Buying A Home
Eitak82
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Determining Budget?
H and I are just starting to look into buying a home. In our initial discussions, we are trying to set a budget for the houses that we would look at. We will be consulting with our financial planner on this as well as taking a close look at our personal finances, but what did you use to determine your house budget? The mortgage calculators seem to give varying ranges based on our income, but I want to make sure we are comfortable with the mortgage we are taking on. We live in a very HCOL area, so I want to make sure we are getting what we want, but not taking on more than we should.
Thanks.
Re: Determining Budget?
Housing could be up to 25-28% of your TAKEHOME pay (30-35% in a HCOL are) less if you have a good deal of other debt obligations.
Housing included principal and interest, taxes, insurance, PMI if applicable, HOA if applicable, utilities.
In your budget include an ongoing line item for maintenance and upkeep.
In your purchase plan also include savings for downpayment, closing costs, utility deposits, moving costs (including eating out until the kitchen is unpacked and restocked) , repairs, renovations, decorating, additional furniture/appliances, tools, ladders, lawn equipment, snow removal, patio furniture and grill.
Home Buying for Dummies and Mortgages for Dummies are very helpful.
Allow future planning for vehicle replacements.
Work up a Home Owner's budget and see what impact it has on your lifestyle etc.
Allow future planning for vehicle replacements.
Work up a Home Owner's budget and see what impact it has on your lifestyle etc.
We worked backwards when determining our budget. We knew our goal was to buy a home that we could afford on the lesser of our 2 salaries (just in case life happens). So we started with that takehome pay amount (with the addition of a few hunderd per month due to the significant lessening of our income taxt burden if we were a single income household). With that amount we deducted what we currently paid for utilities (house we were renting was similar in size and age to target housing stock), car payment, insurances (vehicles, personal items), groceries, 1/3 of our entertainment/fun (because that would be our first area to cut in a single income situation), and our monthly savings goals. What was left was the amount we could spend every month on the mortgage (P&I, taxes, home owner's insurance). Next we looked at our savings account to decide how much of it we were willing to part with for a 20% down payment (leaving a 6 month emergency fund still in there).
With those numbers set, we used online calculators to see what our down payment and monthly payment amounts would buy us. That amount became our top range during our search. We initially wanted to spend even less than our top range, but eventually increased our willingness to max out our (conservative) budget to buy something we could live in for 30+ years.