Comments on: How Much House Can You Afford?

By: Jke

Jke — Sun, 27 Nov 2011 18:11:22 +0000

You sound like a real estate agent. Go advertise somewhere else. When it comes to finances, you should always look at things from a worst case scenario, with a little fear and uncertainty. A lot of things are AFFORDABLE, the question is at what cost? For me, the goal is to OWN the home, not pay for it my entire life. Which route gets me to that goal faster, buy now pay later? Or, save now buy later? Key words being: PATIENCE, SACRIFICE, MINIMALISM, MODESTY.

By: tfd

tfd — Sat, 26 Nov 2011 03:56:33 +0000

Jake,
I have to agree with bchrono. You are using worst case scenario which creates fear and uncertainty. Owning is smarter than renting. It was the greedy people who wanted to keep up with the jones’ and the greedy lenders who didn’t say no which created this housing mess. So everyone should live with mom and dad til they have thousands in cash to buy a home? Absolutely not. Forge ahead and buy a home. Key word here is AFFORDABLE.

By: Jake

Jake — Tue, 23 Aug 2011 21:09:11 +0000

It isn’t a theory, it is a fact. It is smart to buy cash, not easy, not comfortable, smart.
Not that this is necessary, but say you do live with mommy until you’re 30. Thirty isn’t that old and once you move out you’re moving into a home that is actually yours. I never said it was practical for all situations, but it is the best thing you could do from a financial perspective.
In your argument, you make a few bad assumptions.
1) You neglected to mention the closing costs. The costs of both buying and selling a home will likely cost you $10-12K, in that 100K price range. Right there is 1-3 years of rent, depending on costs, roommates, and quality. (money wasted)
2) You assume that you’ll be building equity. That assumption can be dangerous. Tell that to the people who bought homes in the last 10-15 years, how much equity did they end up with? (money wasted)
3) By renting, you are also purchasing flexibility. It is a kind of insurance for the unknown. When you own a home with a mortgage, what happens if you lose your job and can no longer make your payments? What if you end up needing to move a few years after you purchase? All those closing costs, all those payments, could end up being for nothing.
4) Maintenance. A home you own you have to maintain. I’m not sure about you, but it has been my experience, that this cost is greatly underestimated and can easily add on average several hundred to the monthly costs (money wasted).

By: Bchrono

Bchrono — Tue, 23 Aug 2011 17:22:33 +0000

“The really smart thing to do is to pack away money until you can purchase a house cash.” Interesting theory Jake, to bad it doesn’t work in the real world.
Where do you plan to stay for the decade you plan to save up for a house? In your “really smart” world is that living with mommy until you are 30 or renting? I know I’m not comfortable crashing with my fiancee at my parents house with the hopes of saving up over $100k for a house, I moved out when I was 19. Renting would be plain stupid; In Michigan the mortgage taxes and insurance for my house is cheaper than renting an apartment. The apartment would have basically 0 outdoor space, no garage, less than 1/4th the living space of my house, and one less bathroom than my house. On top of that every penny I would have paid in rent would be gone, a waste, I might as well have burned it. At least while I’m paying for the mortgage I’m getting some equity built up and will eventually own the home. There is also no penalty for paying off my mortgage early. This means any of that money that I would have been “saving for a house” while paying rent or living with mommy I can apply directly to my principal.

By: sm rezaul haque

sm rezaul haque — Fri, 29 Jul 2011 16:34:05 +0000

I have no job in USA, but i am able to pay monthly mortgage payment. I can pay $30000
as down payment. Will I be get approved?

By: Jake

Jake — Thu, 09 Jun 2011 20:39:11 +0000

That assumes that you’ll always be working. Or, will always be able to pay your debts. Is that really the advice you want to give? If you’re giving advice, why not say, buy only what you can afford without credit. How simple is that? No interest payments. We tend to just assume that in owning a home we need to take out a home loan. Why? That is actually counter-intuitive. In taking out a home loan, you don’t own the home at all. In fact, you trap yourself in dept. Save. Own!

By: Jake

Jake — Thu, 09 Jun 2011 20:32:25 +0000

Why does it always have to be a mortgage that you can afford? The really smart thing to do is to pack money away until you can purchase a house cash. Live cheap, save, and you’ll end up saving yourself ALOT of money!!!
As far as the actual buying experience, get a realtors license. I’m not sure about every state, but in my state it costs about 30 hours and $250. Now, I don’t know about you, but I’m a lot smarter then the majority of the realtors I’ve encountered, and it is offensive to me that I’m quite literally forced to use a realtor to buy a home. If you tried without a realtor you’d know that information and access are extremely limited. The realtors association controls the information and the access. All that aside, the monetary costs justify it alone.

By: Nicki

Nicki — Mon, 07 Mar 2011 22:32:21 +0000

I’ve got a few friends that live in the bigger cities mentioned earlier. The key was never to “stretch”. They rent apartments with roommates. That’s what a friend of mine has been doing for years. It keeps costs down and you’re never totally alone in a metropolis.

By: KB

KB — Thu, 17 Feb 2011 05:03:42 +0000

Thanks Dave. Thats the best and easiest piece of advice I’ve ever heard. I will definately be giving this a go (with the intention that that 1 week each month is also for saving!)

By: Dave Phone

Dave Phone — Fri, 24 Dec 2010 03:25:12 +0000

Many financial “Experts” make this way too complicated, and simply confuse people. I like to keep it simple and old school, one weeks check from your work should pay for one months mortgage payment, taxes and insurance included, and two weeks checks should cover all your debts and food and utilities. Just remember, if you don’t get paid every week, there are 4.3 weeks in a month.