Wanting to buy house...or rent?

[jpg7n16]

You can bs all you want. First, of all. AVERAGE means average not everybody. yes, of course there are jobs that pay more than minimum.

You said it yourself. Average means average. Not low. Not common. Not most frequent. But average.

The average is (by definition) higher than the minimum, and lower than the maximum.

And minimum means bottom, not middle. Not average. Minimum = lowest possible.

I don't have to know anything about your area to know that it's not predominantly minimum wage.

Besides, this thread isn't about the standard of living in lower Illinois.

PLEASE PLEASE tell me where these great 40K a year jobs are. PLEASE.

I already gave you a link. Filled with job openings at banks, hospitals, law firms, senior care living facilities, a coal company, a WalGreens, a healthcare provider, equipment mechanic, car sales, etc.

Many are in Marion, only 5 miles from Johnston City. aka Southern Illinois. Down by Carbondale. And they were easy to lookup.

And please don't preach to me the ones that require a bachelors, masters, or teaching (wait thats a laugh, poor teachers. my sister is a teacher and is NOT paid enough) degrees or something that people must first pay for a 2 year college

Oh sorry, if you only wanted jobs that don't require you to do grow or improve yourself or seek advanced education - then yeah, maybe you'll only be left with minimum wage jobs.

But that doesn't mean that's all thats out there, or that we should base our advice on someone earning minimum wage.

or for the four year university

Resident Tuition 1 Credit Hours $328.00 PER CREDIT HOUR!!!! this is insane.

I'm sorry you don't agree with the value of higher education. So your local college is 'too expensive'... there are other schools around.

It takes about 125 hours hours to graduate, so that'd be around $41,000 over 4 years of school. For about $10k year (just for easy math).

So you're saying it's too expensive to pay $10k a year, to qualify for jobs that will make you $50k+/year for the rest of your life, as opposed to minimum wage??

there is another area you are not considering.

So, that is: 1 for mom and dad, or even just mom or just dad. 1 for girl and 1 for boy. equal? 3 bedrooms.

So, to summarize. they are paying approximately 25% of their take home pay in rent.

So what you're saying, after your long angry rant, is that a family of 2 both earing minimum wage can still meet my above recommendation of 25%? Got it.

Thank you for confirming my figure above.

So please before you go around telling people they are wrong at best and lieing at worst you might want to do a little better research. You don't live here. You don't know what it is like here. I know our rents are a little cheaper than other areas but that is because we make less money here. everything is the same or close I'll bet. Milk, $3.19 a gallon (skim) Gas: $3.25 a gallon. etc.

Hold your horn there buddy. At least I know how to look stuff up online.

Like how the median salary in your area is $31k. Johnston City, Illinois (IL 62951) profile (National average is $45k)

Minimum wage is $7.25/hour, for a total of $15,080 a year working 40 hours a week and 52 weeks a year.

So yeah, you're below the national average, but your own city is double the minimum wage.

So check your own info before calling me a liar.
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And you still haven't answered how any of this matters to the OPs discussion.

The discussion was, buy or rent? If buy, FHA or 20%+ down?

So if they can't afford to rent for $600/month, you think it's better to buy?? That was the original discussion.


The 25-28% recommendation is solid. And it's not my own creation. It's been around longer than I have.

From: With-Eyes-Bigger-Than-Their-Wallets-Homebuyers-Are-Forced-to-Revisit-Old-Rules: Personal Finance News from Yahoo! Finance

Several financial advisers recommend reverting to an old standard known as the 28/36 rule. Using that rule, households should spend no more than 28 percent of their gross income on housing costs — including mortgage payments, property taxes and insurance — and less than 36 percent on all debt. The total includes obligations like car payments, student loans, credit cards and medical debt.

[cicy33]

I was going to respond to the whole thread and then decided you would simply argue some more so I will hit a couple of key points and then move on to the actual information.

1. minimum wage here is $8.25 not 7.25.
2. I wish you would realize that not everything you read on the internet is true and is generally outdated. specifically the sites you sent me to were for 2009. we are in 2011.The economy has changed drastically in the past couple years.
3. I do attend college so where you got that I have no idea. I was just showing what the cost of college is for my area. and no there are not other alternatives to that. college is college.
4. my original statement was that it is more like 25% of a two income family cost for rent or house.
5. My town is seriously small, we just got our first and only stop light about 3 years ago. where they get these numbers is actually a little funny.

And you still haven't answered how any of this matters to the OPs discussion.

The discussion was, buy or rent? If buy, FHA or 20%+ down?

that is a credit choice. I have no idea how good their credit is. We bought ours with a contract for deed and then were able to pay it off early.

So if they can't afford to rent for $600/month, you think it's better to buy?? That was the original discussion.

Doesn't matter. whether they rent or buy if they are basing the decision solely on the payment it doesn't matter. rent and mortgage are frequently the same. dependent of course on the cost of the house you buy. my dtr's mortgage payment is 450 a month, to rent she would have to pay more like $600 as she has three bedrooms, garage, etc. so the question to rent or buy should be based more on if moving plans are in the near future and if they want to take on something that they will have to fix themselves. I am personally not against buying a house with no down payment. My reasoning is simple, if you save for a down payment and it takes you 5 years to save $12,000, and you are still spending the same on rent as you would be on the mortgage payment then here is my calculation.

200 a month savings for 60 months: $12,000
Rent @ $550 a month for 60 months: $33,000
Mortgage if purchased $550 @ 60 months: $33,000
but... not saving for 5 years and moving right away (if possible)could either save that $200 a month for something else or pay it extra on the mortgage every month effectively paying off mortgage sooner.
So, you see based solely on the matter of payment it is best to go ahead and buy and forget about saving for a down payment. Either way the $33,000 is spent. At least if they were buying it would have went toward an asset. Btw to all, I am in no way advocating buying, I am just as fine with renting personally. We chose to buy based upon convenience. I think both ways are just fine. they both have their benefits and disadvantages. If one doesn't like to work on their own home and pay taxes, insurance and stuff, then by all means rent.



The 25-28% recommendation is solid. And it's not my own creation. It's been around longer than I have.[/QUOTE]
It may be a good recommendation but it is changeable dependent on the economy and how much people charge for houses. that is a fact.

[jpg7n16]

I was going to respond to the whole thread and then decided you would simply argue some more so I will hit a couple of key points and then move on to the actual information.

Yeah when people say that I'm lying (and misspell it no less) I tend to get pretty hacked off. Especially when they offer no proof of my 'lies.' Only get angry and rant at me.

There was no lie. Minimum < average < maximum. That's how math works.

So when you say the average of {2, 2, 2, 5, 7 and 10} is 2, don't get mad at me for saying that you're wrong - cause you are. And don't call me a liar, cause I'm not.

2. I wish you would realize that not everything you read on the internet is true and is generally outdated. specifically the sites you sent me to were for 2009. we are in 2011.The economy has changed drastically in the past couple years.

Economic data is always lagging behind. Especially census type data. Can you find any more up to date info from a credible source online to prove your side?

2009 info is pretty good info for that topic. It's not like they mail out a census every day.

I'm tired of you insulting me with no backup for your own side. Don't just say 'that info's no good' if it's out there, provide a link or something.

And a local college student's personal opinion of the local economy isn't good enough.

I posted salary data, I even posted job listings in your own area that contradict your statements.

5. My town is seriously small, we just got our first and only stop light about 3 years ago. where they get these numbers is actually a little funny.

You're right. They made it all up just for fun

Doesn't matter. whether they rent or buy if they are basing the decision solely on the payment it doesn't matter. rent and mortgage are frequently the same. ...

200 a month savings for 60 months: $12,000
Rent @ $550 a month for 60 months: $33,000
Mortgage if purchased $550 @ 60 months: $33,000
but... not saving for 5 years and moving right away (if possible)could either save that $200 a month for something else or pay it extra on the mortgage every month effectively paying off mortgage sooner.

You forgot to account for the following:

• closing costs (plus interest if rolled into the loan)
• property taxes
• repairs to property
• upkeep (mowing lawns, watering yard, painting, etc.)
• homeowner's insurance
• any HOA dues
• risk of loss of principal from declining real estate values
• and in your case PMI from lack of 20% downpayment

When you add those back in, the equation is much more in favor of renting.

It may be a good recommendation but it is changeable dependent on the economy and how much people charge for houses. that is a fact.

Yes by all means, if that's just what houses cost, you'll just have to pay whatever they say! No one can ever say 'no that's too much, I'll pass'

You should actually figure out the maximum price you'll pay for a home, and the requirements you need it to have, before you go looking. The max should be less than 3x your yearly salary. (when accounting for 20% down, property taxes and insurance, this results in housing expense of around 28% as discussed in another thread here)

Then if you need a 3 br 2 bth home and can afford $150k ($50k salary) and all homes in the area are selling for $200k+, you can just say 'No thanks.' And don't buy. If enough people stop buying, the prices will eventually come down.

[Radiance]

Steve, going back to the housing rules

T his is the guideline by Steve:
1. 20% down payment
2. 6 month emergency fund
3. payment no more than 28% of monthly income
4. plans to stay in home for at least 5 years

How about this out-of-the box idea:

1. 10% downpayment
2. 1 Month emergency fund
3. Payment 9%-12% including Taxes, Insurance and PMI for a place where I am willing to live at
4. Plans to stay in home for at least 5 years

This is $300 less than renting, money that woul go to accelerate my emergncy fund. It would take me 4 months to collect for 1 month emergency fund
Now, these houses are old(early 70's), no I need a super duper inspector to minimize surprise repairs

Just challenging traditional thinking, that's all, let me hear it