Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-01-2008, 09:22 PM   #21
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,846
I bought my house in 2002 for 2.62 times my salary. So, with a little diligence, LBYM, and a head start due the 20% down, it was easy to pay it off in four years.

Now, it is probably worth 2.48 times my salary. That would be due to the combined effects of a housing slump and a promotion.
__________________

__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-01-2008, 11:32 PM   #22
Thinks s/he gets paid by the post
 
Join Date: Jan 2004
Posts: 2,049
I bought at 4x salary, 0% down, but had a roommate. The mortgage is now about 1.5x salary.
__________________

__________________
eridanus is offline   Reply With Quote
Old 01-02-2008, 07:27 AM   #23
Full time employment: Posting here.
Sandy's Avatar
 
Join Date: Dec 2006
Location: Florida
Posts: 855
My first house - about 2.5X gross salary

Current house: initial purchase: 1.6X gross salary for both DH and I (excluding alimony)Refinanced and pulled $$ out, and the refinance was 2.1X. I wouldn't go higher than that, since it leaves me feeling too house poor with no flexibility in the budget. These figures are straight mortage to income ratios and exclude escrow costs.

The current mortage (initial and refinance) were based on my salary alone - DH is not on the mortgage - long story. The refinance was 3.9X my salary. If I were the lender, I wouldn't have lent the $$ at that level, but it was Countrywide - and you know what kind of trouble they are in - I am definately one of their better customers.
__________________
I would not have anyone adopt my mode of living...but I would have each one be very careful to find out and pursue his own way, and not his father's or his mother's or his neighbor's instead. Thoreau, Walden
Sandy is offline   Reply With Quote
Old 01-02-2008, 09:00 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by Walt34 View Post
Hint: Stop by the local police station and ask about the area you're thinking about. If you get a blank look, that's a good sign. If they start rattling off war stories, rethink that location. Appearances can be very deceiving in that regard. Some expensive neighborhoods were not very nice places to live.
Not a bad idea. Somewhat by accident, we ended up buying in a neighborhood that had the mayor's relations, the town's head detective, and the captain of a local volunteer fire company. If I ever moved, I would seriously think about finding out where the local cops and firemen live since A) they are generally nice people and good neighbors, B) they usually live a reasonable middle class existence, and C) you never really have to worry about safety or emergency response times.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 01-02-2008, 09:27 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
I thought that was the case when I moved into my old neighborhood, where we had a highway patrolman, a couple of sheriffs deputies, a fireman and my neighbor was the shift supervisor for the ambulance service.

The highway patrolman had his house robbed while he was out of town in his RV. Took all his guns, badge, bulletproof vests and so forth. I think they caught the guys that did it.
One of the sheriffs had his truck broken into while it was sitting in front of his house. Several other home robberies happened and a couple of cars got stolen.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 01-02-2008, 10:32 AM   #26
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
We recently downsized to a house we could pay cash for.

We paid about 0.8 times my current salary for this house. We could have easily qualified for a house at 4x the price of this one, but I didn't want a large house with large heating and cooling bills, large maintenance bills and high property taxes...not to mention a mortgage for the next 15-30 years.

I feel we moved to a place where it will be much easier to FIRE sooner rather than later.

Buying the most home you can afford is *so* "keeping up with the Joneses," and I decided years ago to let the Joneses win.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 01-02-2008, 11:50 AM   #27
Full time employment: Posting here.
Lusitan's Avatar
 
Join Date: Jan 2006
Location: Boston
Posts: 620
First (and only, so far) house was just about 1x annual gross income. I anticipate moving to a larger home within the next 2 years, and I don't expect to find anything for less than 2x my gross income, although I will not go higher than 2.5x.
__________________
Lusitan is offline   Reply With Quote
Old 01-02-2008, 12:43 PM   #28
Recycles dryer sheets
 
Join Date: Oct 2007
Posts: 463
Quote:
Originally Posted by ziggy29 View Post
let the Joneses win.
Now that would make a good signature!
__________________
TickTock Rule Of Finance - heavily discount any promises of money/benefits to be paid to you in the future

"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
TickTock is offline   Reply With Quote
Old 01-02-2008, 12:57 PM   #29
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
4X when we bought 2 years ago, down to 3X now.

We were married no kids when we moved. We now have twins on the way. We bought with decision based on we are not moving again (went in vertical, coming out horizontal). Wife had also started a new job while we were house hunting, and her income is quickly closing the gap. I could see ratio being less than 2X income within 2 years.

I would advise buying what you want, especially square footage wise. Make sure you have the right foundation- you can finish a basement later, landscape later, but it's tough to bump garage out 3 feet or add that extra bedroom or study after they build. It cost us around 8k to close, and an addition would start at 30k to add a room, so the costs of adding on and/or moving are quite high. If you are at a point in life when you are single, married no kids, married with kids-might have more- married with kids-waiting for college to start- married with kids- which only visit, these scenarios all change what is important.
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote
Old 01-02-2008, 01:53 PM   #30
Dryer sheet wannabe
 
Join Date: Oct 2007
Posts: 11
I'm in the "you only live once" camp and my wife and I plan on building a house that is about 3x combined salary in value but will be about 2.7x in mortgage. There are alot of other factors that go into us taking this plunge though. For instance, we live in Pittsburgh where the housing crash seems to be missing. Plus, there's other income streams that we don't count on that will happen with a 90% probability, so including those, we're probably looking closer to a 2x ratio for the mortgage. And the fact that my wife's pension is second to none, allows us the freedom of adjusting our monthly savings goals and using that cash flow for expenditures.

BTW, our current starter home is about .5x gross salary. And for the person that talked about net salary (which I do think is a better gauge of over-extension), the new house monthly mortgage will be about 33% of net monthly income.
__________________
034runner is offline   Reply With Quote
Old 01-02-2008, 01:58 PM   #31
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by 034runner View Post
I'm in the "you only live once" camp and my wife and I plan on building a house that is about 3x combined salary in value but will be about 2.7x in mortgage.
Nothing wrong with that if it's what is important to you. To me, "you only live once" implies "so don't work in a job you don't love any longer than you have to."

I guess you're referring to the "live for today versus save for tomorrow" angle, though. Though I'd also say that every tomorrow I can shave off of the amount of time I have to work is that much more I enjoy today.

For what it's worth, I live not far outside of Austin, and the market here is still (mostly) very strong.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 01-02-2008, 08:23 PM   #32
Recycles dryer sheets
 
Join Date: Oct 2007
Posts: 463
Link Do you want to pay for the Sub-Prime freeze? to more of my thougts on buying the most expensive house you can...
__________________
TickTock Rule Of Finance - heavily discount any promises of money/benefits to be paid to you in the future

"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
TickTock is offline   Reply With Quote
Old 01-02-2008, 08:45 PM   #33
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,846
Sometimes I like to get online and figure out how much home I could buy, if I put everything I had into it and got the maximum sensible 30-year fixed mortgage that I would qualify for.

It's absolute, utter insanity. What on earth would I do with such a house? My present 1500 square foot home is too big for me, and I don't even use two of the rooms. So, I marvel at these McMansions and wonder what it would be like to live in one. I decided that the upkeep would enslave me, giving me no free time or money in the foreseeable future. Then there are those upscale Jones in the neighborhood, that I'm supposed to keep up with. If I have a McMansion, I'd better be driving a luxury car and I'd better not be wearing grubby jeans, and so on. And wandering through all those empty rooms in the house would be lonely.

I'm suggesting that there IS an ideal range of home values for me and for others. That ideal range involves both a maximum and a minimum price.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
~2x income
Old 01-02-2008, 08:51 PM   #34
Dryer sheet wannabe
 
Join Date: Jan 2008
Posts: 10
~2x income

We purchased our current home for about 2x our annual household income and we are able to manage our savings, retirement, and other expenses quite nicely. I think it largely depends on where you live as to how much you'll qualify for, but my advice is not to overextend yourself -- if you don't have an emergency fund, you're just one accident away from big problems.

I found some posts on this on http://musingsonpersonalfinance.blogspot.com -- have a look, if you have a chance.
__________________
hellodeli1 is offline   Reply With Quote
Old 01-02-2008, 10:28 PM   #35
Thinks s/he gets paid by the post
 
Join Date: Jul 2004
Posts: 1,072
1st house - 2x salary, very little down
2nd house - 2x salary with 20% down
3rd house (current) - 2x salary with 20% down

Salary did go up during those times - now married and house (as currently appraised) 1.5x our salaries
__________________
Deserat aka Bridget
“We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm.” - George Orwell/Winston Churchill
deserat is offline   Reply With Quote
Old 01-03-2008, 09:36 AM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,714
Send a message via Skype™ to kcowan
Our rental is abut 35% of our annual SWR.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 01-03-2008, 05:10 PM   #37
Thinks s/he gets paid by the post
 
Join Date: May 2005
Location: Texas
Posts: 1,038
House value is about 1X combined income. It was about 1.5X when I bought it. Also I make about 90% of the combined income. Wife works part time.

I have more house than I need but less shop space and land than I need. (or want).
__________________
In theory, theory and practice are the same. In practice, they are not.
Lazarus is offline   Reply With Quote
Old 01-04-2008, 10:06 PM   #38
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 292
My house in 1988 was about 1.8x my income with 30% down the mortgage was probably about 1.25x.

I sucked it up and paid the house off in 7 years (9.5% mortgage) and never looked back. It is very nice being able to invest the former mortgage payment.

My regrets were buying a larger house than I needed because I thought it would be easier to sell to a family. I am still in the house so it has been a moot point.

The other regret was not walking away from the deal when a high water table and septic system out of specifications was detected. I would have lose a thousand or so deposit on the pre-qualified mortgage but it was wrong to worry about that.

My advice is to buy the size of house that you need and to buy some rental property if you really feel a need to use the house as an investment. It is best to think of housing as a cost not an income stream.
__________________
joesxm3 is offline   Reply With Quote
Chime in: My last question....
Old 01-05-2008, 06:05 PM   #39
Dryer sheet aficionado
 
Join Date: Feb 2005
Posts: 39
Chime in: My last question....

Has anyone ever gotten a 10/1 LIBOR ARM loan? This option is tempting me as the home I want to get I think stands a good chance to appreciate in 5 years and we're talking ~$300/mon less going this route vs a fixed?

Thoughts, watchouts, learnings?

Thanks,
MFG
__________________
Mary_From_Georgia is offline   Reply With Quote
Old 01-05-2008, 11:37 PM   #40
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 2,401
Nope, I haven't.

Are you 100% certain you'll move in 10 years?
If you took a 30 year fixed on the house would the payment be less than 25% of your gross salary?

I would only consider the ARM if your answers both of the above were "Yes".

2Cor521
__________________

__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Where was that great website about home price trends? spncity FIRE and Money 5 12-31-2007 09:34 PM
2005 Gross Income Survey Danny FIRE and Money 9 11-27-2005 05:22 PM
What percentage of your gross income do you save? SLC Tortfeasor Young Dreamers 152 11-03-2005 08:12 AM
Bill Gross calls CPI fraudulent haha FIRE and Money 1 10-13-2004 01:12 PM
Home Price Appreciation Forecasts Hyperborea FIRE and Money 0 09-05-2004 10:19 AM

 

 
All times are GMT -6. The time now is 07:38 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.