tag:blogger.com,1999:blog-15223784.post7705350414487480614..comments2023-10-08T06:24:07.089-07:00Comments on Seattle Bubble: Let's talk Financing: Gross Income outdated?The Timhttp://www.blogger.com/profile/14832570891451659976noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-15223784.post-3692929177660484462007-02-21T12:58:00.000-08:002007-02-21T12:58:00.000-08:00Yes, it could be a problem for Bob (or whatever hi...Yes, it could be a problem for Bob (or whatever his name was, btw, property taxes on a $460k house wouldn't be $5k a year, and the interest deduction on having a mortgage that large would make his net income probably at least $8k a month), but instead of changing the way that people qualify for a mortgage, why not change the way they spend?<BR/><BR/>I bought at $540,000 house and don't make anywhere near $9,900 a month. But you know what, I didn't get an ARM either. If you are smart about spending, you can get a fixed rate, get the house you want, and still have money left. I have cable, high-speed, an appetite for skiing, an Acura RL (which I bought three years old and saved $30,000), automatic investments into an IRA, and do it all for less than $8,000 a month. <BR/><BR/>It is all about priorities. Know how much that latte costs a year? That bottle of wine at a meal out? Or all the other places where money disappears...Matt van Winklehttps://www.blogger.com/profile/10782479152971259609noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-35863544426654846742007-02-15T22:31:00.000-08:002007-02-15T22:31:00.000-08:00Is this the same "Smiling Bob" from the Enzyte com...Is this the same "Smiling Bob" from the <A HREF="http://www.enzyte.com/" REL="nofollow">Enzyte</A> commercials?Eleuahttps://www.blogger.com/profile/08248482892459370601noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-38626459927141582402007-02-15T22:03:00.000-08:002007-02-15T22:03:00.000-08:00This comment has been removed by the author.Eleuahttps://www.blogger.com/profile/08248482892459370601noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-84695311323477108162007-02-15T17:39:00.000-08:002007-02-15T17:39:00.000-08:00For most Americans, 1/3 of you income is a workabl...For most Americans, 1/3 of you income is a workable number. The official numbers lenders used when I started in real estate was 36% and 41% (36% of income allowed for house payment, 41% for the total of all regular monthly bills.) My parents did advise me to use 1/4. But even using 1/3 of your income on house payment requires some budgeting, a skill that I have seen decrease significantly over time. The solution...........marry a foreigner. My wife was able to get her first house with a 50% ! payment to income ratio, but some lenders know that certain immigrant borrowers have much better spending habits than Americans and will make that loan. She not only paid the house off, but paid it off early.Herb Wrighthttps://www.blogger.com/profile/16662503292242736007noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-6557742677413629352007-02-15T15:21:00.000-08:002007-02-15T15:21:00.000-08:00Debt free,I can see that you are a Dave Ramsey fan...Debt free,<BR/><BR/>I can see that you are a Dave Ramsey fan, me too.<BR/><BR/>Bob the buyer (know many like him) is NOT using a interest only ARM, he is most likely using the Option ARM......which gives you the Option to pay full payments, interest only or minimum......guess which one people choose to do, yeah the minimum. The min payment will allow him an additional $500 to "invest" or more likely to spend. These are dangerous and VERY common type loans.<BR/><BR/>I just sold all of my rental homes and my primary home and moving to TN to pay cash for a house, I'm already debt free, paid off the credit cards and paid cash for a new truck.<BR/><BR/>The great unwinding will be ugly and horrendous for those involved and there are more people involved than you realize. The realtors and banks have been pushing the concept of interest or Neg-am loans, while saying you can always refi or sell the home. That's true unless the values go down or no one is buying.<BR/><BR/>Smart investors know the housing prices are too high and are waiting like vultures to pick up foreclosures, the weak buyers are on the way out with the current subprime lender implosion (22 lenders kaput since dec 06), credit standards are on the increase, hello 25% gross income. Who's left to buy that hasn't already bought?? CA market is imploding as we speak, their absence will be felt in the Seattle market, good luck boys and girls.<BR/><BR/>Congrats to the poster who makes low $100k and is currently renting, save that money and buy after the fall, it's coming.<BR/><BR/>Tony in Port OrchardTony1790https://www.blogger.com/profile/10280041749337603190noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-43447310544345937102007-02-15T11:11:00.000-08:002007-02-15T11:11:00.000-08:00debtfree...I'm with you. Debt is no way to live. "...debtfree...<BR/><BR/>I'm with you. Debt is no way to live. "Live well below your means" - thats my practice. Holding a big mortgage for that tax write-off is way over-rated. I cashed in on my rentals (too soon I might add) and burned my mortgage at 32. With two new cars and no car payments, along with no credit card bills, the money just piles up. Some say I'm way to conservative, but I sleep really well. 1,400 square feet is all we need. Forget impressing your friends; I say impress yourself. When your free to leave that corporate job at 50 (or sooner), while your impressive friends are still chained to that desk, who will be impressive then??simple simonhttps://www.blogger.com/profile/04154431581729457186noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-39044231405556989232007-02-15T09:45:00.000-08:002007-02-15T09:45:00.000-08:00I don't think you should ever rely on what a banki...I don't think you should ever rely on what a banking institution will lend you, they will make you a slave for the rest of your life. People need to make that decision for themselves.<BR/><BR/>My families decision:<BR/><BR/>1) Debt Free (of course)<BR/>2) 6 month emergency fund<BR/>3) Down payment big enough so that my mortgage + taxes + insurance is less than 25% of my take home pay.<BR/><BR/>This will leave us with enough money for retirement (15%), kids education, and doing the things we love to do! I call that FREEDOM!DebtFreehttps://www.blogger.com/profile/16996655460932959396noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-12599999312996012742007-02-15T08:13:00.000-08:002007-02-15T08:13:00.000-08:0033% of gross is a fairly new qual level. It wasn'...33% of gross is a fairly new qual level. It wasn't that long ago that it was 25% of gross income.<BR/><BR/>BTW: in regards to interest only loans you say: "It works well with those who use it wisely." How does one use these wisely? I would guess that you could use them wisely if you pay extra every month (the equivilent of a payment for a regular 30 year fixed) - however, wouldn't there always be the temptation to pay the interest only?Unknownhttps://www.blogger.com/profile/00030800035568351309noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-56478197084858034832007-02-15T06:47:00.000-08:002007-02-15T06:47:00.000-08:00As you state, I never really understood why lendin...As you state, I never really understood why lending institutions base the qualification amount on Gross and not Net income. I use the same 'conservative' estimate as you and only see home prices under $350k as feasible. If a person like Bob throws a wife and kids into that mix, the results would be unpleasant. <BR/><BR/>Even though the government gives you a nice gift at tax time (mortgage interest deduction) that helps make up for some of the outlay, it seems imprudent [to me] for a person to rely on what is basically a government subsidy to afford housing. That subsidy has come under fire recently and could at another point in time as well...Anonymoushttps://www.blogger.com/profile/00969158694588130552noreply@blogger.com