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patientrenter
Participantchrisp, I know there are others on this board who have that info (about historical affordability measures). Just in case they don’t cough it up quick, here are some very rough traditional ratios:
1. Home price should be no more 2-3 times income
2. Downpayment (actually from the buyer, not a second lender) should be at least 20% for an owner-occupied home, and 30% for other homes.
3. Regular home debt payments (or was it all home payments, including home insurance?) should not exceed the smaller of (a) 28% of income, or (b) 33% of all debt service obligations (including car payments and credit card payments etc.)
Relying only on 2 and 3 is risky in a low interest rate environment, because low payments can coexist with prices in the stratosphere in such an environment. So if 2 and 3 look good, but 1 doesn’t, exercise more caution.
I hope someone can give you a better source.
Participantchrisp, I know there are others on this board who have that info (about historical affordability measures). Just in case they don’t cough it up quick, here are some very rough traditional ratios:
1. Home price should be no more 2-3 times income
2. Downpayment (actually from the buyer, not a second lender) should be at least 20% for an owner-occupied home, and 30% for other homes.
3. Regular home debt payments (or was it all home payments, including home insurance?) should not exceed the smaller of (a) 28% of income, or (b) 33% of all debt service obligations (including car payments and credit card payments etc.)
Relying only on 2 and 3 is risky in a low interest rate environment, because low payments can coexist with prices in the stratosphere in such an environment. So if 2 and 3 look good, but 1 doesn’t, exercise more caution.
I hope someone can give you a better source.
Participantchrisp, I know there are others on this board who have that info (about historical affordability measures). Just in case they don’t cough it up quick, here are some very rough traditional ratios:
1. Home price should be no more 2-3 times income
2. Downpayment (actually from the buyer, not a second lender) should be at least 20% for an owner-occupied home, and 30% for other homes.
3. Regular home debt payments (or was it all home payments, including home insurance?) should not exceed the smaller of (a) 28% of income, or (b) 33% of all debt service obligations (including car payments and credit card payments etc.)
Relying only on 2 and 3 is risky in a low interest rate environment, because low payments can coexist with prices in the stratosphere in such an environment. So if 2 and 3 look good, but 1 doesn’t, exercise more caution.
I hope someone can give you a better source.
ParticipantYes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.
Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.
Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.
ParticipantYes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.
Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.
Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.
ParticipantYes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.
Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.
Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.
ParticipantYes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.
Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.
Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.
ParticipantYes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.
Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.
Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.
Participantchrisp, you did get a harsh response, and you didn’t ask anyone how much you should spend.
But, as we point out, you are putting taxpayers on the line to pay an INCREDIBLY large price for a place for you to live in. No one who bought in 2005, or 2006, or 2007, or 2008, planned to default. They all planned to see their home price stay level or go up. That’s not a guaranteed outcome, and many of those people who didn’t plan to default have defaulted, and will default.
I will guess that your family earns $100-250K a year. If you are typical at all, that means you can probably afford a place that costs $200K-625K. I could be wrong. You may spend very little, and be able to afford more. But then how come you have only a tiny amount (10%) saved up for the home purchase? Taxpayers could be pretty sure you wouldn’t overpay, and wouldn’t default, if you were putting 30% down. But you’re not.
To the extent that you are stretching the price, you are getting taxpayers and savers like us Piggs to use mostly our money to help you keep home prices inflated. So we’re kinda tetchy, like I said before.
Participantchrisp, you did get a harsh response, and you didn’t ask anyone how much you should spend.
But, as we point out, you are putting taxpayers on the line to pay an INCREDIBLY large price for a place for you to live in. No one who bought in 2005, or 2006, or 2007, or 2008, planned to default. They all planned to see their home price stay level or go up. That’s not a guaranteed outcome, and many of those people who didn’t plan to default have defaulted, and will default.
I will guess that your family earns $100-250K a year. If you are typical at all, that means you can probably afford a place that costs $200K-625K. I could be wrong. You may spend very little, and be able to afford more. But then how come you have only a tiny amount (10%) saved up for the home purchase? Taxpayers could be pretty sure you wouldn’t overpay, and wouldn’t default, if you were putting 30% down. But you’re not.
To the extent that you are stretching the price, you are getting taxpayers and savers like us Piggs to use mostly our money to help you keep home prices inflated. So we’re kinda tetchy, like I said before.
Participantchrisp, you did get a harsh response, and you didn’t ask anyone how much you should spend.
But, as we point out, you are putting taxpayers on the line to pay an INCREDIBLY large price for a place for you to live in. No one who bought in 2005, or 2006, or 2007, or 2008, planned to default. They all planned to see their home price stay level or go up. That’s not a guaranteed outcome, and many of those people who didn’t plan to default have defaulted, and will default.
I will guess that your family earns $100-250K a year. If you are typical at all, that means you can probably afford a place that costs $200K-625K. I could be wrong. You may spend very little, and be able to afford more. But then how come you have only a tiny amount (10%) saved up for the home purchase? Taxpayers could be pretty sure you wouldn’t overpay, and wouldn’t default, if you were putting 30% down. But you’re not.
To the extent that you are stretching the price, you are getting taxpayers and savers like us Piggs to use mostly our money to help you keep home prices inflated. So we’re kinda tetchy, like I said before.
Participantchrisp, you did get a harsh response, and you didn’t ask anyone how much you should spend.
But, as we point out, you are putting taxpayers on the line to pay an INCREDIBLY large price for a place for you to live in. No one who bought in 2005, or 2006, or 2007, or 2008, planned to default. They all planned to see their home price stay level or go up. That’s not a guaranteed outcome, and many of those people who didn’t plan to default have defaulted, and will default.
I will guess that your family earns $100-250K a year. If you are typical at all, that means you can probably afford a place that costs $200K-625K. I could be wrong. You may spend very little, and be able to afford more. But then how come you have only a tiny amount (10%) saved up for the home purchase? Taxpayers could be pretty sure you wouldn’t overpay, and wouldn’t default, if you were putting 30% down. But you’re not.
To the extent that you are stretching the price, you are getting taxpayers and savers like us Piggs to use mostly our money to help you keep home prices inflated. So we’re kinda tetchy, like I said before.
Participantchrisp, you did get a harsh response, and you didn’t ask anyone how much you should spend.
But, as we point out, you are putting taxpayers on the line to pay an INCREDIBLY large price for a place for you to live in. No one who bought in 2005, or 2006, or 2007, or 2008, planned to default. They all planned to see their home price stay level or go up. That’s not a guaranteed outcome, and many of those people who didn’t plan to default have defaulted, and will default.
I will guess that your family earns $100-250K a year. If you are typical at all, that means you can probably afford a place that costs $200K-625K. I could be wrong. You may spend very little, and be able to afford more. But then how come you have only a tiny amount (10%) saved up for the home purchase? Taxpayers could be pretty sure you wouldn’t overpay, and wouldn’t default, if you were putting 30% down. But you’re not.
To the extent that you are stretching the price, you are getting taxpayers and savers like us Piggs to use mostly our money to help you keep home prices inflated. So we’re kinda tetchy, like I said before.
ParticipantDon’t be so unsympathetic, snail. I am sure there are countries where an unlimited number of children is considered a good thing. This woman and her family should be flown to that country, first class.
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