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Old 01-06-2013, 10:22 PM   #31
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Originally Posted by KrisM
Remember there are a lot of other costs with a house - repairs, maintenance, etc. Those are typically not involved in renting at all. You'll buy things like lawn mowers, rakes, mulch, etc. You'll have to save for roof repair, new appliances, etc. I've read a rule of thumb to save about 1-2% of the houses value each year. We budget $300/month. Generally, we don't use it. But, when we needed a new roof 6 years into this house, we were ready.

What percentage of your take-home income with the mortgage, prop taxes, and insurance be?

We have been homeowners before (this apartment is our in between houses living, all our stuff is in storage), and are aware of the upkeep, and while we have all the lawn equipment, there isn't much upkeep on a wooded property.

Luckily, my husband works in maintenance, and can fix or build everything in a house, except electrical. All appliances are practically brand new, and if they break, hubby can most likely fix them.

It's about 40% now, but in less 6 months, that goes down to 36%. Hubby's raises are in writing, so I am comfortable counting the income.

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Old 01-06-2013, 10:31 PM   #32
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Originally Posted by sojomisa
I don't understand the house poor thing either. House poor to me means that after I pay the mortgage that I don't have enough or just enough to pay the rest of the bills. We are not house poor although we do live in a house that is way too small for us. But our kids don't want to move they like their schools, friends, and activities, go figure.

In our situation paying $100 more a month wouldn't make us house poor and we would definitely do it to get our dream home! On thing that sticks out is you're going from a apartment to a home so utilities will be higher than you're paying now. Additionally, I don't know where you are but you mention the fires, my very good friend just moved back home to Colorado Springs and was stunned at the home owners insurance rates due to the fires. She said some companies weren't insuring the wood roofs or were charging a significant amount for the policy that included the roof. She got quotes anywhere from $1200-$3000, I never did find out what she ended up paying as they wouldn't give her a definitive rate until they ran their credit and she wanted to hold off on the pull until underwriting was done.

Good luck!
Thanks for chiming in! I will definitely call and be verifying insurance before we make an offer. We are in colorado, so that is definitely something we will have to check into.
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Old 01-06-2013, 10:54 PM   #33
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Re: Ae you house poor? Do you regret it?

Also make sure you aren't getting an ARM loan. DH and I got lucky that we paid off this farm upon purchase, and will be making over $300,000 when we sell because of the boom in our area. It is not our dream home, despite 7 bedrooms 35 acres massive outbuildings, ponds and such. It's just not what we want, but I picked it for an investment. Get locked in on a loan, and avoid adjustable rates.
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Old 01-06-2013, 11:07 PM   #34
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Re: Ae you house poor? Do you regret it?

We're living in my DH's parent's house that they let us "have" although its not in our name yet :/

It was basically condemned and abandoned when we got it like 5 years ago, having been majorly water damaged from having holes in the roof for many years, that were further worsened by Hurricane Ike. There was a hole above the kitchen and living room, so it rained freely in both of those rooms, and the floor was so rotted only the support beams were still intact(you had to walk on the beams because the plywood/carpet would fall out from under you). The one usable bedroom(Really the front den that we stuck a curtain over the archway to, since it didn't have a door) that we ended up living in had two spots in the ceiling that leaked, so you never knew when you were gonna wake up with water dripping onto your feet. Of the two back bedrooms, one had been left with a collapsed roof for over 5 years, so the floor was completely gone like in the living room, and the other bedroom had a huge gaping hole in the ceiling. There was black mold everywhere, and I'd occasionally wake up to find mushrooms growing in the bathroom, since the floor was pretty bad in there too. Really the only intact parts of the house were the hallway and den, so living in it was a bit like camping. Winter was terrible, with no central heating and no solid walls to keep heat in it. we would hang a comforter up over the doorway to our room(it's an archway, so we couldn't just install a door) and used space heaters to keep warm. There was a huge blue tarp over the roof to help keep the rain out, but it tended to get blown out of place frequently. All in all, it was a nightmare living here those first two years, when we were working off of only what my DH and I could pull in from minimum wage jobs.

Five years later, and we've finally got this place what I would consider "livable" in that all the floors and roofing and ceiling has been replaced and it's actually clean. We still have some work to do on one of the back rooms and the front wall, and we still need to put down actual flooring, since all of the floors are bare plywood except for our bedroom.

It's been difficult, but now that my husband has a good, steady job, things are so much better. This place still isn't pretty, but it's kept clean and is safe enough to raise a family in. We were honestly going to wait before having children, but I only have one ovary and it kept getting big cysts on it, and I was afraid I'd lose it(like the other one, that developed a huge dermatoid tumor/cyst and had to be removed) before I had a chance to have a child. Thankfully, being pregnant seemed to actually even out my hormones or something, so that I don't get the cysts anymore, so we have hope for a second baby at some point.

It's been a long road, but I'm excited to finally be able to put in some nice flooring and repaint all the walls. Most of them are still a dingy grey or just plywood panels with no drywall on the newer ones. We've managed all of it with only doing work ourselves and not incurring any debt, so right now, the only debt we have at all is some medical bills and a bill for some classes I took but were unable to finish due to lack of funds(Long story short, my family kept telling me to take an online college course and said they'd pay for it. I took it, but then none of them were willing to pay when the first payment was due, so I couldn't continue the courses.)

Sorry if I went off on a tangent, and prolly a bit off topic, lol. But it does go to show how hard work pays off eventually, whether you buy a house and work on paying the loan off, or start with practically nothing and build it yourself.
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Old 01-06-2013, 11:57 PM   #35
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We bought this house,and then not even a year later my dh ripped his hamstring and had to take off of work. He got hurt at home so there was no workman's comp. Shortly after, he was fired because he had to keep taking off for therapy. Since he was fired, he did not receive unemployment. We lived off of me waiting tables and our credit cards.
He finally was able to go back to work, but for less money, having to travel for months at a time, and less work available( work is NOT steady).
We were not able to pay back the credit cards with his new income, credit scores went down, mortgage payment and insurance went up because of lower credit scores.
We are now having to borrow money to keep from losing a house we originally thought we would have NO problems paying for.

Long story short, there are no guarantees. If you are not SURE you can afford you can pay for it now with out the extra bonuses, I would not do it.

Plus don't forget, your utilities will be higher, you will have property taxes, home repair, preventative care( Way more than I ever imagined), lawn care, etc.
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Old 01-07-2013, 12:06 AM   #36
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Re: Ae you house poor? Do you regret it?

I think my idea of "house poor" is different then others here. I *believe* we are considered house poor in the actual intention of the phrase - those who have a decent income but whose mortgage takes up a higher percentage of their income then normal thus making them "poor" since they don't have a lot of extra money above housing costs BUT in another cheaper house they wouldn't actually be poor. (ETA - WOW - run on sentence- lol )

Our mortgage is about 50% of DH's monthly take-home pay. That percentage does NOT include taxes, utilities, maintenance, or insurance. JUST the mortgage alone. DH makes a decent income, I'm a SAHM. We don't regret being house poor. Yes sometimes it would be nice to have money for fancy vacations, we camp in our trailer instead. Sometimes it would be nice to have a newer car, ours is 10. BUT we made a choice to forgo all those other things when we bought the dream home - we knew there would be sacrifices in being able to have this lifestyle. We have an acerage hobby farm in one of the most expensive areas in our country, on a mountain with panoramic windows and a forest with a natural clean creek for water. We are a little further out from the city in order for us to have been able to afford to own a farm here but it is a great place for our kids to grow up and well worth the lack of spending money to live in clean air and space.

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Old 01-07-2013, 05:37 AM   #37
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Re: Ae you house poor? Do you regret it?

We're not house poor now, but we will be when we move to San Diego. We're going to maximize every penny the mortgage company will give us. I'm not sure how much that is, but even so, I worry it will not be enough. The housing prices there are very high, but with the market crash and the lower interest rates, we'll be able to buy a nice home. The question is, where, and if we can get one big enough to raise 4 teenagers in.

We made this decision for a few reasons. One of them is the high housing prices. We're talking a million dollars for a decent suburban home with a 30 min commute and no yard. Another is that we're going to be in this house for at least 10 years, probably more. We've always been good with our bills and have zero debt aside from mortgages. In addition dh's job is as secure as it gets, since he owes the military 10 or 11 more years. And even if they do kick him out, civilian neonatologists make more than the military ones. There are always jobs in health care. Heck, he could even go back to being a Pediatrician again since he is, and always will be, a board certified Pediatrician. The last reason, is that with combined pay raises and promotions coming up, dh will be making 2,000 a month more after we buy the house within 2 years of closing. From now it will be pay raises of about 3500 a month (higher housing allowance, and he gets a whopping 3k a year extra for finishing fellowship). Just like you, the tight finances are going to be temporary.

We've gotten to the point that if something happened to dh that I could not possibly sustain our lifestyle, so we make that up in insurance. Once we move and get the mortgage settled I'm going to add to his life insurance, get him disability insurance, and make sure that our homeowners includes a death benefit, so they forgive the mortgage if he dies. Some of them will forgive the mortgage if the spouse becomes permanently disabled, too. But those types of things can happen to anyone, no matter what their mortgage to income ratio is.

If its your dream home, and it's only 100 bucks more, why hesitate? Congrats!
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Old 01-07-2013, 05:57 AM   #38
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Re: Ae you house poor? Do you regret it?

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Originally Posted by TeachinAuntie View Post
We're "house poor" but not in the way you describe.

We bought a house we could "afford" but we overpaid. We are upside down in our mortgage now that the market crashed (we've been here almost 7 years) and we will never be able to get out of our "starter house" that we have now outgrown as a family.

Technically the appraisal is only about $35K under what we paid/owe but the actual neighborhood comps are more like $70-80K under. And we have a balloon payment coming due in 8 years that there is just no way we can save enough for.

We DO have other debt (thanks to life happening) and so we live on a very strict budget to be able to pay our bills, even though DH makes "good money" and from the outside looking in we "shouldn't be poor."

If we knew then what we know now, NO, we wouldn't have bought a house at that point in time....of course buying a house was step 1 to starting a family for us & if we hadn't bought then who knows when we would have!
This is us also. We can AFFORD the mortgage... which is nice. But we are literally $100k upside down and don't have the massive, massive DP that would be required on a new place (thanks to being underwater). We are delaying TTC #2 simply bc we don't know where they would go
It sounds like the financials on a monthly basis could work out - just make sure that you have a big enough "life happens" fund to cover emergency repairs that the landlord would do for you now... ie new roof, new hot water heater, new stove, all the takout you eat while waiting for new stove...

The biggest piece of advice I can give you is make sure you have a long term plan for being in the house. If the house won't work for you in 5 years, or you're not sure about staying in the area, or the schools, or whatever... don't do it. We got suckered into the whole "Oh, buy now with 0 down and you can refi in 3 years and have $100k equity and move and become a kagillionaire." Luckily I stuck to my guns so we didn't "stretch" too much but we definitely banked on having enough equity to move in 3 years (that would have been 4 years ago, lol). My new mantra: Assume you're staying put for 10 years, at least.
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Old 01-07-2013, 06:42 AM   #39
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A little. We bought the house that would work for us forever in the best school district in the area. The payments are a little high for us now, but it's doable. We knew what we were doing and I love this house.
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Old 01-07-2013, 07:02 AM   #40
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Re: Ae you house poor? Do you regret it?

another piece advise is if they offer life insurance on your mortgage. meaning if you or DH pass away it would pay the loan in full (it usually has to be accidental death) then take it. Its usually UNDER $10 a month and welll worth it. The phone calls I have to handle at work for loved one who pass away and the wife/husband can't afford the mortgage are horrible.
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