Buying a house

**dmoe** · 02-04-2008, 10:38 PM

I have been reading lots of threads on sites of people paying off mortgages and read Dave Ramsey's book where he talks about having a home mortgage that is maximum 15% of your budget. What do you do if that is impossible where you live?

I am in shock when I see that homes can cost $140,000...because where I live a very sketchy/scary condo costs that at the bottom end. Homes start at $400,000 and I currently rent a tiny bachelor suite for $600 a month which is 25% of my income and this is the cheapest thing around.

I geuss I am just trying to figure out how people make things work or if debt is just a way of life living where I do. I have thought of moving but then all my family is here and you could move and be debt free...but then you aren't living in community with the people dearest to you. I don't know...just wondering if any people on this forum are trying to live off of small budgets while living in expensive areas.

Thanks for your help!

**frooz** · 02-05-2008, 03:07 AM

Ours is 43% of our budget and we bought a do-up. We would not be able to buy a house at 15%. I got a temp salary increase (covering another job) so our actual figure is probably more like 55%.

**TheRootedNomad** · 02-05-2008, 07:41 AM

I thought Dave said 25 to 35 percent of your take home with 25 percent being optimal. You may want to look into that. I can tell you morgage companies will finance you for a lot higher percentage but it's not wise to take them up on it. Maybe you should save to put a huge down payment on it first.

How is paying 25% working for you???? Pretend you have all the other bills you would in a house and start putting that aside.
Examples:
~another $75 a month for insurance and property taxes
~another $25 a month for gas and electric
~$25 a month for garbage pick-up
~put up for an EF that just got emptied because the furnace went ka-put
add things one at a time till ...this month garbage...next month garbage and increased electric...and so on

These numbers might not be accurate for your area so research and talk to homeowners you know first and then PRETEND (and save at the same time). Maybe you'll realize that if you want to live in that area you need to stay in an apartment or maybe you'll decide you want a different job or maybe...you'll run across the perfect place one day and know you can afford it because you've already pretended out the scenerio (and saved your 20% down)!!!

**nodmicks** · 02-05-2008, 08:49 AM

I thought it was 25% also.

**larabelle** · 02-24-2008, 12:42 AM

Originally Posted by dmoe

I have been reading lots of threads on sites of people paying off mortgages and read Dave Ramsey's book where he talks about having a home mortgage that is maximum 15% of your budget. What do you do if that is impossible where you live?

I am in shock when I see that homes can cost $140,000...because where I live a very sketchy/scary condo costs that at the bottom end. Homes start at $400,000 and I currently rent a tiny bachelor suite for $600 a month which is 25% of my income and this is the cheapest thing around.

I think that I would consider moving to a cheaper part of the country. Is your job transferable? I know of a couple of people who moved from California to Missouri due to the high cost of housing. They are doing GREAT in Missouri. Kansas City, Missouri is very affordable as well as several cities in Oklahoma. I would be very leery of financially over extending myself in order to purchase a $400,000 home.