Tag: mortgage
There are 3 entries that are tagged mortgage. Now displaying reults 1 - 3.
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"How Much Home Can You Afford?" Calculators Scare the Bejeezus Outta Me
Posted on June 22, 2007 by Him
Between friends and coworkers, I'd say that 80% of the people I know are now homeowners, with many of them buying their first home in the last year or so. Admittedly, I've felt out of the loop.
In the past, we've wondered if it were feasible to put down 20% on a home. The more I look at our future, it looks like that could be possible. As we've just paid off all of our revolving credit card debt, I've wondered (just for fun) how it would affect how much home we'd be able to afford. So in order to get a better idea of a number, I decided to run the numbers using four different online calculators.
Before I get into the details of each calculator, there were some ground rules in the numbers to make everything even. I assumed:
- $50,000 for a down payment, the approximate amount I'd like to save up before buying a home
- Fixed 30-year mortgage at 6.25%, a reasonable guesstimate of what our interest rate would be considering our FICO scores
- Annual property taxes of $2,300, an eyeballed average of property tax listings of condos in my part of town
- Annual homeowner's insurance of $659, the 2004 Illinois state average.
- Monthly debt of $1,000, the minimum payment for the student loans
The first calculator is the one (warning, this calculator is a java applet that will slow down your computer for a few seconds) from dinkytown.com. I'm pretty sure that it is the same calculator found on (also java) interest.com (disclosure: they may have ads on this site, on every page, or something). I like their calculator because it shows how much mortgage you can afford over a range of interest rates. But since we're only looking at interest rates at 6.25%, I've gratuitously outlined the value in the chart: $318,883. Add to that a $50,000 down payment, and we have a value of $368,883. Not bad.
The second calculator was the venerable bankrate.com's housing affordability calculator, which said we could afford a $368,902.36 home:
I next went to smartmoney.com to use their calculator. The mortgage amount was pretty much the same as was dinkytown.com stated, $318,835, making the final value $368,835.
The last calculator I tried was CNN Money's offering. This calculator gave me a range from $368,882.87-$397,846.38.
This was a fun exercise considering that a year and a half ago a calculator (erroneously) told us that we could only afford a $10,000 home!
Why do these calculators scare the bejeezus out of me? Because I know for a fact that I'm not in the state of mind for home ownership. I'm still in young and carefree mode, and with a house comes a lot of responsibility that I don't think I'm ready for. I think Mapgirl would agree with me on this one.
The real scare is knowing how much more debt would be added to our tally. That is only slightly tempered by the fact that we'd have to be paying for housing whether we're renting or buying...so why not build equity? I also have to keep in mind that these numbers represent the MAXIMUM amount of mortgage that we'd be able to handle. Her and I have had some pillowtalk discussions about how stretched thin we'd be if we bought the maximum amount of house we could "afford," and how we'd rather not have to stress about the money.
In the end, I know that none of this is serious. We're not looking to buy until at least a few more years, both for maturity and saving's sake. It does feel good though, to know that we're making some financial progress.
Is It Feasible For Us To Put Down 20% For A Home?
Posted on September 19, 2006 by Him
The home ownership bug has hit me as of late. This is a dangerous thing, apparently, as many hours of my day are spent looking at housing calculators, reading up about different types of mortgages, and most procastinating-ly, looking at various properties in Chicago (those virtual tours devour my lunch hour).
I know I know - we are SO not in a position to buy a home. But hear me out.
We'll be credit card debt free in less than two years, freeing up about $1,000 a month for us. By that time we'll be married, and we will have a nice chunk of wedding money and other money saved up - by my estimates around $20,000. (EDIT: Please note that the $20,000 is coming from wedding gifts and OTHER SAVINGS. My parents have comitted to giving us a $10,000 gift for our wedding, so there's where half of it comes from.) Because we're faithfully paying off the credit card debt, we'll have excellent credit scores by then as well.
A decent 2 bedroom condo in Chicago runs about $300,000, so a 20% down payment on that home would be $60,000. That is a considerable chunk of change, especially when we already have a mortgage worth of student debt to pay off.
Is it feasible to drop 20% down considering our financial situation? What alternatives would you recommend?
Mortgage on my mind
Posted on January 30, 2006 by Her
Today I saw this article in the Seattle Post-Intelligencer about the new face of poverty: the college grad. According to the article,
About 40 percent of students now graduate with what lenders consider "unmanageable" debt loads, meaning their payments eat up more of their salaries than is considered financially sound.
It may not be financially sound, but it sure sounds familiar. My parents believe that their children are not owed an education, and therefore we each had to pay for our own university costs. I feel this was a very costly decision, both in financial and life terms. One sibling of mine joined the military to get an education "for free" -- serving our country for 25 years and still doesn't have any promised degree. My other sibling put went to a top school -- the resulting financial burden strained the relationship with my parents to the point that they haven't spoken in years. As for me, my outstanding $136,000 in student loan debt costs us nearly $1,000 per month. The truly frustrating part is that the interest accumulates so quickly that some months the principal balance actually increases. This is equivalent to what some of our friends are paying for their mortgages, and it means we can't afford a home mortgage until we pay off the mortgage on my mind.
This amount of student loan debt has caused us to argue at times. He feels that I've already spent so much money that he should get to spend a similar amount on stuff he wants, including his doctorate degree in the future. I feel we have so much debt already that neither of us can afford to spend more. Of course, we are both right and wrong.
My student loan debt is also going to impact our future finances. It will take 30 years to pay off this debt, and of course we will want to buy a home before we're 55. So that means our mortgage application will inevitably include some student loan debt, which is dragging down my FICO score. So this debt will also cause us to incur more debt than necessary when purchasing a home. Hopefully we can pay the loans down more aggressively in the future and pay them off much sooner.
If you can mortgage your mind, why can't degrees grow on trees?
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