Comments on: Help Buying a New House – 10 Tips for First Time Home Owners http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/ Got goals? Need a push in the right direction? You've come to the right place! Wed, 23 May 2012 15:32:09 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Laurie Pawlik-Kienlen http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-27153 Laurie Pawlik-Kienlen Tue, 27 Sep 2011 22:51:47 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-27153 Thanks for your comments, Bruce! Every little bit helps, when you're buying a new house. My best tip for first time homebuyers is to be prepared to spend a lot of money on your house. We bought our house a year ago, and are just now spending thousands of dollars on new windows. Our first expense, which is pretty good. But it'll be expensive. Thanks for your comments, Bruce! Every little bit helps, when you’re buying a new house. My best tip for first time homebuyers is to be prepared to spend a lot of money on your house. We bought our house a year ago, and are just now spending thousands of dollars on new windows. Our first expense, which is pretty good. But it’ll be expensive.

]]> By: Bruce Mackay http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-26793 Bruce Mackay Fri, 23 Sep 2011 02:28:15 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-26793 Great information but better plan how to save on your house payments now you own it like by making bi weekly payments and gaining two or three payments a year You can save over a hundred grand over twenty years. Also learn to change your amortisation evry few years. so you only pay tax on what you owe not on what you used to owe. Taxes kill. Great information but better plan how to save on your house payments now you own it like by making bi weekly payments and gaining two or three payments a year You can save over a hundred grand over twenty years. Also learn to change your amortisation evry few years. so you only pay tax on what you owe not on what you used to owe. Taxes kill.

]]> By: Laurie Pawlik-Kienlen http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-9893 Laurie Pawlik-Kienlen Mon, 17 May 2010 01:51:10 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-9893 How exciting -- you've bought your first home! You and your fiance will be able to afford the mortgage payments; you know that because of all the research you did before you bought your house. You did due diligence and didn't make a rash decision. That's the first step to paying off your mortgage. Now, as Rick said, enjoy your new home...even if you have to fix things here and there, enjoy the fact that it's YOURS. :-) Laurie .-= Laurie Pawlik-Kienlen´s last blog post ...How to be Lucky – 10 Ways to Get Luckier in Life and Love =-. How exciting — you’ve bought your first home! You and your fiance will be able to afford the mortgage payments; you know that because of all the research you did before you bought your house. You did due diligence and didn’t make a rash decision. That’s the first step to paying off your mortgage.

Now, as Rick said, enjoy your new home…even if you have to fix things here and there, enjoy the fact that it’s YOURS. :-)

Laurie
.-= Laurie Pawlik-Kienlen´s last blog post …How to be Lucky – 10 Ways to Get Luckier in Life and Love =-.

]]> By: Rick http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-9866 Rick Fri, 14 May 2010 16:09:41 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-9866 That's great Bryan, congratulations. I certainly don't know the market conditions where you are but in some areas the prices have pulled back and with interest rates at rock bottom I am sure you have made a sound decision. I personally think it is good to stretch when buying a house if you are able to manage your money well. Stay focused on paying down your principal and enjoy the pride of ownership. That’s great Bryan, congratulations. I certainly don’t know the market conditions where you are but in some areas the prices have pulled back and with interest rates at rock bottom I am sure you have made a sound decision. I personally think it is good to stretch when buying a house if you are able to manage your money well. Stay focused on paying down your principal and enjoy the pride of ownership.

]]> By: Bryan http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-9840 Bryan Wed, 12 May 2010 20:53:46 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-9840 Okay, I'm back with news to report. My fiance and I have purchased our first home. The house ended up being 3.2 times our annual salaries. However, the montly mortgage, PMI, homeowner's insurance and taxes are 32% of our monthly gross income. We ended up at the high end of our range which I can see happening often. Thanks again! Okay, I’m back with news to report. My fiance and I have purchased our first home. The house ended up being 3.2 times our annual salaries. However, the montly mortgage, PMI, homeowner’s insurance and taxes are 32% of our monthly gross income. We ended up at the high end of our range which I can see happening often.

Thanks again!

]]> By: Bryan http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-8969 Bryan Wed, 24 Feb 2010 17:29:50 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-8969 Thank you both again for your insight. I will be sure to post my results (hopefully this spring)! Thank you both again for your insight. I will be sure to post my results (hopefully this spring)!

]]> By: Laurie Pawlik-Kienlen http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-8902 Laurie Pawlik-Kienlen Fri, 19 Feb 2010 23:33:16 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-8902 When you're buying a new house, you also need to take into account where you live (urban versus rural), your lifestyle (big spender versus frugal), your occupation (do you need designer clothes or do you work from home in your pajamas?), your love and family life (are you married with 5 kids, or are you single?), etc. I think that those are the differences that may account for the difference between the "34% of gross income" theory and the "2.5 times your salary" theory. Like Rick said (or alluded to), each person is different, and each potential home buyer needs to calculate his or her own mortgage and housing costs. Just to confuse things further :-) here's another set of calculations that I found: 10% of your income should be going to savings or investments 25-40% to mortgage or rent 8-15% to home-related expenses (utility bills, etc) 10-20% to food 15-25% to transportation 8-15% for medical expenses 3-5% for clothing 5-10% to personal or miscellaneous less than 5% to personal debt such as student or personal loans Again, these calculations depend on the person's lifestyle. For instance, 3-5% is WAY much for me to spend on clothes each month -- I don't even think I spend that in a year! And, I'm Canadian with extended health coverage through my husband's work so I don't spend 8-15% on medical expenses. So I can shift those monies over to paying off my mortgage, going on exotic vacations, etc. I think it's also important to sit down with a few mortgage brokers and bankers, and see what they say about interest rates and being a first-time homebuyer in your area. Of course, it also depends on your line of credit and amount of debt! I hope this helps.....and please do come back and let me know what you end up doing -- if you bought your first new house and if it was within the 35% theory or the 2.5 times your salary theory. Laurie When you’re buying a new house, you also need to take into account where you live (urban versus rural), your lifestyle (big spender versus frugal), your occupation (do you need designer clothes or do you work from home in your pajamas?), your love and family life (are you married with 5 kids, or are you single?), etc.

I think that those are the differences that may account for the difference between the “34% of gross income” theory and the “2.5 times your salary” theory.

Like Rick said (or alluded to), each person is different, and each potential home buyer needs to calculate his or her own mortgage and housing costs.

Just to confuse things further :-) here’s another set of calculations that I found:

10% of your income should be going to savings or investments

25-40% to mortgage or rent

8-15% to home-related expenses (utility bills, etc)

10-20% to food

15-25% to transportation

8-15% for medical expenses

3-5% for clothing

5-10% to personal or miscellaneous

less than 5% to personal debt such as student or personal loans

Again, these calculations depend on the person’s lifestyle. For instance, 3-5% is WAY much for me to spend on clothes each month — I don’t even think I spend that in a year! And, I’m Canadian with extended health coverage through my husband’s work so I don’t spend 8-15% on medical expenses. So I can shift those monies over to paying off my mortgage, going on exotic vacations, etc.

I think it’s also important to sit down with a few mortgage brokers and bankers, and see what they say about interest rates and being a first-time homebuyer in your area. Of course, it also depends on your line of credit and amount of debt!

I hope this helps…..and please do come back and let me know what you end up doing — if you bought your first new house and if it was within the 35% theory or the 2.5 times your salary theory.

Laurie

]]> By: Rick http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-8899 Rick Fri, 19 Feb 2010 19:10:50 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-8899 There are no hard and fast rules to the amount you can afford. These general rules of thumb, 35% of gross, 2.5-4.0 times salary, etc, are there to provide guidance. Different lenders use different formulas based on what their experts predict. Sometimes the percentage of gross income might be 30% to 35% depending on interest rates and general economy. Other experts may be very conservative and suggest you never put yourself at financial risk so they may say 20% (which is close to the 2.5 times salary). You need to determine what you can afford and are comfortable with. Make a budget and allocate all your income verses expenses: food, entertainment, car, utilities, savings, insurances, etc, being as detailed and accurate as possible. Consider whether your income will increase or decrease based on your employment prospects and career plans. Then look at how little or how much is there at the end of the month/year. Use an online calculator from the bank or mortgage company website to determine the total cost to borrow various amounts of mortgage money ($300,000, 400,000, etc) until the amount of monthly payment fits your budget. Those calculators should also show the amount of mortgage insurance you pay based on the down payment. The higher the down payment the cheaper the insurance so put as much down as possible. One bit of advice I have is buy almost as much as you can afford, living frugally, and with every left over penny pay down your mortgage with penalty-free prepayments. There are no hard and fast rules to the amount you can afford. These general rules of thumb, 35% of gross, 2.5-4.0 times salary, etc, are there to provide guidance. Different lenders use different formulas based on what their experts predict. Sometimes the percentage of gross income might be 30% to 35% depending on interest rates and general economy. Other experts may be very conservative and suggest you never put yourself at financial risk so they may say 20% (which is close to the 2.5 times salary). You need to determine what you can afford and are comfortable with. Make a budget and allocate all your income verses expenses: food, entertainment, car, utilities, savings, insurances, etc, being as detailed and accurate as possible. Consider whether your income will increase or decrease based on your employment prospects and career plans. Then look at how little or how much is there at the end of the month/year. Use an online calculator from the bank or mortgage company website to determine the total cost to borrow various amounts of mortgage money ($300,000, 400,000, etc) until the amount of monthly payment fits your budget. Those calculators should also show the amount of mortgage insurance you pay based on the down payment. The higher the down payment the cheaper the insurance so put as much down as possible. One bit of advice I have is buy almost as much as you can afford, living frugally, and with every left over penny pay down your mortgage with penalty-free prepayments.

]]> By: Bryan http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-8869 Bryan Wed, 17 Feb 2010 15:30:43 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-8869 Thanks, Rick and Laurie. If you don't mind, another question. 35% of gross income is one theory and then there are some who say you can afford 2.5 times what you make (assuming annual income). To illustrate how different these theories are let's say I make $100,000. If you divide that number by 26 pay periods, my monthly income would approximately be $7,700. Multiply this by 35% and you have about $2,700 to spend on a house monthly. Take away $200 for PMI and insurance and another 500 for taxes (assuming $6K a year) - leaves you with $2K. Based on mortgage rates right now, I would be able to afford a house somewhere around $370K. If you go with the theory that you can afford 2.5 times your salary, well $100K x 2.5 = $250K. A difference of over $100,000. I am obviously missing something here. Your thoughts and feedback are appreciated. Thanks again. Thanks, Rick and Laurie. If you don’t mind, another question.

35% of gross income is one theory and then there are some who say you can afford 2.5 times what you make (assuming annual income).

To illustrate how different these theories are let’s say I make $100,000. If you divide that number by 26 pay periods, my monthly income would approximately be $7,700. Multiply this by 35% and you have about $2,700 to spend on a house monthly. Take away $200 for PMI and insurance and another 500 for taxes (assuming $6K a year) – leaves you with $2K. Based on mortgage rates right now, I would be able to afford a house somewhere around $370K.

If you go with the theory that you can afford 2.5 times your salary, well $100K x 2.5 = $250K. A difference of over $100,000.

I am obviously missing something here. Your thoughts and feedback are appreciated.

Thanks again.

]]> By: Laurie Pawlik-Kienlen http://theadventurouswriter.com/blog/buying-new-house-tips-first-time-homebuyers/comment-page-1/#comment-8808 Laurie Pawlik-Kienlen Sun, 14 Feb 2010 02:51:28 +0000 http://theadventurouswriter.com/blog/?p=2127#comment-8808 Interesting -- I would've thought that "housing expenses" do include the cost of utilities! But, I've heard from Rick here on Quips and Tips before, and his financial advice was solid. Interesting — I would’ve thought that “housing expenses” do include the cost of utilities! But, I’ve heard from Rick here on Quips and Tips before, and his financial advice was solid.

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