$80k salary / $220k house - Doable?

[Petunia 100]

I paid 231.4k for my house, while making about 45k. I did put 20% down. Here we are almost 7 years later, and it has worked out fine.

I would like to spend less on housing and put more into investments each month. But, we have different priorities at different times in our lives. I'd be content in a 1 br / 1 ba, if it were just me. While raising children, I wanted more space.

I think a 220k home while earning 80k is completely doable.

[jIM_Ohio]

I am from a high cost region, so this seems very doable, to me. Of course, home ownership is also a substantial tax break. Anyway, nothing about this seems *tight*, to me. A $220k house on a $80k income, with 20% down and cash reserves, sounds pretty reasonably by most any measure. (We've personally mostly owed $200k-ish on a $50k - $80k income. & we have only had a 4% interest rate in the past few years; started at over 8% in 1999. Our first home was a condo with $300/month HOA, so factoring that part too).

I think the response you are getting is mostly in regards to your motivations. I would hope you had more home buying motivation than "rent is throwing away money". I'd think more carefully about all of the costs and benefits of home ownership in regards to what is best for you personally.

+1

The flags to me which I saw below MM's response was a $300/mo HOA fee.

If rent is throwing money away...
and mortgage interest is throwing money away...
then the HOA fee adds little value too (I get trash, water and a pool for mine at $200/mo)

Here is another question- would someone rent this townhouse for $2000/month? If you could not rent the townhouse for that, don't buy it for that price either.

Is the townhouse more or less than 20 years old?

I would focus on townhouses which are more than 20 years old, and watch the neighborhood- do most of them list for the same price?

This could be an owner which is underwater and needs to ask high to bail them out.

[jIM_Ohio]

It may be doable.

A couple things to keep in mind:

- Some expenses may go down. Car insurance may decrease (call your insurer and ask), especially if you are moving from an unsecured to a secured parking spot. Utilities may go down if you are moving from an inefficient apartment to an energy efficient building. If the condo is currently occupied ask for copies of utility bills for the last year. You may be able to cut expenses elsewhere by taking full advantage of the amenities offered (gym, entertainment, etc).

- Condo insurance is not nearly as expensive as single-family home insurance. It's closer to what you pay for renter's insurance. Your HOA dues should include insurance up to your interior walls.

- 15 & 30 year aren't your only mortgage options. You can have a 20 or 25 year, or even a custom one that is tied to whatever date you choose (5 years before planned retirement, for example). I'd opt for a term that doesn't stretch you too much and then come up with a plan for early pay down. Decide on max purchase price and down payment. Make a tentative decision on lender and term. Then ask the lender to run the numbers for you so you have a better idea of what you'd be looking at as far as closing costs and monthly payment. Then decide if it's comfortable for you.

- Put down enough to avoid PMI. PMI is a big fat waste of money for you. Don't pay it!!

- The most important piece of advice I can offer is to be prepared to walk away from the property if you don't get the price you want and can comfortably afford (decide on your max price before you start negotiations). There will always be other properties you can buy. It's OK to like a place, but never ever feel you "need to have it." Be as emotionally cool & detached during the negotiation process as you can.

Good luck.

+1

excellent advice

[phantom]

is this info wrong?


Worst States for Property Taxes

The Tax Foundation found that homeowners in these states paid the most in property taxes compared to home value. The percentages represent the percentage of home value that homeowners pay in property taxes.

New Jersey - 1.89%
New Hampshire - 1.86%
Texas - 1.81%
Wisconsin - 1.76%
Nebraska - 1.70%
Illinois - 1.73%
Connecticut - 1.63%
Michigan - 1.62%
Vermont - 1.59%
North Dakota - 1.42%

Sounds misleading to me. I live in Pennsylvania and my property taxes are about 3% of my house's assessed value. Even if I were being optimistic about the market value of my home being significantly higher than the assessed value, I'd still say we're paying 2.3% in property taxes. Yet, somehow, PA isn't even on that top 10 list.

I'm would guess that the problem with your data is that property taxes can vary a good bit, even within a state. Where I live, it is common for people to choose to live just over the county line for the sake of lower property taxes, and I've got to imagine that taxes get even lower way out in the middle of the state, farther away from any major cities.

[jIM_Ohio]

Sounds misleading to me. I live in Pennsylvania and my property taxes are about 3% of my house's assessed value. Even if I were being optimistic about the market value of my home being significantly higher than the assessed value, I'd still say we're paying 2.3% in property taxes. Yet, somehow, PA isn't even on that top 10 list.

I'm would guess that the problem with your data is that property taxes can vary a good bit, even within a state. Where I live, it is common for people to choose to live just over the county line for the sake of lower property taxes, and I've got to imagine that taxes get even lower way out in the middle of the state, farther away from any major cities.

There are 3 ways states and local municipalities can assess taxes

1) Income tax
2) Property tax
3) Sales tax

Many states have all 3- New York and Ohio come to mind (I have lived in both locations).
More than likely those with high property taxes have lower "other taxes".

For example, Texas to my knowledge has no state income tax, Kentucky and Virginia use "personal property taxes" in place of a state income tax (not sure how that affects "real estate property taxes".

I know there are places in Pennsylvania without sales tax (right??) and I also know Delaware has a favorable sales tax situation (as well as low corporate income taxes, which is why a lot of businesses incorporate in Delaware).

[scfr]

For example, Texas to my knowledge has no state income tax,

That is correct.

Also, if RE appraised values are lower you may pay less in actual dollars even though the percentage is higher. When we moved from Washington State to Texas our RE tax percentage increased quite a bit but the dollar amount decreased slightly.