Since all the landlords here say you should just buy bro, let us see how practical it is for you.
Rule: Before doing the below, the house must be within a 30 minute drive to your workplace. No cheating by commuting more than an hour a day.
Step 1: Post your income. Step 2: Times that by a maximum of 2.5 to come up with what you can afford for a 30 year mortgage. Step 3: Post pictures in your local area of what you can afford.
Step 1: $52,000/yr Step 2: Can afford $130,000. Step 3, pic related. It's just a shitty mobile home manufactured in 1969.
This is why people who rent are retarded and destined to stay renting. You never, ever buy a house in full you always leverage your money. Why? Because I can earn a higher rate of return investing the money elsewhere (so long as I can outpace the rate of my note). A standard conventional mortgage will be 80% LTV meaning you only put 20% down. If you’re a first time home buyer you can apply for an FHA loan which allows you to only have to put 5% down. By your calculations and utilizing a standard conventional loan, with $130k you could afford a $650k house at 80% LTV. Your mortgage on a 30 year fixed 425 point loan would be roughly $2500/month. Renters were destined to rent.
where did op say anything about paying cash for a house?
Logan Martinez
6, sorry*.
>2500/month on a $52,000 salary. >90% of take home salary. >Affordable.
This is why landlords are screaming recently because they have massively overextended themselves. If you go a month or a few months without rent you'll be destroyed.
Brandon Morgan
I specifically said “using your calculation”. His 2.5 year calculation is retarded, no prudent RE investor valuate property or the value of their note utilizing that metric, hence why I said “using your calculation”. The point of my post was to highlight how retarded the original post is and why it’s indicative of renters staying as renters. I’m guessing you rent as well?
Wyatt Jones
You could get a roommate and pay half.
David Barnes
After tax income I am assuming?
1. 55k before, 40k after 2. 120k 3. jesus christ its worse than i thought
Yeah, 4-6x local median income in your area is a good range for housing to correct to. It's not a terrible idea for a thread though, just have fun with it my dood.
Jason Cooper
At least two people have OD'd and one person been murdered in that house
The fuck are you even talking about retard? The conventional advice to see what you can afford is no more than 2.5x your yearly income on a 40 year mortgage, which is what the OP used, which is what he did.
Posted income: $52,000/yr. Can afford a house: $130,000/yr. 2.5x $52,000/yr=$130,000.
2.5 years for the down payment not the full purchase price. He is posting full purchase prices that are under the 2.5 amount, the conventional rule of thumb your talking about is for the down payment
Isaiah Wilson
That's a bit over what you can afford according to conventional wisdom, you would be able to afford 150k.
Caleb Price
But it’s not 2.5, I was taught 1.75 in undergrad and then grad school told me to forget about that useless shit and just do a DCF analysis
Eli Taylor
When link moons I'll be able to raise my kids in a decent neighborhood
No, it's not 2.5x for the downpayment, it's for what you can afford.
Determining an Affordable Mortgage Generally speaking, most prospective homeowners can afford to finance a property that costs between two and two and a half times their gross income. Under this formula, a person earning $100,000 per year can afford a mortgage of $200,000 to $250,000. However, this calculation is only a general guideline. You can use Investopedia's mortgage calculator to better estimate monthly mortgage payments.
Evan Smith
Based, let me be the third
Levi Reyes
>1337 absolutely based digits
Hudson Watson
Could afford more, but this would be fine. 95k/year
I don't want to play the game. I'm insecure about what I make
Dominic Phillips
By saving my money instead of wasting it on stupid shit
Eli Peterson
How long did you save for? What was your strategy? How big was your downpayment?
Ian Jones
Excluding the downpayment.
Ryder Sanders
This is literal brainlet investing, I’m sorry I wasn’t aware of this investopedia calculation. I’ll ask my grad professors for a refund
Aaron Parker
Can you explain to me in simpler terms how someone making $52,000 a year can take out the $630,000 you suggested they could and not get destroyed in a mortgage? What do you suggest?
Jack Williams
Suggest as the max mortgage someone making $52k/yr can take out without having to rely on renters, to clarify.
I wasn’t suggesting that, I was simply plugging in values to the existing formula the OP provided. I would never suggest someone making $53k leverage a $650k house...
Luis Kelly
I started working when I was 21 and I'm about to turn 29. I was even at Walmart for 2.5 years making a meager 20k/22k (again, before taxes). My strategy was to not spend money. The down payment was 90k. I've also put about 55k into various long-term investments and retirement accounts. I also bought a 22k car at the start of 2019. I'm obviously in debt at this point due to the mortgage, but it's for only 15 years. Once that's done, I can probably retire if I wish.
It's pretty crazy to me how people don't have money.
Leo Lopez
Right...but mortgages aren’t cookie cutter like the formula suggest. Even a variable rate vs conventional will dictate different equity contributions over the long run. This is why time value of money is so important and why the investopedia formula is made for retards
Oliver Cook
>Times that by a maximum of 2.5 to come up with what you can afford for a 30 year mortgage. with interest rates as low as they are, I can technically afford a 600k home on an 80k salary.
Jackson Sanchez
He can't, most degrees aren't worth the paper they're written on (Especially U Cal/Ivy League).
No reason to go to university unless you want to become an Accountant, Medical Doctor or Engineer (As you're required).
Met a dude who did a PhD on Leaves; His thesis was a 25 page laminated (Homemade) book with leaves he collect from the side of the road.
Aaron Lopez
What were your living expenses and location to be able to save almost half to a third of your salary(after I'm assuming putting money into a retirement fund?) for so long?
Ayden Barnes
Obviously, this is just a general rule of thumb. What would you suggest for someone making 53k with a fixed rate 30 year mortgage could afford?
Owen Wright
I was with my mom until early 2017 and then I lived with a coworker from then until buying the house. He charged 600 a month.
Austin Bell
$53k after or before taxes? What’s your monthly take home?
Jeremiah Turner
46,000 per year x 2. 5 = 115,000 This house built in 1935. Grim.
Take home is around 34k after retirement deductions and healthcare.
Carter Price
Jesus Christ, they couldn't even fix the screen before putting it on Zillow.
Jayden Brooks
Based Scrooge
Hunter Fisher
How much do you make a year now?
Dominic Jones
That would be contingent upon any other liabilities you have. Student loans? Car payment? If I’m making $53k a year I am likely waiting until I can afford mortgage under more strenuous conditions, say 70% LTV and at 500 points. Each investor has different risk profiles and investment objectives
Angel Nelson
160-200
200 would be stretching yourself and you’d probably have to stop 401k contributions for a few years. The first couple years of home ownership are the hardest.
