It is so hard to make that 30% rule for the mortgage. Most of my life I was paying 40-45% of my take home pay on rent. I finally bought a house back in April of 2021 and got a 2.6% rate. I thought for sure that I was going to finally make that 30% threshold but alas I came in at 32.5% of my take home pay going to the mortgage. With todays rate and elevated home prices, I feel sorry for the people looking to buy their first home right now.
The 30% rule has actually been adjusted to be closer to 35% by many financial professionals, as a lot consider noting everything housing as a part of that 1/3. I agree having a goal of 30% is still what we want, but it's just not realistic anymore. The fact I'm at 36% all in (maintenance, insurance, tax, mortgage), is a win, especially in Canada. But that 30%... Nearly impossible. You're doing pretty good if you're near 35%. Again, that is all in. But it is rough out there, fam.
i bought my house before the housing price surge in 2020 here in GA. i bought it for $240,000 brand new, 3000 sq ft, 3bd 3ba. the APR then was very low so i got it for 2.7% apr. I am also 100% disabled vet so my property is exempt. so my current mortgage is only $950 a month which is very affordable. my suggestion is keep saving your money, at some point housing market will go back down, and buy a house when that time comes.
The price of homes will not go back down. Wages are increasing at 5% per year. Home prices will increase at 3% per year. Interest rates will come down and affordability will slowly improve.
I have a feeling rates will skyrocket and prices will drop by 40% by next year and all theses people buying 250k houses for $450k will be badly screwed.
No one can afford $436k house .I bought my house at $76k with FHA mortgage I qualified for a loan of 175k but knew I couldn’t afford the payment so I found cheapest house that was livable and fixed it up .
Well I'm screwed. I make between 50 and 60K a year in Massachusetts. Homeownership is not in my future. And with the way rent cost is going I'm not even sure about that. I wonder what will happen to the market when it gets to the point almost no one can afford a home. Certainly 6 figure salaries are not the norm for most people.
This is insane. I make really good money and would not pay that much for my monthly nut lol. I know you are just using broad strokes but I live in Vegas and it’s much higher across the board. People really do get up to their eyeballs in debt pretty easily. Appreciate this video!!
The current housing market has gone wayyyy higher for almost most people. I was luck to buy in San Francisco Bay Area on my single income over 20 yrs ago. Yes, I put 20% down myself, but housing was still good, but was never easy!!
Very realistic numbers! If you live in New Jersey, with 436K you can get a townhome with a $350 HOA fee and property tax of $10000/year in a decent area, but adding that you will probably need to make $200k to be able to purchase a house comfortably. The scariest thing is, you are worried about if you don't buy it now, you will never be able to buy it with the home price raise.
Utility at 250 that is very unrealistic. Electricity alone is $200 to $205 especially during the summer and if you have a washer and dryer and a family of 4 or 5 water is easily going to be 100+ per month and with high speed internet like fiber optics you going to pay 100 with tax. Please don’t get me started on the average car note. Please lady tell me where I can get a car for $400 with high interest rates and car marks up.
Depends on what county. A person can find affordable places in Central NJ. I can find some affordable single family in Northern passaic and Sussex County as a whole, but it is out of the way.
If the added context helps anyone, my house was almost exactly this price in Washington State near Portland, OR when I bought last year. My total monthly payment is $600 lower than this video 4:49 , mostly due to one key metric: The interest rate being at 6.375% instead of 7.18%. If you worked hard and are fortunate enough to pay the 20% down to never pay PMI, I consider it worth it. The more equity you put in, the less interest is charged to you. When people say renters are the ones “throwing away money” every month, interest given to the banks that trade your mortgage is the house equivalent in my mind, but I understand times are incredibly difficult for homebuyers as I went through it last year.
My husband and I make 120k combine but there is no way that we're paying that much. We are renting 800 a month, we're not buying a house until it cools down lol. Patience is the key guys! Good luck on your finances.
800 a month!!! Amazing! Keep saving your money for that house. Not sure if it will cool down much. Experts predict rates should go down in 2025 so you may have to wait until then.
Nice paying 800 a month. What area is this? But agree with Jackie I don't know how much lower it's going to cool. Hopefully you'll get in one in the future.
$800 a month can't even get you a room in Florida, let alone a 1 bedroom apartment. Assuming, you split the bills with your husband and don't make him pay 100% of the bills you guys can save alot of money from now until 2025 if you have no other major debt.
@@deadcell1 we pay 50/50 on everything.. No car debt.. we both drive old car, he drives Honda Element while I drive Subaru from my in-laws.. Saving money is hard but it takes dedication.. We even stay in our apartment on our day off lol
Really good video. I always wonder how people afford two really nice, expensive car payments plus the insuranceon them. Usually $400-$1000 per month payment on each one. And car washes??? These cars are always shiny and clean. Anyway, we are in our 70s and these house prices are shocking and potentially financially crippling for today's young home buyers. We have always budgeted. Of course, wages are higher than when we started out, but we wouldn't have been able to afford these payments. Our first house cost $28,000, our second cost about $35,000. This was in the later 1970s. We built our current house for $220,000 20 years ago. Thank goodness it's paid off or we would be in serious trouble.
Great video. I like it because it's catered to live comfortably still, which is what you want to do when you own a home. Unfortunately most people bite off more than they can chew but that's what makes them "house poor" like you said.
Just wanted to make a comment for any younger people who work in tech or can work remotely. Homes across a wide swath of the US, in the Midwest, are so much less expensive, than living on either coast. Now, I have thought about my husband and I retiring to a small midwestern town, but he needs to be around major health care facilities because of his heart. Sure, it may be less exciting, but the homes are cheap and abundant.
What an eye opening video on home ownership. Out of all the videos I've seen on this topic You're the only one that goes this deep into the real cost of comfortably owning a home. You got a new subscriber !!! Thank you !!!
In regards to the PMI insurance, it does not take 15 years. My husband and I had our home for 1 1/2 at the time and was able to have it removed. We had our home re-appraised & the house had appreciated. Forward information to the mortgage company & it was removed.
I became house poor after my house went from 399k to 749K in 4 years. The taxes, utilities, etc crept up with the higher assessed value and of course, inflation. I just sold and have never felt better! No debt!
This video has some of the best info, thank you. I run the numbers all the time and you hit all the biggies. I think your budget you outlined is incredibly accurate. Only thing I didn't see was Medical, since insurance which is a huge hit on its own, only covers a certain amount. The funny thing is in my area Raleigh Durham, 435k is a basic house, nothing special. So you look at that monthly payment and think ...FOR THAT........
Nearly made a huge financial mistake two years ago at the height of the sellers market of 2022 in Florida. My rental was sold out from under me and I had three months to find a comparable unit. Thought buying a condo would be the answer. Oh no! The first place had major repair issues that were not immediately apparent to an untrained eye. Even the inspector didn't pick it all up. The property was dumped on the market at a higher price than it was worth. I withdrew from the contract when the seller realized I was on to him. He had to take the property off the market to fix the problems. The next place was more than 250,00 for a 2/2 condo and I found myself in a bidding war. After more research, I realized there were noise issues and a less than savory surrounding neighborhood. This would have been a huge mistake as the property was more than 30 years old. Thankfully I found another rental at the very last minute. Please do your homework. One of the units had unlicensed contractors doing the tile as well as sn uninspected HVAC unit installed.
@@ladyd4098In Florida HVAC work is performed under a State license. There are also inspection requirements for certain building trades at the local level. Tile work in Palm Beach County requires a specialty license issued by them. Some specialty licenses are reciprocal from Florida county to county, others are not.In my case, no inspection was performed after the ac installation and the tile specialty license was not valid for my county. The tile work was shoddy and had gaps, big mold problem in Florida.
The issue is the overwhelming majority of people don’t budget. Just before the 2008 housing crash I remember trying to find a $300,000 house, none to be found. My wife asked ‘how are other people affording houses’? I said I don’t know. Well we found out the answer…people were not affording houses. The collective WE caused this. Believe it or not most people make approximately the same amount of money. If WE bid on houses according to a reasonable budget ……houses would be reasonably priced. Enough people don’t, which drives up house prices. If everyone bid based on a reasonable budget, eventually house prices will decrease.
This a great vidceo. I congratulate you for adding taxes to the calculations. I see a lot of budgeting videos and they completely discount taxes as an expense. Which is silly because it tends to be the largest single expense.
For my PMI I got rid of mine after 8 years by refinancing. The increased value of my home allowed me to get rid of it. If interest rates continue to climb this probably won’t help anyone in the future. I was able to go from a 3.875% to 3.125%
I look around my area and see all these mcmansions that are occupied. Most of these people used 2 incomes, the husband and wifes, in order to qualify. They have on average 2 car payments. If 1 looses their job they are sunk. I own a 850 square ft 2 bedroom house that I paid cash for. It is the rigjt fit for me as I am single and live with my cat.
Some people actually get offended by that question. It all depends on the financial situation of each and every individual. Not everyone is among the majority of people and some people are among the 1%. I invest in rental properties. I noticed that real-estate costs in New Jersey is much more expensive than real-estate costs in Texas. In Texas, you can get a $440k house with a square footage of 3,000 or more depending on where you live in Texas. Austin is more expensive than most of Texas.
You'd better make that $172k a year and never lose your job or otherwise lose that income. For 30 years. Nose to the grindstone, boy! Until you're old and grey.
Excellent video , this is really good. thank u very much for this video. i will continue to live in apartment until i put 20 to 50% down before i buy a home.
Thank you, Jackie, and no, I'm not cursing you out. We thought $436,000 house would be affordable. We're going to take your advice. We moved out of NY to Texas. We'll wait to buy a house. We may move again.
This budget assumes you don’t have to pay/won’t have to pay for childcare or some other larger monthly payment (I know it is just a rough estimate to look at numbers). When we bought, we ignored the % of income rule and, based on our monthly budget, calculated what monthly payment we could afford and worked backwards from there. Our mortgage lender took every opportunity to remind us that we qualified for more and could look at pricier properties, it was annoying.
😂 most ppl can only afford to buy a cardboard box anymore w these prices skyrocketing and wages staying like they were in 2007. These high intrests rate def arent helping 1st time home buyers either. We are doomed, Im only making roughly 48k a yr. Need to become a brain surgeon 😅
Toll payment is getting expensive and I think you should facture-in that also. Great job/vids Jackie. I didn't want to click on your vid anyway but I'm sorry and appreciate your dedication and honesty ..... Thanks again. * I noticed home own with ARM is getting hit ....
Thank you for the video! The reality is that there are going to be at least 2 cars. So, twice the payment and twice the insurance along with perhaps 1.5 times the cost for gas assuming one car gets used more than the other. Plus those pesky car maintenance costs. Oh, wait! What about child care?! And pets too.
@@amazinglats6020 VA Loans are a double-edged sword (if you will): Yes, you put no money down, but that means you have ZERO equity in your house right up front. Also, since you're financing the WHOLE amount the house costs, your mortgage pay't is WAY more than it'd be normally (with a non-VA loan)...much like putting no money down on a car and financing the whole amount. So, it seems best -- even with a VA loan -- to go ahead and put something down ANYWAY if you possibly can. -- BR
Georgia has some amazing deals for new homes. Got a brand new house, 5 beds, 3 baths, smart home under 400k with a 3.99% fixed interest rate. Don't know why all areas aren't doing this
@GTOberfest ... all banks that are working with the builders. It's complicated. The new house you're interested in, they give you a large lump sum of money for buying. Example, the house I chose, I was given 30k for picking the house and signing for it. You start off at your normal interest rate, and they give you that lump sum of money to buy the rate down. I was given 30k, I use 15k of that to buy the rate down to 3.99%, and I'm pocketing the rest. The inventory here is great, so it wasn't hard for me to find, all I had to do was look for the best place that is offering more money.
In some states yes. In states like New Jersey, New York, Connecticut, no way. I said in the video I took an average for the entire country. So when doing this calculation, you have to use the taxes in your area.
At the the rates were formally had, 2%-3%, than yes, many Americans could have afforded a $400k house. With interest rates around 7%-8%, most people cannot afford that, as it makes the payment a lot higher. I bought a house for $510k in 2021, with 0% down, and the mortgage payment is around $1900k per month. With property taxes being about $6200 per year and homes owners insurance being around $1800 per year, that adds about $600-$700 to the payment per month, but that’s not really the mortgage.
Your income will determine the amount of the loan by the lender. And your realtor will only show you houses that you can reasonably afford with that loan amount. That's usually how it works.
Try living in San Francisco!! average home 1.3-1.8 million! Don't believe me? Zillow it!! I live in Sonoma county myself, average here is 850k! Yes, I owned my home for over 24 years on my single income!
In houston we have some property taxes varying between 2.5 to 3.6% can you do a video with that in mind or giving examples for areas with high property taxes and Hoa’s
That’s something a lot of people don’t consider so it’s a good point. It’s even worse in Upstate NY with property taxes at 4%+ with second highest income taxes on top of high sales taxes and very high property values. Not sure how things get better
@@watchin-stoof988I didn't know it was that bad in upstate NY but it's so crazy that your mortgage payment can be less than your property tax payment if you have a big down payment on a 500k house with 4% tax you're looking at almost 1700 dollars a month just in property taxes assuming no exemptions
@@joeb582 that’s exactly right haha - my parents who have owned their home for over 20 years pay more in property taxes than their mortgage. Sadly, due to recent price hikes for properties all around, once they finish paying their home, their property taxes will be raising to reflect the rise in their home price so once they retire in a few years they’ll have a higher property tax in retirement then they ever had to pay for the home when they bought it when they had both mortgage payment and property tax!! Absolute insanity - you basically don’t own property in reality. Stop paying taxes and you lose your home even if it’s 100% paid off
@@watchin-stoof988 This is the real tragedy so many older people or people with fixed incomes who are stuck even after they have payed off their homes it's pretty crazy that the prices are sustaining this level no-one knows the future but it's crazy if they stay at this level
So basically kids, be sure to marry someone who cannot only split that cost with you - but will be able to hold on to their jobs. No kids for you…. They get more expensive as they get older… and as YOU get older, you become less valuable on the job.
600 dollars for food, and on top of that another budget item for eating out?? NOPE. I spend 3 to 350 a month on food and do not eat out AT ALL. It can be done. Another thing you missed was HOA fees. Where I live there is no way to buy a home without an HOA unless you want to live in a dump or way way out in the boonies.
I didn't include HOA for this one. As I said in the video, everyone needs to speak with their own lender to discuss their own needs and financial situations.
This is exactly what our government refuses to take into consideration. The average person could never hope to pull this off. Hell over, over Achievers are having issues doing this! I live in a Shabby Chic Shack knob-and-tube, and probably some Led paint. 55,000. Trying to save us some money to fix the s***😅
That’s exactly what they are considering. They want the corporations which all fall under Black Rock to keep buying up all the single family homes and rent them back. That is the global plan for governments. They do not want any property ownership for complete population control.
@@pmkz7970 this is why people hate Californians...they always need to let the world know their wages are much higher than the rest of the country and in no way reflect whats average or normal...we get it, yall earn a lot more and pay a lot more
Not if we know that it’s only worth 200,000 to work all your life paying for a 400 close to $500,000 home and it’s only worth $200.000 .And the percentage and insurance and taxes is going up cutting back on hours of jobs. Inflation Nope👀
@JackieBaker Unless you live in NJ where property taxes are 6 grand a year if you are LUCKY. Otherwise you’re paying on average 10 to 12 grand a year today. And they go up on average $300 a year or $1000 every 3 years. How long do you think property taxes will increase in that manner before the state implodes or sees a mass exodus?
If I purchase a home for 900k, will my property taxes get reassessed where I'll be looking at around $18k in property taxes. Figure 2% of purchase price?
Depends on the town/municipality. Some towns are reassessing now since values have gone up so much the past few years. I advise everyone to check with the town tax assessor in the town you’re thinking of buying and find out.
That 175k don't have to be by yourself. You can make 100k and your partner makes 75k. At that point, you will be living lavishly for an American. You can make it with 130k. 70k for you. 70k for partner. Huge debt is the problem. Once you get rid of them, the rest is just downhill
Depends on the premium on buying the home vs. rent, it makes no sense to buy a place when landlords are literally renting out their properties for near what they pay in property tax, you can take the money and invest it in something else instead.
@@dmitryg6353 The market rate townhomes near me are starting at $850k. The low-income townhomes 15 miles away are starting at $550k and most immediately become rentals. There was a 25 year old 1 bed/bath condo conversion (in a building that has had nothing but complaints about the quality from day one as apartments) on the market for several hours a couple weeks ago for $225k so I guess that's something. In all seriousness though, in a lot of areas a median income hasn't paid for median price homes for several years and often doesn't even cover what used to be starter homes be it SFHs, townhomes, condos or a shed that passes inspection for occupancy with a wink and a nod.
Most people can’t afford anymore a home what about the the ones who bought over 20 years ago this is high way robbery and if it’s specials that’s just as long this is so sad
My husband and I always thought that we could afford whatever the bank determined to lend us The banks were the financial experts, right? right? - NO) WRONG! Thus we were house poor and the stressors badly affected my husband's reviews at his job.
Great depression is coming by spring. All mortgages and job losses and student loans and credit cards will bring world's economy to halt. Going to be like 1933. Good luck
