| Author | Message | ||
     Wolfridgerider |
I was just watching the CBS evening news..... They did a clip on a woman that lost her home.... OK... I kinda feel bad for her. THEN, they say she lost her job and the household income plummeted from $50,000 a year to $15,000 a year. WTF!? did they just say... rewind.. I did hear a putty cat! Her and her husband bought a $320,000 dollar home on a combined income of $50,000 I'm no mathmatizer, but REALLY!? REALLY!!? They thought the could afford a $320,000 home on $50,000 a year... REALLY!? | ||
| Froggy |
That doesn't sound unreasonable. Quickly punching the numbers in at http://www.mortgagecalculator.org/ shows that a $320k loan with 5% interest paid over 30 years would run a little over $2k a month. $24k a year puts it at a little under half their annual income. I don't know where this is so I can't factor in cost of living and other things accurately, but it seems doable if you aren't blowing the other $26k on booze and hookers. | ||
| Wolfridgerider |
That doesn't sound unreasonable REALLY!? | ||
| Badlionsfan |
No way I'd ever wanna do it. We bought a foreclosed house for 39, did 20 in renovations for a total mortgage of 59k. Our household income is around $100k, house payment is $550 with ins and tax. We'd survive one of us losing our jobs until another job was found. That's the way it should be IMO. | ||
| Reepicheep |
LOL. $50k income, $320k house, what could possibly go wrong? :0 | ||
| J2blue |
Oh, it is very unreasonable. Part of the mortgage fiasco was because they moved from a general rule of 1/3 the income per monthly mortgage payment to 1/2! For two adults to live on $26,000.00/year is very impractical, if not impossible. They both probably consume $2K/year on gas to commute to the jobs they once had. No room in that budget to save for retirement, either. It probably cost around $1,000.00 per month to heat, cool, and light the house, if it was over 2,500 square feet. Health insurance, car insurance, and other miscellaneous items would chew through a lot more. And, my guess is they had at least two car payments of probably $400/month. No, they had no business in a house that expensive, without charging rent to a family of illegals! (Message edited by j2blue on January 31, 2012) | ||
| Buellkowski |
I've heard that lenders prefer a maximum 35% payment/income ratio. Perhaps their income was higher when they bought the place? Or perhaps they simply were unreasonable borrowers who signed up with an unreasonable lender. No shortage of those stories recently. | ||
| Satori |
Smells of predatory lending, that Sh** really pisses me off being in the business. While a 45%-50% Debt to income ratio is certainly not unheard of, that would be the "back end" ratio, ie with all dbts included, not just housing. I would suspect they had a adjustable, and were qualified with the starting payment, not the max payment. These folks should have been in a 150k house or less. | ||
| Paint_shaker |
I don't necessarily blame the people, I blame the mortgage lender who should have KNOWN better... | ||
| Strokizator |
They probably got a "teaser" rate that was really low and affordable. Sure in a few years that rate would go up and the payment would be ridiculous but by then the house would be worth $500k and they could sell for a profit. Except that it didn't and they couldn't. Now the house is worth $160K and they owe $300K. Time to blame the greedy banks who gave them the loan. | ||
| Aesquire |
Blame the greedy bank. Blame the politicians that set the rules that way.... for the poor. Blame "Flip this House". Blame the idiots who bought a house that cost more than they could afford. Pick one? That's dumb. Pick all. FYI I Bought house for 2-2.5 times yearly income. Never plan to pay it off... or will pay it off early.. One or the other. Depends on market and tax laws. | ||
| Stirz007 |
And that's if you figure $50K TAKE HOME income. Prolly more like $35K. | ||
| Ft_bstrd |
Smells of predatory lending, I hate it when those bastards hold a gun to your head and make you sign. I've never accidentally gone into debt. Do you ask the guy selling the Big Macs if you really should eat them? | ||
| Ulywife |
M2nc and I watch the same report and had the same reaction...who thinks they can afford a $320,000 house on $50k a year? The fault lies with the lenders as well. They knew when they made that loan that it was more than these folks could afford for any length of time. As my Granddaddy used to say..."your take home pay is what you have after you pay your bills". These folks probably had no take home money after their mortgage payment. | ||
| Kenm123t |
Its called Community Reinvestment Act banks had nothing to go on but a credit score. They wre forced to make those Loans NCNB was Sued amd lost over alledged Red Lining when all they did was require standard loan terms Board members were sued by DOJ and lost 11 million judgement agains the Board for doing what the Feds and standard mortgage standards required. | ||
| Xl1200r |
Not unreasonable? Without disclosing figures, I make considerably more than $50k/yr and bought my house for roughly half what these folks did. Yeah, I have a couple bikes and a nice car, but I'm just barely getting by as it is. If my house were $320k on my income, I'd have to sell all the bikes and buy a cheap cheap car. And that $2,000k doesn't even include property taxes. Where I am, you can tack another 50% onto your mortgage payment or MORE for f***ing taxes. I'm about to go into a truly positive cash flow and it's taken selling a bike, getting a roommate (thankfully she sleeps in the same bed as me, lol) and putting all of the proceeds along with my bonus towards eliminating $350 a month in debt payments. At my income, I was approved for a $200k home. There was no way on EARTH I was going to buy something that much. And this was at the bottom of the market when borrowing was supposed to be tough. I feel bad that someone lost their job. Given this example, I don't feel bad they lost their home. | ||
| Court |
>>>>LOL. $50k income, $320k house, what could possibly go wrong? :0 Welcome to "Hope and Change" and the folks who told your banks what they would do to them if they did anything stupid like asking for income verification or requiring income that would support the payment, | ||
| Rah7777777 |
I think the only one to blame are the people who signed to buy the house. But too many idiots out there can't do simple math or budget the bills and think it'll all work out in the end. It's there own damn fualt. | ||
| Ratbuell |
318k in MD at 4.00 fixed for 30 is 1974.18 a month, PITI. If you subscribe to the 1/2 math, it's fine. If you're smart enough to stick to the 1/3 math...you'd know to get a cheaper house. Especially if you have other payments like automobiles or motorcycles. But its no different than HD financing motorcycles at 24.99%. 24.99%. *Here's yer sign*. Perhaps NOW is not the best time for you to purchase a $25,000 toy, Mr. Customer. But nooooo....they just write the loan so they can log another sale, knowing full well they will likely own the motorcycle again soon. | ||
| Blake |
Add the taxes and insurance please. That could easily add another $500/mo to the pmt. $2.5k Now add utilities, $3k per mo Add groceries and restaurant. $4k CableTV, internet, and cell phones. Clothes, cleaners, gasoline, misc... Student loans? Retirement Savings? Emergencies? Oops. The mortgage ought to never be more than thrice total household income. | ||
| Blake |
Add vacation, toys, and tools to the above. | ||
| Cityxslicker |
"Perhaps NOW is not the best time for you to purchase a $25,000 toy, Mr. Customer. " exactly why I had to leave the motorcycle dealership - customers were not getting financed - even through Eaglemark Went from a firehouse in 2003 to a drippy faucet in 2009 | ||
| Firemanjim |
Firehouse???  | ||
| Satori |
Blakes Probably not far off. 350k, at 30 yrs, 4% fixed 1671 PI 438 Tax - Guestimate 1.5% of value /12 146 Mortgage insurance ( assuming a FHA Mortgage) fair guess given their income also this is if they bought before the fall of 09, if it was after that would be 335 mo. Hazard ins 65 mo. 2320 a month Housing DTI = 55.7% = not a good idea. Current FHA Guidelines are 29% Housing DTI Thats why I'm calling Predatory lending. But no one made them sign either. | ||
| Boltrider |
What these buyers need are some qualities that money cannot buy. | ||
| Slaughter |
What the buyers need is common sense and LEGITIMATE Home Economics. "Home Ec" should be REQUIRED in elementary school as an introduction - and then REQUIRED as a condition to graduate High School. I'm tired of idiots. People should never be unleashed on society without a most basic understanding on how THEIR PERSONAL economy works. (Message edited by slaughter on February 01, 2012) | ||
| Ratbuell |
re-read my post, please. P - principal I - interest T - taxes I - insurance the only thing not added in that number is utilities. my electric? $94 a month. Well water. Sewer is nominal, pennies. cityx - we had the opposite issue. HDFS was writing everybody, common sense or no. Half our used inventory was repos. | ||
| Gentleman_jon |
Back in the dear old days, when home buyers and their bankers could still remember the Great Depression, the income to mortage ratio was a strict 25%. Still a pretty good idea, if you ask me, especially in the times we are living in. | ||
| Thumper74 |
We've covered this before...personal responsibility. In no way can $50,000 income cover a mortgage on $320,000 of house. After taxes, $50,000 isn't $2,500 a month, so anything above and beyond the mortgage had them in the red. We bought our house planning for unemployment or death. Either one of us could afford our house should the other not be around for whatever reason. (Message edited by Thumper74 on February 01, 2012) | ||
| Notpurples2 |
When I bought my house I only paid about double my annual take home pay for it, which was way less than what I was approved for. This greatly helped my piece of mind later when I got laid-off and was unemployed for a few months. I had seen the writing on the wall with massive layoffs at work and talk of selling the shipyard (which eventually happened). Since I wasn't spending more than half my income each month on bills, I was able to save back a bit of money. When I finally got a new job I still had as much money in the checking account as I had the previous year when I first started saving. I filed for unemployment since I had no idea how long it would take to get a job but in the end it wasn't really needed. Too many people bought into the idea of home ownership for profit. They all thought that if things got hard they could just sell the house and if not make a profit, at least come out even. I bought my home hoping one day to do the same, however, I put enough down and bought low enough that if I had to walk away today I could sell for what I owe. It would suck to loose every bit of equity I've put into it but it would sell quickly even it a sour market. |
