Prices of Houses

How did you figure out how much house you could afford.

I made a list of our monthly expenses (cell phone, student loans, car insurance are the only things that are def. every month) and I know how much we bring in per month but then I'm lost. I can't seem to figure out how to estimate bills once we're in the home (water, gas, electric, insurance, food shopping etc).

I'm so lost and confused lol.

Re: Prices of Houses

The bank told us what we could afford.

If you mean the price of the house itself, I've been told that about 3-4 times your income is what you can afford, and that rang true in what we were approved for.

Re: Prices of Houses

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Posted by JAAMS

The bank told us what we could afford.

If you mean the price of the house itself, I've been told that about 3-4 times your income is what you can afford, and that rang true in what we were approved for.

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The bank told us too...but then again we were approved for alot more than what we could afford!!

As far as figuring everything out: We did the same thing- figured out monthly expenses and how much income we had left AFTER those expenses. Then we would figure out what monthly payments were reasonable for us and TAXES!! Taxes were probably the number one factor in our decision. For example- we were able to afford a 425k house because the taxes were only 5k. However, if the taxes were 10k (which is much more of the norm on LI)- we were looking low-mid 300's.

Re: Prices of Houses

We figured out how much we wanted to save a month, what our regular expenses were pre-mortgage/maintenance payments, and then also in the case if one of us lost a job, made sure that we could still be okay with just one of us working. We were approved for more also, but ended up spending much less so that we would be comfortable and not have a burden on our heads.

Re: Prices of Houses

For us it was fairly easy, since we already were paying rent, we knew exactly what we had left over every month. The bank told us up to what amount we could mortgage (way more then I felt comfortable with lol). If your utilities are included now, then trying to figure that stuff out could be a little difficult since many factors affect your bill. A house with gas is great because its so much cheaper then oil. My house is gas and we pay about $700-$800 a year, I have friends who pay that for one oil fill up. Electric varies, summer is more since your running the AC. Water is cheap.

Re: Prices of Houses

Taxes, PMI (if you put down less than 20%) and mortgage int. rate will impact how much house you can afford the most.

Here's just a quick breakdown:
HO Ins (added into mortgage pmt) = $990/yr
Taxes (added into mortgage pmt) = $7,400/yr
PMI (added into mortgage pmt) = $225/mo

Our mortgage payment is approx $2,500/mo including all of the above.

On top of that our monthly expenses are approx:
LIPA = $150/mo
FIOS = $100/mo
Oil = fluctuates, but on average $200/mo
Water = $30/qtr
Food Shopping = $100/week

Hope that helps!

Re: Prices of Houses

I would say a safe range is to have your mortgage/taxes/homeowners fall into the 25% range of your take home.

The bank at times will approve people for a lot more than they should spend. We were approved for close to $1m and a mortgage that big would have been insane. We would have been eating Ramen noodles every night.