Rebellab Posted June 13, 2008 Share Posted June 13, 2008 Well after looking for 6 months Mrs. Rebellab and I have finally found two house that we both agree on. Problem is they were in our budget until the mortgage rate jumped. We haven't made an offer yet so we are not locked into buying, but I was wondering what you guys thought. With inflation up will the mortgage rates come down again in the next month or do you see them continually rising? Quote Link to comment Share on other sites More sharing options...
alexgaddis Posted June 13, 2008 Share Posted June 13, 2008 I would only play the rate watching game for a refinance...If you have found a house to buy and you can afford the payments at the current rates, don't wait for them to go down, Buy the house. Quote Link to comment Share on other sites More sharing options...
i_am_the_swammi Posted June 13, 2008 Share Posted June 13, 2008 Well after looking for 6 months Mrs. Rebellab and I have finally found two house that we both agree on. Problem is they were in our budget until the mortgage rate jumped. We haven't made an offer yet so we are not locked into buying, but I was wondering what you guys thought. With inflation up will the mortgage rates come down again in the next month or do you see them continually rising? I would only play the rate watching game for a refinance...If you have found a house to buy and you can afford the payments at the current rates, don't wait for them to go down, Buy the house. Quote Link to comment Share on other sites More sharing options...
Rebellab Posted June 13, 2008 Author Share Posted June 13, 2008 I would only play the rate watching game for a refinance...If you have found a house to buy and you can afford the payments at the current rates, don't wait for them to go down, Buy the house. Okay, here in lies the problem. First off the wife would kill me if she knew I was talking about this to you guys, but here goes. We make good money, I am buying into a business at the end of the year for alot of money. Good news, the business will pay for itself and pay me. No real worries as far as job security. The wife has a new job and they love her. She is changing things and saving them money etc all good. Currently our housing is included in my salary package. There is a residence connected to the funeral home. It is old and Mrs Rebellab wants something to call her own. We have options for the residence once I move out so that is not an issue. Long story short we can afford the mortgage and still put a nice chunk in savings every month. We would be down $300 from what we put in now each month so no big worries. We have never lived on a budget and that is a little scary. We don't have kids and can't have kids so we will be DINKS the rest of our lives. So with over $90,000 combined income is $1850 mortgage too much? Quote Link to comment Share on other sites More sharing options...
wiegie Posted June 13, 2008 Share Posted June 13, 2008 So with over $90,000 combined income is $1850 mortgage too much? Just for clarification: Is that just for the mortgage or does it include insurance, taxes, etc.? Also, interest rates pretty much follow a random walk (meaning that short-term fluctuations in them are basically impossible to predict), however, I don't see any real reason why the rates should come down anytime soon (which sucks for me because my wife and I are also planning to buy a house in the next couple of months). Quote Link to comment Share on other sites More sharing options...
i_am_the_swammi Posted June 13, 2008 Share Posted June 13, 2008 So with over $90,000 combined income is $1850 mortgage too much? Herein lies your computation...what you didn't add was your other monthly debt (auto loans, credit cards, insurance, etc.). And is your $90K gross or net? The historical info is mostly emotional, and you need to get past it. What you currently pay and the nice, affordable situation you have now bears no impact on what you can afford going forward. But some quick matth: $90K gross probably nets you around $60K, or $5K per month. Go through your last two months of expenses (groceries, gas, clothes, etc.) as well as your other payments noted above. Also factor in what you spent last year on a vacation and big ticket items, and divide by 12 to see what it cost you per month. Factor in what you want to save every month for a comfortable retirement. Also factor in what you should be saving in your emergency fund...you should have 6 months income stashed away, should one of you lose your jobs or become disabled and can't work. Add those up, and if you are left with more than $2,250 per month ($1,850 + $400 maintnenace/upgrades/bills/services), you should be in good shape. Quote Link to comment Share on other sites More sharing options...
alexgaddis Posted June 13, 2008 Share Posted June 13, 2008 I kant reed two gud sumtymes Quote Link to comment Share on other sites More sharing options...
Rebellab Posted June 13, 2008 Author Share Posted June 13, 2008 Just for clarification: Is that just for the mortgage or does it include insurance, taxes, etc.? Also, interest rates pretty much follow a random walk (meaning that short-term fluctuations in them are basically impossible to predict), however, I don't see any real reason why the rates should come down anytime soon (which sucks for me because my wife and I are also planning to buy a house in the next couple of months). That is everything. Property tax, insurance quote, and figured at 6.25% interest, as well as PMI Quote Link to comment Share on other sites More sharing options...
twiley Posted June 13, 2008 Share Posted June 13, 2008 So with over $90,000 combined income is $1850 mortgage too much? I'll be honest with you - if I had a combined income of 90K I wouldn't be looking to buy a house with that sort of payment. JMHO Quote Link to comment Share on other sites More sharing options...
Big Country Posted June 13, 2008 Share Posted June 13, 2008 (edited) I'll be honest with you - if I had a combined income of 90K I wouldn't be looking to buy a house with that sort of payment. JMHO Good thing you don't have to look to buy a house in California. ETA: To stay on topic, yes, it is doable. I certainly reccomend making a budget of any other expenses. My wife and I are essentially in a similar situation, but we have no other outstanding debt (ie, no car payment, no student loans, etc.), so that certainly eased up some pressures to be able to afford a house. We just try to be very reasonable in our purchases (no impulse 45 inch HD TVs for us as nice as it would be) and have been able to afford the house just fine. Others have mentioned, do a 2-3 month analysis of all of your expenses, factor in what you would like to be saving, etc. and subtract to determine what your comfortable mortgage amount would be. Edited June 13, 2008 by Big Country Quote Link to comment Share on other sites More sharing options...
twiley Posted June 13, 2008 Share Posted June 13, 2008 Good thing you don't have to look to buy a house in California. True, I guess it also depends on where you live too. Quote Link to comment Share on other sites More sharing options...
Rebellab Posted June 13, 2008 Author Share Posted June 13, 2008 I'll be honest with you - if I had a combined income of 90K I wouldn't be looking to buy a house with that sort of payment. JMHO Mrs. Rebellab just called and she is getting cold feet as well. That's a good thing, she is the one really wanting this. Quote Link to comment Share on other sites More sharing options...
moneymakers Posted June 13, 2008 Share Posted June 13, 2008 That is everything. Property tax, insurance quote, and figured at 6.25% interest, as well as PMI PMI is for losers find a way to put more money down. are you earning 6.25% on your savings? Quote Link to comment Share on other sites More sharing options...
Rebellab Posted June 13, 2008 Author Share Posted June 13, 2008 PMI is for losers find a way to put more money down. are you earning 6.25% on your savings? At the end of the year I am going to need around $50,000 to $60,000 cash down for the business. Quote Link to comment Share on other sites More sharing options...
twiley Posted June 13, 2008 Share Posted June 13, 2008 Herein lies your computation...what you didn't add was your other monthly debt (auto loans, credit cards, insurance, etc.). And is your $90K gross or net? The historical info is mostly emotional, and you need to get past it. What you currently pay and the nice, affordable situation you have now bears no impact on what you can afford going forward. But some quick matth: $90K gross probably nets you around $60K, or $5K per month. Go through your last two months of expenses (groceries, gas, clothes, etc.) as well as your other payments noted above. Also factor in what you spent last year on a vacation and big ticket items, and divide by 12 to see what it cost you per month. Factor in what you want to save every month for a comfortable retirement. Also factor in what you should be saving in your emergency fund...you should have 6 months income stashed away, should one of you lose your jobs or become disabled and can't work. Add those up, and if you are left with more than $2,250 per month ($1,850 + $400 maintnenace/upgrades/bills/services), you should be in good shape. Excellent advice here. Quote Link to comment Share on other sites More sharing options...
i_am_the_swammi Posted June 13, 2008 Share Posted June 13, 2008 That is everything. Property tax, insurance quote, and figured at 6.25% interest, as well as PMI Any way you can put some extra cash down to avoid the PMI? PMI stands for "Poke My Insides", which is essentially what the insurer is doing. Also, from today's Philly Inquirer: Mortgage rates hit 8-month highBy Martin Crutsinger Associated Press WASHINGTON - Rates on 30-year mortgages jumped this week to the highest in nearly eight months, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported yesterday that 30-year fixed-rate mortgages averaged 6.32 percent, up sharply from 6.09 percent last week. It was the highest for 30-year mortgages since they averaged 6.33 percent for the week of Oct. 25. LIke some have said, I don't think rates will be dropping materially anytime soon...they will likely trickle higher. If you have found a home you both like, and the $1850 works for your budget (the $1850 will go lower once your equity-level surpasses 20% and the PMI goes away...which may be in a couple years once the housing mess goes away and values correct upwards), buy the house. Quote Link to comment Share on other sites More sharing options...
twiley Posted June 13, 2008 Share Posted June 13, 2008 (edited) At the end of the year I am going to need around $50,000 to $60,000 cash down for the business. Not to be off subject but how about looking into a SBA loan? Edited June 13, 2008 by twiley Quote Link to comment Share on other sites More sharing options...
Big Country Posted June 13, 2008 Share Posted June 13, 2008 Not to be off subject but how about looking into a SBA loan? My first thought as well. Quote Link to comment Share on other sites More sharing options...
Rebellab Posted June 13, 2008 Author Share Posted June 13, 2008 (edited) Not to be off subject but how about looking into a SBA loan? We have a quote from a local bank right now for $1,000,000 loan at 6% the current owner is going to carry the rest for 1/4% lower. SBA at this time can't touch this according to our other banker who is going to be very disappointed that we are taking our business elsewhere. E2A: These are both small town banks and the one we will be leaving is where the wife works and current owner is on the board. Edited June 13, 2008 by Rebellab Quote Link to comment Share on other sites More sharing options...
twiley Posted June 13, 2008 Share Posted June 13, 2008 We have a quote from a local bank right now for $1,000,000 loan at 6% the current owner is going to carry the rest for 1/4% lower. SBA at this time can't touch this according to our other banker who is going to be very disappointed that we are taking our business elsewhere. E2A: These are both small town banks and the one we will be leaving is where the wife works and current owner is on the board. Makes sense. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted June 13, 2008 Share Posted June 13, 2008 a little off topic. has the small biz loan industry tightened up like every other credit market? Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted June 13, 2008 Share Posted June 13, 2008 however, I don't see any real reason why the rates should come down anytime soon (which sucks for me because my wife and I are also planning to buy a house in the next couple of months). On the plus side, this is the best buyer's market for decades. The drop in house prices will more than compensate for a little more mortgage cost. You'll be able to buy a house you could not have bought two years ago. I'll be honest with you - if I had a combined income of 90K I wouldn't be looking to buy a house with that sort of payment. JMHO Nor would I, especially if that's $90k gross. Way too big a proportion of net income. My rule of thumb is that the monthly mortgage < 25% monthly net income Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted June 13, 2008 Share Posted June 13, 2008 So with over $90,000 combined income is $1850 mortgage too much? It's not my real line of work... but that sounds like a lot. If my math is correct, that is 25% of your pre-tax income. For comparison, my mortgage is 15% of my family's pre-tax income. But I live in a different area, and I have a different situation. Quote Link to comment Share on other sites More sharing options...
Chavez Posted June 13, 2008 Share Posted June 13, 2008 It's not my real line of work... but that sounds like a lot. If my math is correct, that is 25% of your pre-tax income. For comparison, my mortgage is 15% of my family's pre-tax income. But I live in a different area, and I have a different situation. 25% is acceptable for a mortgage, assuming there isn't a boatload of junk debt floating around. You need to remember, too, Atomic, that dinks have a bit less overhead than you rabbit-like Celts. Quote Link to comment Share on other sites More sharing options...
Savage Beatings Posted June 13, 2008 Share Posted June 13, 2008 your debt to income ratio will help you to decide Quote Link to comment Share on other sites More sharing options...
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