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Forum
-> Household Management
-> Finances
amother
Blue
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Wed, Nov 15 2017, 1:10 pm
How much money does a family need in order to buy a house or apartment? I'm looking at a range of $250-$500,000 houses. We don't want to live in a rented apartment forever and right now my husband is the only one working. However, I'd like to plan and see if it will be possible for us in the future. Thanks
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amother
Bronze
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Wed, Nov 15 2017, 1:18 pm
The easiest thing is to look up an online mortgage calculator and factor in your property taxes.
However - you will also need a cash reserve for repairs and for paying the mortgage for a few months if you should suddenly find yourselves without income.
Also, many mortgage calculators assume that you can put 30 percent of your income towards housing. However, if you also need to pay tuition, subtract that from your income to determine what you can really pay.
Hatzlacha!
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wife101
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Wed, Nov 15 2017, 1:21 pm
You need a down payment of 20% of the purchase price + closing costs (usually under 10K)
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lavenderchimes
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Wed, Nov 15 2017, 1:38 pm
amother wrote: | The easiest thing is to look up an online mortgage calculator and factor in your property taxes.
However - you will also need a cash reserve for repairs and for paying the mortgage for a few months if you should suddenly find yourselves without income.
Also, many mortgage calculators assume that you can put 30 percent of your income towards housing. However, if you also need to pay tuition, subtract that from your income to determine what you can really pay.
Hatzlacha! |
You will also need to bear in mind all your other existing expenses (food, clothes, maaser,) and those that will increase, such as gas and electric. And don't forget about home insurance.
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doctorima
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Wed, Nov 15 2017, 2:41 pm
There's no magical answer for how much income you need. You need to determine how much you can afford to put down, while leaving over enough for unexpected expenses, and then see how much of a mortgage you would need to take out, and from there figure out if you make enough to cover it (for 30 straight years, including rising property taxes and homeowner's insurance).
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SixOfWands
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Wed, Nov 15 2017, 3:07 pm
lavenderchimes wrote: | You will also need to bear in mind all your other existing expenses (food, clothes, maaser,) and those that will increase, such as gas and electric. And don't forget about home insurance. |
And, bluntly, tuition. For most of us, that's a huge chunk of money each month.
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Amarante
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Wed, Nov 15 2017, 3:18 pm
I think the 30% "rule of thumb" may not be applicable to frum families because of high tuition expenses as SixofWands posted.
The only way to determine whether you can afford a house is to determine what you can realistically afford for rent - and remember when you buy a house you may have to pay for stuff like utilities, garbage pickup, real estate taxes as well as inevitable maintenance expenses. Will a new refrigerator or hot water heater cause economic catastrophe?
I will leave the quagmire which has been discussed frequently regarding the issue of tuition versus mortgage and the equity and lack thereof when high mortgage payments are considered when discounts are allocated.
If you can afford a house, it's generally a good decision because if you are prudent - I.e. stay in your house long enough, eventually your housing costs will be lower than if you had rented - and more importantly at the end of 20 years, you will own a home - have equity - and your housing costs will then decrease.
The rub is what you can "afford" - a moderate stretch is good. My mortgage payments were a bit high in the first few years so I had to pull in my belt - watch the budget VERY carefully. I also made do with hand me down furniture to a great extent and made do. I had built in a moderate budget for remodel/furniture and I spent that on those items that would have been difficult to do later on - I.e. I painted and I also replaced the carpet with wood but I lived with the avocado green formica counters for awhile :-)
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