If you make 150k-200k a year would you... ?

Question

If you make 150k-200k a year would you consider buying a house that is 700000$ to 1 Million$ worth?

thankx

Answer 1

no. pay attention to fukinluck. it's darned true that the maximum mortgage amount should not be greater than 2.5 times that of your annual gross income. that means that you should buy the best house you can find, with the highest amount of land, for no more than $400,000, perhaps a maximum of $425,000.

if you buy in a good location (always remember: you only need to remember 3 things about real estate, which are: location, location, location) and maintain the house well, you can sell it later, in the early part of the next seller's market, which should come in about 2008 or 2009.

you will, by not being house poor, have a little extra money each month or in income tax return since you deduct all the interest paid on your mortgage as well as real estate taxes paid each year from your income tax bill to uncle sam. you should do what all the smart people do, which is to prepay your principal down. all you do is whenever you have extra money, even $25 a month, you make a check to your lender and mark it, in the memo area and on the back of the check with your loan number and the words "for principal only." that way you are lowering the amount of total dollars in interest on the loan (in a 30 year mortgage, about 18 years of 30 are devoted to paying down the interest and not the principal), as well as reducing the time you pay off the balance. there is no prepayment penalty on residential real estate that you live in.

you see, the logic i am applying here is that right now, it is the biggest BUYER'S market i have ever seen, or even heard of! for sale signs have been sitting on lawns for a couple of years now! you stand to negotiate the best deal on a good house right now, since they are overpriced. they are overpriced because for the first time i ever heard about, instead of having 5 years of a buyer's market followed by 2 years of a seller's market, we just left, in early 2005 really, more than 5 years of a seller's market! so then, prices got so high that no family can even think about buying a house. with YOUR income, you are in a great position to buy a nice house in a nice neighborhood, so do it. watch carefully to see when those lawn signs begin to have stickers on them that say "under contract." when you see that, call your Realtor to see if it is becoming a good time to sell for your top dollar. if i lived in your skin, i would buy now, in the buyer's market, then i would sell at the beginning, not at the end of, the next seller's market and then step up to that more expensive house then.

kindly review examples that i gave in my answer today in this section to the question called: "Are we being played by our agent? ..." you will find a few good negotiating techniques, i think.

you should never be house poor. and remember two things:

1. a house, the place where you go after a hard day's work, is a place to lay down your hat and get comfortable. it is not, as so many people seem to think, an investment. it is your HOME. treat it with TLC and then when you sell it, that TLC will shine through, making it easier for you to sell it quickly and for closer to your asking price than those that were not maintained.

2. real estate investments, even, are not liquid. the down payment and all the other cash elements that cost you to buy the house are locked into the real estate parcel. it is not like you put that money into a fluid money market account and you can just walk over to the bank, close the account, and walk out with your money. it takes TIME to sell a house, no matter what the market is like.

i wish you a very happy home!

Answer 2

Nope. You'll be house-poor.

$800K at 6.25% is $4925/mo. Add taxes of $500-1000/mo, plus insurance of $200/mo. All told, you could easily be paying $6000 per month to live in that house.

Maintenance costs and budgeting should really be about a grand per month, unless you want it to turn into a shithole in a few years.

At $150K per year, that's $12,500 per month. After insurance, taxes, etc..., you're lucky to have $7000 in your bank every month, less if you're putting cash into 401K.

Even at $200K/yr, that's $16,667 per month. You'll see $8-9K after taxes.

I assume that, along with having a nice house, you might enjoy other activities? Travel? Nice car? Dinner out?

Except for a few cities in the US, $500K will get you a damn nice house. The old rule of thumb about buying 2.5-3 times your annual income makes sense.

Sure, you could take out an interest only loan, or something like an option ARM, just to be able to make the payments on that house, but if you can't afford to pay back the loan, you shouldn't be buying the house in the first place.

PS Danny O is a moron

Answer 3

Yes, definately. Tax Benefits and better rate of Return. You could probably go a little higher even.

Answer 4

no way no how that is too much what about repairs what about things homeowners wont pay for? what about other bills?