beyond that?

[HLS]

Assuming that you are buying gas, get a gas card too. Some offer discounts like SHELL offers a 5% rebate on gas with their card. Use the cards at least once a month and pay the bill off each month.
Using credit will raise your score over time.

Just realize that a debit card does absolutely nothing for your credit score.

You will get a loan, that’s not the point.
You want to try and get a great loan.

Guidleines are constantly changing. A 680+ mid-score will get you a better loan than a 679 mid-score today.
A 90% loan is a better rate than a 91% loan.

[(former)FormerSanDiegan]

Front end ratio is the percentage of your income needed to service PITI (principal, interest, taxes, and insurance).
Back end ratio is the percentage of your income needed to service all of your debt (including PITI).

Old fashioned Debt ratios used to be 28/36. Thast is 28% of income for PITI, 36% for total debt.

[CogSciGuy]

Got it. Thanks. I’d seen the 28/36 before and knew what it represented–just hadn’t heard the “front-end” and “back-end” terms.

[svelte]

I remember when we first bought in the 1980s we were shocked at what the banks were willing to lend us….they’d lend us enough money to hang ourselves, even back then!

We’ve always worked into it the other way – we decide how big we want our house payment to be and then calculate how much $$ we can borrow to hit that number. We take that loan amount, tack on what we want to put down, and that’s the maximum we can spend!

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

Of course, when buying your first place, you might have to stretch a little more just to get in the game.

Good luck and best wishes.

[(former)FormerSanDiegan]

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.

[CogSciGuy]

That’s a good point, FSD. I think I’m going to throw all such rules out the window and just go with what I feel comfortable with: $2500-$3000 PITI.

[patientrenter]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

After all the analysis of what went wrong in the current bubble, I’d have thought readers of this blog would be looking at the actual price of the home, not just the monthly payments.

Patient renter in OC

[paramount]

Some people get a bit carried away with “fiscal conservatism”.

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

[NotCranky]

Good post patient,how quickly we forget. Stealing an idea from Bugs. Buy as much as you are sure you can keep, or at least buy no more than that. In a market like this there is little room for error on this.

[NotCranky]

Good post patient,how quickly we forget. Stealing an idea from Bugs. Buy as much as you are sure you can keep, or at least buy no more than that. In a market like this there is little room for error on this.

[NotCranky]

Good post patient,how quickly we forget. Stealing an idea from Bugs. Buy as much as you are sure you can keep, or at least buy no more than that. In a market like this there is little room for error on this.

[NotCranky]

Good post patient,how quickly we forget. Stealing an idea from Bugs. Buy as much as you are sure you can keep, or at least buy no more than that. In a market like this there is little room for error on this.

[NotCranky]

Good post patient,how quickly we forget. Stealing an idea from Bugs. Buy as much as you are sure you can keep, or at least buy no more than that. In a market like this there is little room for error on this.

[CogSciGuy]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn’t explicitly ‘fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it’s amazing how little it is, in the face of attempting to purchase a home that doesn’t suck. If you’re expressing skepticism, I guess I can share that. I’ve seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I’m not doing that!)–or whether they’re lying.

[CogSciGuy]

Man! I went through the bother to try to figure out how to italicize on here and then I blew it with a typo!

[CogSciGuy]

Man! I went through the bother to try to figure out how to italicize on here and then I blew it with a typo!

[CogSciGuy]

Man! I went through the bother to try to figure out how to italicize on here and then I blew it with a typo!

[CogSciGuy]

Man! I went through the bother to try to figure out how to italicize on here and then I blew it with a typo!

[CogSciGuy]

Man! I went through the bother to try to figure out how to italicize on here and then I blew it with a typo!

[Coronita]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn't explicitly 'fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it's amazing how little it is, in the face of attempting to purchase a home that doesn't suck. If you're expressing skepticism, I guess I can share that. I've seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I'm not doing that!)–or whether they're lying.

</i>

I can probably offer some viewpoints.

1) A lot of us are probably referring to household income, and not individual.

2) Two professionals in a household, and that is a couple of times above the average income quoted.

3) Regardless of how much it is, with a W-2, it stinks after taxes.

4) A lot of us are already in their mid thirties, some forties, and are probably not going to see much more as a W-2. If you're in your twenties and are doing this, you're already doing pretty well.

5) A lot more of it has to do with what you keep, not how much you earn. There are plenty of people that make huge salaries but can't save if their life depended on it.

 

On topic,

CogSciGuy. I hope your not carrying large balances on CC's. If you are, I'd consider paying those off before tacking on more debt. Your previous post eluded to CC balance. I wasn't sure if you meant you just paid your balance off in full or if you maintained a balance. The entire frontend/backend percentages are great as a guideline. But I think you also need to make sure you're expenses and outstanding obligations are in check.

[Coronita]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn't explicitly 'fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it's amazing how little it is, in the face of attempting to purchase a home that doesn't suck. If you're expressing skepticism, I guess I can share that. I've seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I'm not doing that!)–or whether they're lying.

</i>

I can probably offer some viewpoints.

1) A lot of us are probably referring to household income, and not individual.

2) Two professionals in a household, and that is a couple of times above the average income quoted.

3) Regardless of how much it is, with a W-2, it stinks after taxes.

4) A lot of us are already in their mid thirties, some forties, and are probably not going to see much more as a W-2. If you're in your twenties and are doing this, you're already doing pretty well.

5) A lot more of it has to do with what you keep, not how much you earn. There are plenty of people that make huge salaries but can't save if their life depended on it.

 

On topic,

CogSciGuy. I hope your not carrying large balances on CC's. If you are, I'd consider paying those off before tacking on more debt. Your previous post eluded to CC balance. I wasn't sure if you meant you just paid your balance off in full or if you maintained a balance. The entire frontend/backend percentages are great as a guideline. But I think you also need to make sure you're expenses and outstanding obligations are in check.

[Coronita]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn't explicitly 'fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it's amazing how little it is, in the face of attempting to purchase a home that doesn't suck. If you're expressing skepticism, I guess I can share that. I've seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I'm not doing that!)–or whether they're lying.

</i>

I can probably offer some viewpoints.

1) A lot of us are probably referring to household income, and not individual.

2) Two professionals in a household, and that is a couple of times above the average income quoted.

3) Regardless of how much it is, with a W-2, it stinks after taxes.

4) A lot of us are already in their mid thirties, some forties, and are probably not going to see much more as a W-2. If you're in your twenties and are doing this, you're already doing pretty well.

5) A lot more of it has to do with what you keep, not how much you earn. There are plenty of people that make huge salaries but can't save if their life depended on it.

 

On topic,

CogSciGuy. I hope your not carrying large balances on CC's. If you are, I'd consider paying those off before tacking on more debt. Your previous post eluded to CC balance. I wasn't sure if you meant you just paid your balance off in full or if you maintained a balance. The entire frontend/backend percentages are great as a guideline. But I think you also need to make sure you're expenses and outstanding obligations are in check.

[Coronita]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn't explicitly 'fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it's amazing how little it is, in the face of attempting to purchase a home that doesn't suck. If you're expressing skepticism, I guess I can share that. I've seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I'm not doing that!)–or whether they're lying.

</i>

I can probably offer some viewpoints.

1) A lot of us are probably referring to household income, and not individual.

2) Two professionals in a household, and that is a couple of times above the average income quoted.

3) Regardless of how much it is, with a W-2, it stinks after taxes.

4) A lot of us are already in their mid thirties, some forties, and are probably not going to see much more as a W-2. If you're in your twenties and are doing this, you're already doing pretty well.

5) A lot more of it has to do with what you keep, not how much you earn. There are plenty of people that make huge salaries but can't save if their life depended on it.

 

On topic,

CogSciGuy. I hope your not carrying large balances on CC's. If you are, I'd consider paying those off before tacking on more debt. Your previous post eluded to CC balance. I wasn't sure if you meant you just paid your balance off in full or if you maintained a balance. The entire frontend/backend percentages are great as a guideline. But I think you also need to make sure you're expenses and outstanding obligations are in check.

[Coronita]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn't explicitly 'fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it's amazing how little it is, in the face of attempting to purchase a home that doesn't suck. If you're expressing skepticism, I guess I can share that. I've seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I'm not doing that!)–or whether they're lying.

</i>

I can probably offer some viewpoints.

1) A lot of us are probably referring to household income, and not individual.

2) Two professionals in a household, and that is a couple of times above the average income quoted.

3) Regardless of how much it is, with a W-2, it stinks after taxes.

4) A lot of us are already in their mid thirties, some forties, and are probably not going to see much more as a W-2. If you're in your twenties and are doing this, you're already doing pretty well.

5) A lot more of it has to do with what you keep, not how much you earn. There are plenty of people that make huge salaries but can't save if their life depended on it.

 

On topic,

CogSciGuy. I hope your not carrying large balances on CC's. If you are, I'd consider paying those off before tacking on more debt. Your previous post eluded to CC balance. I wasn't sure if you meant you just paid your balance off in full or if you maintained a balance. The entire frontend/backend percentages are great as a guideline. But I think you also need to make sure you're expenses and outstanding obligations are in check.

[CogSciGuy]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn’t explicitly ‘fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it’s amazing how little it is, in the face of attempting to purchase a home that doesn’t suck. If you’re expressing skepticism, I guess I can share that. I’ve seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I’m not doing that!)–or whether they’re lying.

[CogSciGuy]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn’t explicitly ‘fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it’s amazing how little it is, in the face of attempting to purchase a home that doesn’t suck. If you’re expressing skepticism, I guess I can share that. I’ve seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I’m not doing that!)–or whether they’re lying.

[CogSciGuy]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn’t explicitly ‘fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it’s amazing how little it is, in the face of attempting to purchase a home that doesn’t suck. If you’re expressing skepticism, I guess I can share that. I’ve seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I’m not doing that!)–or whether they’re lying.

[CogSciGuy]

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

Thanks, paramount. I hadn’t explicitly ‘fessed up to my inclination to not hold off until I have the good old fashioned 20% ready. That comment makes me feel less guilty about it.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

Yep. And it’s amazing how little it is, in the face of attempting to purchase a home that doesn’t suck. If you’re expressing skepticism, I guess I can share that. I’ve seen a lot of people glibly dropping big numbers for income that makes me wonder what they do for a living (and why I’m not doing that!)–or whether they’re lying.

[paramount]

Some people get a bit carried away with “fiscal conservatism”.

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

[paramount]

Some people get a bit carried away with “fiscal conservatism”.

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

[paramount]

Some people get a bit carried away with “fiscal conservatism”.

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

[paramount]

Some people get a bit carried away with “fiscal conservatism”.

20% down is a nice ideal, but life is not always ideal. I would say at todays prices 5% should be a minimum.

You make a 120k? I always seem to notice that people on this board state these incredible incomes, and yet in my own life I know very few people who make anywhere near 100k.

[CogSciGuy]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?

[temeculaguy]

CogSciGuy, you are wise to avoid borrowing to the limit, 28/33 or 28/36 ratios have been around for a long time and most people can make it using those guidelines. The other thing is your life situation. A family of four or more has a harder time making it on those ratios, a person starting out in their career whose income will increase faster than inflation has an easier time. So the guidelines are relative. What are you paying in rent and how much extra money do you have each month? That is a better question as to what you can afford, ignore what the bank says. If you are paying 2k in rent and you have money to spare, then a $2500 PITI should feel the same (subtract the income tax benefit but add maintenance). If you don’t have an extra grand laying around at the end of every month then be prepared to feel the pinch if you bite off a 3K mortgage and you pay less than 2k in rent. You gross 120 and only have 10k saved, so that’s not very encouraging and you will likely be house poor if you exceed rent very much. Perhaps change your lifestyle now and see how it works. Pay your rent and at the same time pay the difference equal to 2500 or 3000 into savings at the same time and see how your houshold economy holds up.

A long time ago I borrowed 28% of my gross for a house and I was broke for years, today I have a different theory. All house expenses (piti and utilities) with the net from one paycheck and not with a high witholding ratio but something like m-0 or s-1. At 120k you probably take home about 2500-3000 a paycheck so your theory on that being your limit is a good one.

[paramount]

CogSciGuy: I know what you mean – I went into engineering, and yes I do have a six figure income (basically the same as yours), but it took me years and years to get there.

The thing is, I don’t know to many people that do have six figure incomes. As I have read these forums for quite some time, I can’t help but wonder from time to time who is BSing and who isn’t.

BTW, there is NO shame in not having a big income, none at all.

[paramount]

CogSciGuy: I know what you mean – I went into engineering, and yes I do have a six figure income (basically the same as yours), but it took me years and years to get there.

The thing is, I don’t know to many people that do have six figure incomes. As I have read these forums for quite some time, I can’t help but wonder from time to time who is BSing and who isn’t.

BTW, there is NO shame in not having a big income, none at all.

[paramount]

CogSciGuy: I know what you mean – I went into engineering, and yes I do have a six figure income (basically the same as yours), but it took me years and years to get there.

The thing is, I don’t know to many people that do have six figure incomes. As I have read these forums for quite some time, I can’t help but wonder from time to time who is BSing and who isn’t.

BTW, there is NO shame in not having a big income, none at all.

[paramount]

CogSciGuy: I know what you mean – I went into engineering, and yes I do have a six figure income (basically the same as yours), but it took me years and years to get there.

The thing is, I don’t know to many people that do have six figure incomes. As I have read these forums for quite some time, I can’t help but wonder from time to time who is BSing and who isn’t.

BTW, there is NO shame in not having a big income, none at all.

[paramount]

CogSciGuy: I know what you mean – I went into engineering, and yes I do have a six figure income (basically the same as yours), but it took me years and years to get there.

The thing is, I don’t know to many people that do have six figure incomes. As I have read these forums for quite some time, I can’t help but wonder from time to time who is BSing and who isn’t.

BTW, there is NO shame in not having a big income, none at all.

[CogSciGuy]

Thanks for your comments, temeculaguy.

Six months ago, my savings was zero. I’ve been saving at the rate of $1000/paycheck or $2K/month since, after covering my $1000/month in rent. So that’s why I figure I can swing $3K/month PITI at best. Of course, then I wouldn’t have much at all left for saving/inventment/401K, whatever. My income a year ago was about $90 (and 2 yrs ago, about $60…three years ago, about $50), plus I had debts I was paying off. My lifestyle is actually pretty modest. I have little desire for much material stuff (other than a nice house!) and toys, and I don’t spend much on “entertainment.” I’m engaged and pay my fiance’s way through school. A baby might come in a year or two, but no child expense just yet.

I don’t expect my income to rise past hopefully keeping up with inflation from here. I’m kind of at the top of the pay scale for what I do.

What’s funny is that a few months ago I was all set to move to Washington state, work from home with the same job and same pay, and be able to purchase a nice home for much less–which was most of the rationale for wanting to move. That option was taken away from me and shortly thereafter I realized that the SD market (and particularly Chula Vista/Otay Ranch, where I may buy) was tanking. I’m downright merry about that coincidence! 🙂

[temeculaguy]

Cog, you will be fine and you have a good plan. Factor in the bride to be and lack of income if you have kids, the kid will cost what her schooling does, so another wash. Just stay conservative because there is a lot of stuff that can and will come up as life changes but you have good handle on it. Try to get closer to 2500 piti, the market where you are looking will meet you at your goal sometime in 2008.

Paramount, I never did get that apology. I think there aren’t too many people lying about their financials here, some may fudge a little like their weight on a drivers license but for the most part the people that find it entertaining to discuss math on a Friday night are not normal people anyway, yours truly included. Six figures is usually 100-150k and in so cal, that doesn’t make you rich and still makes you priced out of most markets, which is precisely why we are in a declining market.

[temeculaguy]

Cog, you will be fine and you have a good plan. Factor in the bride to be and lack of income if you have kids, the kid will cost what her schooling does, so another wash. Just stay conservative because there is a lot of stuff that can and will come up as life changes but you have good handle on it. Try to get closer to 2500 piti, the market where you are looking will meet you at your goal sometime in 2008.

Paramount, I never did get that apology. I think there aren’t too many people lying about their financials here, some may fudge a little like their weight on a drivers license but for the most part the people that find it entertaining to discuss math on a Friday night are not normal people anyway, yours truly included. Six figures is usually 100-150k and in so cal, that doesn’t make you rich and still makes you priced out of most markets, which is precisely why we are in a declining market.

[temeculaguy]

Cog, you will be fine and you have a good plan. Factor in the bride to be and lack of income if you have kids, the kid will cost what her schooling does, so another wash. Just stay conservative because there is a lot of stuff that can and will come up as life changes but you have good handle on it. Try to get closer to 2500 piti, the market where you are looking will meet you at your goal sometime in 2008.

Paramount, I never did get that apology. I think there aren’t too many people lying about their financials here, some may fudge a little like their weight on a drivers license but for the most part the people that find it entertaining to discuss math on a Friday night are not normal people anyway, yours truly included. Six figures is usually 100-150k and in so cal, that doesn’t make you rich and still makes you priced out of most markets, which is precisely why we are in a declining market.

[temeculaguy]

Cog, you will be fine and you have a good plan. Factor in the bride to be and lack of income if you have kids, the kid will cost what her schooling does, so another wash. Just stay conservative because there is a lot of stuff that can and will come up as life changes but you have good handle on it. Try to get closer to 2500 piti, the market where you are looking will meet you at your goal sometime in 2008.

Paramount, I never did get that apology. I think there aren’t too many people lying about their financials here, some may fudge a little like their weight on a drivers license but for the most part the people that find it entertaining to discuss math on a Friday night are not normal people anyway, yours truly included. Six figures is usually 100-150k and in so cal, that doesn’t make you rich and still makes you priced out of most markets, which is precisely why we are in a declining market.

[temeculaguy]

Cog, you will be fine and you have a good plan. Factor in the bride to be and lack of income if you have kids, the kid will cost what her schooling does, so another wash. Just stay conservative because there is a lot of stuff that can and will come up as life changes but you have good handle on it. Try to get closer to 2500 piti, the market where you are looking will meet you at your goal sometime in 2008.

Paramount, I never did get that apology. I think there aren’t too many people lying about their financials here, some may fudge a little like their weight on a drivers license but for the most part the people that find it entertaining to discuss math on a Friday night are not normal people anyway, yours truly included. Six figures is usually 100-150k and in so cal, that doesn’t make you rich and still makes you priced out of most markets, which is precisely why we are in a declining market.

[CogSciGuy]

Thanks for your comments, temeculaguy.

Six months ago, my savings was zero. I’ve been saving at the rate of $1000/paycheck or $2K/month since, after covering my $1000/month in rent. So that’s why I figure I can swing $3K/month PITI at best. Of course, then I wouldn’t have much at all left for saving/inventment/401K, whatever. My income a year ago was about $90 (and 2 yrs ago, about $60…three years ago, about $50), plus I had debts I was paying off. My lifestyle is actually pretty modest. I have little desire for much material stuff (other than a nice house!) and toys, and I don’t spend much on “entertainment.” I’m engaged and pay my fiance’s way through school. A baby might come in a year or two, but no child expense just yet.

I don’t expect my income to rise past hopefully keeping up with inflation from here. I’m kind of at the top of the pay scale for what I do.

What’s funny is that a few months ago I was all set to move to Washington state, work from home with the same job and same pay, and be able to purchase a nice home for much less–which was most of the rationale for wanting to move. That option was taken away from me and shortly thereafter I realized that the SD market (and particularly Chula Vista/Otay Ranch, where I may buy) was tanking. I’m downright merry about that coincidence! 🙂

[CogSciGuy]

Thanks for your comments, temeculaguy.

Six months ago, my savings was zero. I’ve been saving at the rate of $1000/paycheck or $2K/month since, after covering my $1000/month in rent. So that’s why I figure I can swing $3K/month PITI at best. Of course, then I wouldn’t have much at all left for saving/inventment/401K, whatever. My income a year ago was about $90 (and 2 yrs ago, about $60…three years ago, about $50), plus I had debts I was paying off. My lifestyle is actually pretty modest. I have little desire for much material stuff (other than a nice house!) and toys, and I don’t spend much on “entertainment.” I’m engaged and pay my fiance’s way through school. A baby might come in a year or two, but no child expense just yet.

I don’t expect my income to rise past hopefully keeping up with inflation from here. I’m kind of at the top of the pay scale for what I do.

What’s funny is that a few months ago I was all set to move to Washington state, work from home with the same job and same pay, and be able to purchase a nice home for much less–which was most of the rationale for wanting to move. That option was taken away from me and shortly thereafter I realized that the SD market (and particularly Chula Vista/Otay Ranch, where I may buy) was tanking. I’m downright merry about that coincidence! 🙂

[CogSciGuy]

Thanks for your comments, temeculaguy.

Six months ago, my savings was zero. I’ve been saving at the rate of $1000/paycheck or $2K/month since, after covering my $1000/month in rent. So that’s why I figure I can swing $3K/month PITI at best. Of course, then I wouldn’t have much at all left for saving/inventment/401K, whatever. My income a year ago was about $90 (and 2 yrs ago, about $60…three years ago, about $50), plus I had debts I was paying off. My lifestyle is actually pretty modest. I have little desire for much material stuff (other than a nice house!) and toys, and I don’t spend much on “entertainment.” I’m engaged and pay my fiance’s way through school. A baby might come in a year or two, but no child expense just yet.

I don’t expect my income to rise past hopefully keeping up with inflation from here. I’m kind of at the top of the pay scale for what I do.

What’s funny is that a few months ago I was all set to move to Washington state, work from home with the same job and same pay, and be able to purchase a nice home for much less–which was most of the rationale for wanting to move. That option was taken away from me and shortly thereafter I realized that the SD market (and particularly Chula Vista/Otay Ranch, where I may buy) was tanking. I’m downright merry about that coincidence! 🙂

[CogSciGuy]

Thanks for your comments, temeculaguy.

Six months ago, my savings was zero. I’ve been saving at the rate of $1000/paycheck or $2K/month since, after covering my $1000/month in rent. So that’s why I figure I can swing $3K/month PITI at best. Of course, then I wouldn’t have much at all left for saving/inventment/401K, whatever. My income a year ago was about $90 (and 2 yrs ago, about $60…three years ago, about $50), plus I had debts I was paying off. My lifestyle is actually pretty modest. I have little desire for much material stuff (other than a nice house!) and toys, and I don’t spend much on “entertainment.” I’m engaged and pay my fiance’s way through school. A baby might come in a year or two, but no child expense just yet.

I don’t expect my income to rise past hopefully keeping up with inflation from here. I’m kind of at the top of the pay scale for what I do.

What’s funny is that a few months ago I was all set to move to Washington state, work from home with the same job and same pay, and be able to purchase a nice home for much less–which was most of the rationale for wanting to move. That option was taken away from me and shortly thereafter I realized that the SD market (and particularly Chula Vista/Otay Ranch, where I may buy) was tanking. I’m downright merry about that coincidence! 🙂

[temeculaguy]

CogSciGuy, you are wise to avoid borrowing to the limit, 28/33 or 28/36 ratios have been around for a long time and most people can make it using those guidelines. The other thing is your life situation. A family of four or more has a harder time making it on those ratios, a person starting out in their career whose income will increase faster than inflation has an easier time. So the guidelines are relative. What are you paying in rent and how much extra money do you have each month? That is a better question as to what you can afford, ignore what the bank says. If you are paying 2k in rent and you have money to spare, then a $2500 PITI should feel the same (subtract the income tax benefit but add maintenance). If you don’t have an extra grand laying around at the end of every month then be prepared to feel the pinch if you bite off a 3K mortgage and you pay less than 2k in rent. You gross 120 and only have 10k saved, so that’s not very encouraging and you will likely be house poor if you exceed rent very much. Perhaps change your lifestyle now and see how it works. Pay your rent and at the same time pay the difference equal to 2500 or 3000 into savings at the same time and see how your houshold economy holds up.

A long time ago I borrowed 28% of my gross for a house and I was broke for years, today I have a different theory. All house expenses (piti and utilities) with the net from one paycheck and not with a high witholding ratio but something like m-0 or s-1. At 120k you probably take home about 2500-3000 a paycheck so your theory on that being your limit is a good one.

[temeculaguy]

CogSciGuy, you are wise to avoid borrowing to the limit, 28/33 or 28/36 ratios have been around for a long time and most people can make it using those guidelines. The other thing is your life situation. A family of four or more has a harder time making it on those ratios, a person starting out in their career whose income will increase faster than inflation has an easier time. So the guidelines are relative. What are you paying in rent and how much extra money do you have each month? That is a better question as to what you can afford, ignore what the bank says. If you are paying 2k in rent and you have money to spare, then a $2500 PITI should feel the same (subtract the income tax benefit but add maintenance). If you don’t have an extra grand laying around at the end of every month then be prepared to feel the pinch if you bite off a 3K mortgage and you pay less than 2k in rent. You gross 120 and only have 10k saved, so that’s not very encouraging and you will likely be house poor if you exceed rent very much. Perhaps change your lifestyle now and see how it works. Pay your rent and at the same time pay the difference equal to 2500 or 3000 into savings at the same time and see how your houshold economy holds up.

A long time ago I borrowed 28% of my gross for a house and I was broke for years, today I have a different theory. All house expenses (piti and utilities) with the net from one paycheck and not with a high witholding ratio but something like m-0 or s-1. At 120k you probably take home about 2500-3000 a paycheck so your theory on that being your limit is a good one.

[temeculaguy]

CogSciGuy, you are wise to avoid borrowing to the limit, 28/33 or 28/36 ratios have been around for a long time and most people can make it using those guidelines. The other thing is your life situation. A family of four or more has a harder time making it on those ratios, a person starting out in their career whose income will increase faster than inflation has an easier time. So the guidelines are relative. What are you paying in rent and how much extra money do you have each month? That is a better question as to what you can afford, ignore what the bank says. If you are paying 2k in rent and you have money to spare, then a $2500 PITI should feel the same (subtract the income tax benefit but add maintenance). If you don’t have an extra grand laying around at the end of every month then be prepared to feel the pinch if you bite off a 3K mortgage and you pay less than 2k in rent. You gross 120 and only have 10k saved, so that’s not very encouraging and you will likely be house poor if you exceed rent very much. Perhaps change your lifestyle now and see how it works. Pay your rent and at the same time pay the difference equal to 2500 or 3000 into savings at the same time and see how your houshold economy holds up.

A long time ago I borrowed 28% of my gross for a house and I was broke for years, today I have a different theory. All house expenses (piti and utilities) with the net from one paycheck and not with a high witholding ratio but something like m-0 or s-1. At 120k you probably take home about 2500-3000 a paycheck so your theory on that being your limit is a good one.

[temeculaguy]

CogSciGuy, you are wise to avoid borrowing to the limit, 28/33 or 28/36 ratios have been around for a long time and most people can make it using those guidelines. The other thing is your life situation. A family of four or more has a harder time making it on those ratios, a person starting out in their career whose income will increase faster than inflation has an easier time. So the guidelines are relative. What are you paying in rent and how much extra money do you have each month? That is a better question as to what you can afford, ignore what the bank says. If you are paying 2k in rent and you have money to spare, then a $2500 PITI should feel the same (subtract the income tax benefit but add maintenance). If you don’t have an extra grand laying around at the end of every month then be prepared to feel the pinch if you bite off a 3K mortgage and you pay less than 2k in rent. You gross 120 and only have 10k saved, so that’s not very encouraging and you will likely be house poor if you exceed rent very much. Perhaps change your lifestyle now and see how it works. Pay your rent and at the same time pay the difference equal to 2500 or 3000 into savings at the same time and see how your houshold economy holds up.

A long time ago I borrowed 28% of my gross for a house and I was broke for years, today I have a different theory. All house expenses (piti and utilities) with the net from one paycheck and not with a high witholding ratio but something like m-0 or s-1. At 120k you probably take home about 2500-3000 a paycheck so your theory on that being your limit is a good one.

[patientrenter]

” ‘CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?’

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?”

CogSciGuy, I assumed you were talking about buying your own home, not an investment property. Let’s make that assumption.

My point is that you seem to calculate affordability based solely on the monthly payment, not the purchase price. If you buy a house for, let’s say, $1 million, then my point is that you can only REALLY afford the house if you can expect to earn, net of taxes etc, $1 million in excess of your other needs and wants over your lifetime. Looking at it that way forces you to understand that the price of the house is going to have to compete with some other long-term goals you may not want to sacrifice now. Do you really want to buy a $500K house if it means you may have to retire no earlier than 65, or limit your spending from now until you die to your current abstemious budget?

For years now, most buyers didn’t do the kind of analysis I’m describing, becaase they just assumed that if the price of the home became too much to bear, they would sell it and get a gain, or at least their money back. At today’s prices, that’s not a slam dunk assumption, regardless of your monthly payments.

Do you see what I’m getting at?

Patient renter in OC

PS
CAN SOMEONE TURN OFF THESE ITALICS, PLEASE?

[paramount]

Because in reality most people/families live month-to-month.

Basically it comes down to this – I don’t care what the house costs, just tell me what it costs per month (that’s all that really matters for most).

For all of those people who yearn for the financial values of yesteryear, you are fighting a loosing battle.

This downturn is only temporary – and I guarantee you the financial engineers will engineer a way out of this mess one way or another.

I would not bother fighting the system, just use it to your advantage within reason.

[paramount]

Because in reality most people/families live month-to-month.

Basically it comes down to this – I don’t care what the house costs, just tell me what it costs per month (that’s all that really matters for most).

For all of those people who yearn for the financial values of yesteryear, you are fighting a loosing battle.

This downturn is only temporary – and I guarantee you the financial engineers will engineer a way out of this mess one way or another.

I would not bother fighting the system, just use it to your advantage within reason.

[paramount]

Because in reality most people/families live month-to-month.

Basically it comes down to this – I don’t care what the house costs, just tell me what it costs per month (that’s all that really matters for most).

For all of those people who yearn for the financial values of yesteryear, you are fighting a loosing battle.

This downturn is only temporary – and I guarantee you the financial engineers will engineer a way out of this mess one way or another.

I would not bother fighting the system, just use it to your advantage within reason.

[paramount]

Because in reality most people/families live month-to-month.

Basically it comes down to this – I don’t care what the house costs, just tell me what it costs per month (that’s all that really matters for most).

For all of those people who yearn for the financial values of yesteryear, you are fighting a loosing battle.

This downturn is only temporary – and I guarantee you the financial engineers will engineer a way out of this mess one way or another.

I would not bother fighting the system, just use it to your advantage within reason.

[paramount]

Because in reality most people/families live month-to-month.

Basically it comes down to this – I don’t care what the house costs, just tell me what it costs per month (that’s all that really matters for most).

For all of those people who yearn for the financial values of yesteryear, you are fighting a loosing battle.

This downturn is only temporary – and I guarantee you the financial engineers will engineer a way out of this mess one way or another.

I would not bother fighting the system, just use it to your advantage within reason.

[kev374]

I can’t turn them off? I tried end tags i, em and cite, doesn’t work??

[Eugene]

testtest

[svelte]

Here you go.

FYI, to turn it off, embed a less than sign, a forward slash, a little i, and a greater than sign into your text, with no spaces in between.

[NotCranky]

How about buying two cheaper houses and renting one out?

[CogSciGuy]

I don’t think so. I don’t want to be a landlord or a real estate investor.

[CogSciGuy]

I don’t think so. I don’t want to be a landlord or a real estate investor.

[CogSciGuy]

I don’t think so. I don’t want to be a landlord or a real estate investor.

[CogSciGuy]

I don’t think so. I don’t want to be a landlord or a real estate investor.

[CogSciGuy]

I don’t think so. I don’t want to be a landlord or a real estate investor.

[NotCranky]

How about buying two cheaper houses and renting one out?

[NotCranky]

How about buying two cheaper houses and renting one out?

[NotCranky]

How about buying two cheaper houses and renting one out?

[NotCranky]

How about buying two cheaper houses and renting one out?

[svelte]

Here you go.

FYI, to turn it off, embed a less than sign, a forward slash, a little i, and a greater than sign into your text, with no spaces in between.

[svelte]

Here you go.

FYI, to turn it off, embed a less than sign, a forward slash, a little i, and a greater than sign into your text, with no spaces in between.

[svelte]

Here you go.

FYI, to turn it off, embed a less than sign, a forward slash, a little i, and a greater than sign into your text, with no spaces in between.

[svelte]

Here you go.

FYI, to turn it off, embed a less than sign, a forward slash, a little i, and a greater than sign into your text, with no spaces in between.

[Eugene]

testtest

[Eugene]

testtest

[Eugene]

testtest

[Eugene]

testtest

[kev374]

I can’t turn them off? I tried end tags i, em and cite, doesn’t work??

[kev374]

I can’t turn them off? I tried end tags i, em and cite, doesn’t work??

[kev374]

I can’t turn them off? I tried end tags i, em and cite, doesn’t work??

[kev374]

I can’t turn them off? I tried end tags i, em and cite, doesn’t work??

[CogSciGuy]

Do you see what I’m getting at?

I suppose. But I don’t think I am able to get anywhere close to a reasonable approximation of what my lifetime earnings will be, nor my lifetime expenses, so I’m not sure your line of reasoning can actually be carried out.

[CogSciGuy]

Do you see what I’m getting at?

I suppose. But I don’t think I am able to get anywhere close to a reasonable approximation of what my lifetime earnings will be, nor my lifetime expenses, so I’m not sure your line of reasoning can actually be carried out.

[CogSciGuy]

Do you see what I’m getting at?

I suppose. But I don’t think I am able to get anywhere close to a reasonable approximation of what my lifetime earnings will be, nor my lifetime expenses, so I’m not sure your line of reasoning can actually be carried out.

[CogSciGuy]

Do you see what I’m getting at?

I suppose. But I don’t think I am able to get anywhere close to a reasonable approximation of what my lifetime earnings will be, nor my lifetime expenses, so I’m not sure your line of reasoning can actually be carried out.

[CogSciGuy]

Do you see what I’m getting at?

I suppose. But I don’t think I am able to get anywhere close to a reasonable approximation of what my lifetime earnings will be, nor my lifetime expenses, so I’m not sure your line of reasoning can actually be carried out.

[patientrenter]

” ‘CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?’

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?”

CogSciGuy, I assumed you were talking about buying your own home, not an investment property. Let’s make that assumption.

My point is that you seem to calculate affordability based solely on the monthly payment, not the purchase price. If you buy a house for, let’s say, $1 million, then my point is that you can only REALLY afford the house if you can expect to earn, net of taxes etc, $1 million in excess of your other needs and wants over your lifetime. Looking at it that way forces you to understand that the price of the house is going to have to compete with some other long-term goals you may not want to sacrifice now. Do you really want to buy a $500K house if it means you may have to retire no earlier than 65, or limit your spending from now until you die to your current abstemious budget?

For years now, most buyers didn’t do the kind of analysis I’m describing, becaase they just assumed that if the price of the home became too much to bear, they would sell it and get a gain, or at least their money back. At today’s prices, that’s not a slam dunk assumption, regardless of your monthly payments.

Do you see what I’m getting at?

Patient renter in OC

PS
CAN SOMEONE TURN OFF THESE ITALICS, PLEASE?

[patientrenter]

” ‘CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?’

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?”

CogSciGuy, I assumed you were talking about buying your own home, not an investment property. Let’s make that assumption.

My point is that you seem to calculate affordability based solely on the monthly payment, not the purchase price. If you buy a house for, let’s say, $1 million, then my point is that you can only REALLY afford the house if you can expect to earn, net of taxes etc, $1 million in excess of your other needs and wants over your lifetime. Looking at it that way forces you to understand that the price of the house is going to have to compete with some other long-term goals you may not want to sacrifice now. Do you really want to buy a $500K house if it means you may have to retire no earlier than 65, or limit your spending from now until you die to your current abstemious budget?

For years now, most buyers didn’t do the kind of analysis I’m describing, becaase they just assumed that if the price of the home became too much to bear, they would sell it and get a gain, or at least their money back. At today’s prices, that’s not a slam dunk assumption, regardless of your monthly payments.

Do you see what I’m getting at?

Patient renter in OC

PS
CAN SOMEONE TURN OFF THESE ITALICS, PLEASE?

[patientrenter]

” ‘CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?’

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?”

CogSciGuy, I assumed you were talking about buying your own home, not an investment property. Let’s make that assumption.

My point is that you seem to calculate affordability based solely on the monthly payment, not the purchase price. If you buy a house for, let’s say, $1 million, then my point is that you can only REALLY afford the house if you can expect to earn, net of taxes etc, $1 million in excess of your other needs and wants over your lifetime. Looking at it that way forces you to understand that the price of the house is going to have to compete with some other long-term goals you may not want to sacrifice now. Do you really want to buy a $500K house if it means you may have to retire no earlier than 65, or limit your spending from now until you die to your current abstemious budget?

For years now, most buyers didn’t do the kind of analysis I’m describing, becaase they just assumed that if the price of the home became too much to bear, they would sell it and get a gain, or at least their money back. At today’s prices, that’s not a slam dunk assumption, regardless of your monthly payments.

Do you see what I’m getting at?

Patient renter in OC

PS
CAN SOMEONE TURN OFF THESE ITALICS, PLEASE?

[patientrenter]

” ‘CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?’

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?”

CogSciGuy, I assumed you were talking about buying your own home, not an investment property. Let’s make that assumption.

My point is that you seem to calculate affordability based solely on the monthly payment, not the purchase price. If you buy a house for, let’s say, $1 million, then my point is that you can only REALLY afford the house if you can expect to earn, net of taxes etc, $1 million in excess of your other needs and wants over your lifetime. Looking at it that way forces you to understand that the price of the house is going to have to compete with some other long-term goals you may not want to sacrifice now. Do you really want to buy a $500K house if it means you may have to retire no earlier than 65, or limit your spending from now until you die to your current abstemious budget?

For years now, most buyers didn’t do the kind of analysis I’m describing, becaase they just assumed that if the price of the home became too much to bear, they would sell it and get a gain, or at least their money back. At today’s prices, that’s not a slam dunk assumption, regardless of your monthly payments.

Do you see what I’m getting at?

Patient renter in OC

PS
CAN SOMEONE TURN OFF THESE ITALICS, PLEASE?

[CogSciGuy]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?

[CogSciGuy]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?

[CogSciGuy]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?

[CogSciGuy]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

Sure, probably. Wouldn’t you? If I’m purchasing a property with a PITI of $2500/month, I bet I could rent it out for many multiples of $2500/month.

Or was there a different point you were trying to make?

[patientrenter]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

After all the analysis of what went wrong in the current bubble, I’d have thought readers of this blog would be looking at the actual price of the home, not just the monthly payments.

Patient renter in OC

[patientrenter]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

After all the analysis of what went wrong in the current bubble, I’d have thought readers of this blog would be looking at the actual price of the home, not just the monthly payments.

Patient renter in OC

[patientrenter]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

After all the analysis of what went wrong in the current bubble, I’d have thought readers of this blog would be looking at the actual price of the home, not just the monthly payments.

Patient renter in OC

[patientrenter]

CogSciGuy, if you could get a loan for $1 million at a PTI of $2500, would you take it?

After all the analysis of what went wrong in the current bubble, I’d have thought readers of this blog would be looking at the actual price of the home, not just the monthly payments.

Patient renter in OC

[CogSciGuy]

That’s a good point, FSD. I think I’m going to throw all such rules out the window and just go with what I feel comfortable with: $2500-$3000 PITI.

[CogSciGuy]

That’s a good point, FSD. I think I’m going to throw all such rules out the window and just go with what I feel comfortable with: $2500-$3000 PITI.

[CogSciGuy]

That’s a good point, FSD. I think I’m going to throw all such rules out the window and just go with what I feel comfortable with: $2500-$3000 PITI.

[CogSciGuy]

That’s a good point, FSD. I think I’m going to throw all such rules out the window and just go with what I feel comfortable with: $2500-$3000 PITI.

[(former)FormerSanDiegan]

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.

[(former)FormerSanDiegan]

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.

[(former)FormerSanDiegan]

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.

[(former)FormerSanDiegan]

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.

[svelte]

I remember when we first bought in the 1980s we were shocked at what the banks were willing to lend us….they’d lend us enough money to hang ourselves, even back then!

We’ve always worked into it the other way – we decide how big we want our house payment to be and then calculate how much $$ we can borrow to hit that number. We take that loan amount, tack on what we want to put down, and that’s the maximum we can spend!

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

Of course, when buying your first place, you might have to stretch a little more just to get in the game.

Good luck and best wishes.

[svelte]

I remember when we first bought in the 1980s we were shocked at what the banks were willing to lend us….they’d lend us enough money to hang ourselves, even back then!

We’ve always worked into it the other way – we decide how big we want our house payment to be and then calculate how much $$ we can borrow to hit that number. We take that loan amount, tack on what we want to put down, and that’s the maximum we can spend!

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

Of course, when buying your first place, you might have to stretch a little more just to get in the game.

Good luck and best wishes.

[svelte]

I remember when we first bought in the 1980s we were shocked at what the banks were willing to lend us….they’d lend us enough money to hang ourselves, even back then!

We’ve always worked into it the other way – we decide how big we want our house payment to be and then calculate how much $$ we can borrow to hit that number. We take that loan amount, tack on what we want to put down, and that’s the maximum we can spend!

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

Of course, when buying your first place, you might have to stretch a little more just to get in the game.

Good luck and best wishes.

[svelte]

I remember when we first bought in the 1980s we were shocked at what the banks were willing to lend us….they’d lend us enough money to hang ourselves, even back then!

We’ve always worked into it the other way – we decide how big we want our house payment to be and then calculate how much $$ we can borrow to hit that number. We take that loan amount, tack on what we want to put down, and that’s the maximum we can spend!

It has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.

Of course, when buying your first place, you might have to stretch a little more just to get in the game.

Good luck and best wishes.

[CogSciGuy]

Got it. Thanks. I’d seen the 28/36 before and knew what it represented–just hadn’t heard the “front-end” and “back-end” terms.

[CogSciGuy]

Got it. Thanks. I’d seen the 28/36 before and knew what it represented–just hadn’t heard the “front-end” and “back-end” terms.

[CogSciGuy]

Got it. Thanks. I’d seen the 28/36 before and knew what it represented–just hadn’t heard the “front-end” and “back-end” terms.

[CogSciGuy]

Got it. Thanks. I’d seen the 28/36 before and knew what it represented–just hadn’t heard the “front-end” and “back-end” terms.

[(former)FormerSanDiegan]

Front end ratio is the percentage of your income needed to service PITI (principal, interest, taxes, and insurance).
Back end ratio is the percentage of your income needed to service all of your debt (including PITI).

Old fashioned Debt ratios used to be 28/36. Thast is 28% of income for PITI, 36% for total debt.

[(former)FormerSanDiegan]

Front end ratio is the percentage of your income needed to service PITI (principal, interest, taxes, and insurance).
Back end ratio is the percentage of your income needed to service all of your debt (including PITI).

Old fashioned Debt ratios used to be 28/36. Thast is 28% of income for PITI, 36% for total debt.

[(former)FormerSanDiegan]

Front end ratio is the percentage of your income needed to service PITI (principal, interest, taxes, and insurance).
Back end ratio is the percentage of your income needed to service all of your debt (including PITI).

Old fashioned Debt ratios used to be 28/36. Thast is 28% of income for PITI, 36% for total debt.

[(former)FormerSanDiegan]

Front end ratio is the percentage of your income needed to service PITI (principal, interest, taxes, and insurance).
Back end ratio is the percentage of your income needed to service all of your debt (including PITI).

Old fashioned Debt ratios used to be 28/36. Thast is 28% of income for PITI, 36% for total debt.

[HLS]

Assuming that you are buying gas, get a gas card too. Some offer discounts like SHELL offers a 5% rebate on gas with their card. Use the cards at least once a month and pay the bill off each month.
Using credit will raise your score over time.

Just realize that a debit card does absolutely nothing for your credit score.

You will get a loan, that’s not the point.
You want to try and get a great loan.

Guidleines are constantly changing. A 680+ mid-score will get you a better loan than a 679 mid-score today.
A 90% loan is a better rate than a 91% loan.

[HLS]

Assuming that you are buying gas, get a gas card too. Some offer discounts like SHELL offers a 5% rebate on gas with their card. Use the cards at least once a month and pay the bill off each month.
Using credit will raise your score over time.

Just realize that a debit card does absolutely nothing for your credit score.

You will get a loan, that’s not the point.
You want to try and get a great loan.

Guidleines are constantly changing. A 680+ mid-score will get you a better loan than a 679 mid-score today.
A 90% loan is a better rate than a 91% loan.

[HLS]

Assuming that you are buying gas, get a gas card too. Some offer discounts like SHELL offers a 5% rebate on gas with their card. Use the cards at least once a month and pay the bill off each month.
Using credit will raise your score over time.

Just realize that a debit card does absolutely nothing for your credit score.

You will get a loan, that’s not the point.
You want to try and get a great loan.

Guidleines are constantly changing. A 680+ mid-score will get you a better loan than a 679 mid-score today.
A 90% loan is a better rate than a 91% loan.

[HLS]

Assuming that you are buying gas, get a gas card too. Some offer discounts like SHELL offers a 5% rebate on gas with their card. Use the cards at least once a month and pay the bill off each month.
Using credit will raise your score over time.

Just realize that a debit card does absolutely nothing for your credit score.

You will get a loan, that’s not the point.
You want to try and get a great loan.

Guidleines are constantly changing. A 680+ mid-score will get you a better loan than a 679 mid-score today.
A 90% loan is a better rate than a 91% loan.

[CogSciGuy]

I already got qualified for a loan with a couple different mortgage brokers a month or so back, before I backed out and decided it was dumb to go with an IO ARM, esp. with the market tanking for the foreseeable future. So I’m not too worried about what a bank is willing to lend me–I’m sure I can get much more loan than I actually want.

As far as raising my score…I’m just making regular credit card payments on two cards and then my car and student loan payments. Is there something you’d recommend above and beyond that?

[CogSciGuy]

I already got qualified for a loan with a couple different mortgage brokers a month or so back, before I backed out and decided it was dumb to go with an IO ARM, esp. with the market tanking for the foreseeable future. So I’m not too worried about what a bank is willing to lend me–I’m sure I can get much more loan than I actually want.

As far as raising my score…I’m just making regular credit card payments on two cards and then my car and student loan payments. Is there something you’d recommend above and beyond that?

[CogSciGuy]

I already got qualified for a loan with a couple different mortgage brokers a month or so back, before I backed out and decided it was dumb to go with an IO ARM, esp. with the market tanking for the foreseeable future. So I’m not too worried about what a bank is willing to lend me–I’m sure I can get much more loan than I actually want.

As far as raising my score…I’m just making regular credit card payments on two cards and then my car and student loan payments. Is there something you’d recommend above and beyond that?

[CogSciGuy]

I already got qualified for a loan with a couple different mortgage brokers a month or so back, before I backed out and decided it was dumb to go with an IO ARM, esp. with the market tanking for the foreseeable future. So I’m not too worried about what a bank is willing to lend me–I’m sure I can get much more loan than I actually want.

As far as raising my score…I’m just making regular credit card payments on two cards and then my car and student loan payments. Is there something you’d recommend above and beyond that?

[HLS]

Any loan (max $417K) over 80% of the purchase price will require mortgage insurance or a higher rate to compensate.
Depending on the rest of your profile, you may or may not qualify for a loan next year.

Do you actually know how to raise your credit score ?

I don’t think that you need to worry about prices going up around here.

A lender might allow you to borrow with total monthly payments and debt up to 60% of your gross income, more than you are comfortable with.

[HLS]

Any loan (max $417K) over 80% of the purchase price will require mortgage insurance or a higher rate to compensate.
Depending on the rest of your profile, you may or may not qualify for a loan next year.

Do you actually know how to raise your credit score ?

I don’t think that you need to worry about prices going up around here.

A lender might allow you to borrow with total monthly payments and debt up to 60% of your gross income, more than you are comfortable with.

[HLS]

Any loan (max $417K) over 80% of the purchase price will require mortgage insurance or a higher rate to compensate.
Depending on the rest of your profile, you may or may not qualify for a loan next year.

Do you actually know how to raise your credit score ?

I don’t think that you need to worry about prices going up around here.

A lender might allow you to borrow with total monthly payments and debt up to 60% of your gross income, more than you are comfortable with.

[HLS]

Any loan (max $417K) over 80% of the purchase price will require mortgage insurance or a higher rate to compensate.
Depending on the rest of your profile, you may or may not qualify for a loan next year.

Do you actually know how to raise your credit score ?

I don’t think that you need to worry about prices going up around here.

A lender might allow you to borrow with total monthly payments and debt up to 60% of your gross income, more than you are comfortable with.

[CogSciGuy]

I’ve had the same job for 4 years. My FICO is like 675 right now (bankrupcy 4 years ago). I have $10K saved for down payment.

I’m not sure on the timing of when I’ll buy just yet. I’ll probably be waiting at least a year to save another $20K or so and boost the FICO a bit–assuming prices don’t start to increase.

[CogSciGuy]

I’ve had the same job for 4 years. My FICO is like 675 right now (bankrupcy 4 years ago). I have $10K saved for down payment.

I’m not sure on the timing of when I’ll buy just yet. I’ll probably be waiting at least a year to save another $20K or so and boost the FICO a bit–assuming prices don’t start to increase.

[CogSciGuy]

I’ve had the same job for 4 years. My FICO is like 675 right now (bankrupcy 4 years ago). I have $10K saved for down payment.

I’m not sure on the timing of when I’ll buy just yet. I’ll probably be waiting at least a year to save another $20K or so and boost the FICO a bit–assuming prices don’t start to increase.

[CogSciGuy]

I’ve had the same job for 4 years. My FICO is like 675 right now (bankrupcy 4 years ago). I have $10K saved for down payment.

I’m not sure on the timing of when I’ll buy just yet. I’ll probably be waiting at least a year to save another $20K or so and boost the FICO a bit–assuming prices don’t start to increase.

[HLS]

Have you got 20% for a down payment and reserves beyond that and a credit score above 680 and same job for 2 years+ ?

[HLS]

Have you got 20% for a down payment and reserves beyond that and a credit score above 680 and same job for 2 years+ ?

[HLS]

Have you got 20% for a down payment and reserves beyond that and a credit score above 680 and same job for 2 years+ ?

[HLS]

Have you got 20% for a down payment and reserves beyond that and a credit score above 680 and same job for 2 years+ ?

[gold_dredger_phd]

Enough for my wife and 5 children and then sign the deed over to us. Thanks…

[gold_dredger_phd]

Enough for my wife and 5 children and then sign the deed over to us. Thanks…

[gold_dredger_phd]

Enough for my wife and 5 children and then sign the deed over to us. Thanks…

[gold_dredger_phd]

Enough for my wife and 5 children and then sign the deed over to us. Thanks…

[gold_dredger_phd]

Enough for my wife and 5 children and then sign the deed over to us. Thanks…

[Author]

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