How much house should I buy?

[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! 🙂

[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]

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.

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