How much house can I afford?

[Poetic Chaos]

I'm engaged and my fiance and I are looking to be making a combined 6 figure income (around $112 before taxes). I'm wondering what kind of price range we should be looking at for housing. We live in the California Bay Area, notoriously expensive, so we'll probably look more north around the Vacaville area to get more bang for our buck but not as far as Sacramento. Is a $500k house on a 30 year mortgage realistic or can we afford more (not taking kids into account)?

 

[MessiahDecoy123]

http://www.zillow.com/mortgage-calculator/house-affordability/

 

[MessiahDecoy123]

This one might be more accurate.

http://money.cnn.com/tools/houseafford/houseafford.html

 

[Poetic Chaos]

Cool links, thanks!

 

[charl_huntress]

Good luck! Don't give up and don't settle, but keep your goals realistic and chose a finance plan that works for the long term.

 

[Poetic Chaos]

It feels like such a "grown up" concern to be thinking about but I'm 28 now and guess it's time to learn this stuff haha.

 

[charl_huntress]

It is grown up business! lol You're talking about a thirty or forty year financial commitment. It ain't for the faint of heart, especially here in CA.

 

[Immortalfire]

I think you should be asking this question somewhere other than the Hype.

 

[redmarvel]

Step 1: Figure out how much you earn net each month. Subtract 10% for your retirement savings plan.
Step 2: Deduct how much you would normally spend on Food, Clothing, Entertainment etc.
Step 3: Deduct an additional 10% off the remaining for "incidentals"
Step 4: The amount you have left is what you can afford to pay in to your mortgage on a monthly basis.
Step 5: Do you have at least 5% for a down payment (better to have more)? If not, then you probably can't afford that house.
Step 6: Opt for a weekly or bi-weekly payment schedule instead of monthly - it will save you a lot of interest in the long run.

 

[Pink Ranger]

I think you should be asking this question somewhere other than the Hype.

Didn't this website originally begin as a discussion forum for mortgage brokers?

 

[Erzengel]

I wouldn't put down less than 10%. If you could put down 20% even better.

Your interest rate should be in the 3% range.

If you put down less than 20% only, you'll pay a PMI Private Mortgage insurance which is around $200 a month.

For your example of say 500k for your home, and say 10% down and a 3.5% interest rate, including taxes which I am guessing is 10k and that's a conservative estimate annually, homeowner's insurance and PMI you'll probably be paying $3,250+ a month minimum.

 

[Immortalfire]

Didn't this website originally begin as a discussion forum for mortgage brokers?

Yeah, but Mortgagehype.com didn't quite get the response we were going for. So, the next best thing was Spider-Man.

 

[Persistence]

If you're applying for mortgage, make sure your financial statements are all in order. Mortgage companies will scrutinize your credit history, bank statements, employment history, salary, pay stubs. Don't make any large cash transactions in two months. You can't accept gifts from people who aren't immediate family members (or those funds will not be considered assets during mortgage process). The mortgage process is ridiculous, even for people with good credit scores.

http://www.transunion.com/personal-credit/life-stages/prepare-for-a-mortgage.page

 

[Lantern Venom]

I'm engaged and my fiance and I are looking to be making a combined 6 figure income (around $112 before taxes). I'm wondering what kind of price range we should be looking at for housing. ?

Let me pose another question to you as you consider this step: how big of a job do you want with this house? Owning a house is like taking on a second job. In addition to the constantly cleaning and necessary organization, there will be unforeseen repair/replacement expenses. Even if you can afford it, don't buy something so large that you'll wear yourself out financially and emotionally trying to maintain it.

 

[redmarvel]

You're right about that Lantern Venom. It's the things that you don't expect that really wear you out.

Case in point - our swimming pool is losing tiles, but you can't find 3 x 3 x 3/16th tiles anymore. So we have to buy 9 x 9 and a tile cutter to replace the ones that broke when they fell out. Then comes all the fun of re-installing them. And to top it off, a squirrel went and died in our pool over winter, so we had to drain and clean the entire thing. We finally finished refilling the pool yesterday, the hot tub should get done today *crossed fingers*. Then before we close it again we have to figure out a way to fix the tear in the pool cover to prevent animals from falling in again.

Now I wonder - was this worse than the year the skunk died under our porch... The skunk problem was easier to clean up but much smellier...

 

[Erzengel]

We've been there for almost 4 years. But keeping up a house is expensive.

We both had our own bedroom furniture before we moved in. I put mine in a smaller room and hers in another. It took almost 2 years for us to get furniture for the master bedroom.

We still have light bulbs hanging instead of lighting fixtures in 2 locations in our house. One is where the chandelier is suppose to go. Another is in the dining room. We couldn't replace that because we needed new dining room furniture and we wanted the light fixture to match.

While we've done a lot, there's still so much more to do.

 

[NHawk19]

Don't forget to budget for utilities like gas, water and electric. Plus the bigger the house the more it takes to heat and cool the place.

Also in addition to taxes and PMI, the other thing that could add up is a Home Owner's Association fee.

 

[Mandon Knight]

If you lived in the UK, it would be a nightmare for you. Here you have to be ideally...

a) earning a dual income with your partner (if single forget the idea of earning enough for a mortgage)

b) dual income needs to be £50,000 upwards to stand any chance of being accepted for a mortgage

c) have inherited property or income to quantify the idea of believing you can commit to a mortgage

d) win the lottery instead