This video is should be required watching for EVERYONE looking to buy a house!!! My husband and I are in the market for our first home right now and have made a lot of the same gross vs net income discoveries you’re talking about. I have a lot of other friends and family members that weren’t so lucky. They followed conventional wisdom and ended up with way more house than they could comfortably afford.
Thank you! You are one of my new faves. Upon seeing my pre-approval amount, I immediately said no, no, no. If the income is not going into my bank account, I'm not considering it! Even with a sizeable amount, I still decided to save for a larger down payment to knock off the PMI. I live in Chicago and considering buying on the north side or in Oak Park so you KNOW decreasing any possible costs is important b/c the property taxes have already given me minor heart attacks. Thank you for teaching people to take a realistic look at how much they can afford because some of these banks sure aren't!
I totally agree. It’s very silly to base all the mortgage financial advice on gross income when the typical gross income gets hijacked by medical insurance, retirement accounts, and massive taxes (state, local, federal).
Good conservative estimate. 35% of your take-home pay. That just brings up some hard truths for people. If you want to buy a $300,000 home with a $1800/mo total payment, you need to take home $5,142 per month. Assuming you withhold 30% for taxes, your gross pay needs to be $88,149. Many young professionals aren't there, yet, and it means either buying a smaller home OR renting. Or marry up 😂
Hey Tess, Clarification question: for the 1% we're supposed to be tacking onto what we are calculating, is it 1% of the home price, then divide it by 12 or is it the house price divided by 12 then 1% of that answer?
1% of the Home price is essentially what you can expect to spend on home maintenance each year. It’s an average obviously - some years will be higher, some lower. So when you’re budgeting you want to think of saving that up on a monthly basis so then you divide by 12 to budget for the monthly cost. Ex: $250,000 home means expect to spend $2,500 per year. Budget about $208 per month for that.
How many of you are planning to buy a home? RAISE YOUR HAND!
This video is should be required watching for EVERYONE looking to buy a house!!! My husband and I are in the market for our first home right now and have made a lot of the same gross vs net income discoveries you’re talking about. I have a lot of other friends and family members that weren’t so lucky. They followed conventional wisdom and ended up with way more house than they could comfortably afford.
Kristina Reeder wow thanks for the comment! Best of luck on your journey!!
Update us!
Thank you! You are one of my new faves.
Upon seeing my pre-approval amount, I immediately said no, no, no. If the income is not going into my bank account, I'm not considering it! Even with a sizeable amount, I still decided to save for a larger down payment to knock off the PMI. I live in Chicago and considering buying on the north side or in Oak Park so you KNOW decreasing any possible costs is important b/c the property taxes have already given me minor heart attacks. Thank you for teaching people to take a realistic look at how much they can afford because some of these banks sure aren't!
Taxes in Chicago (even just sales tax!) give me all sorts of heart attacks! 😂
I totally agree. It’s very silly to base all the mortgage financial advice on gross income when the typical gross income gets hijacked by medical insurance, retirement accounts, and massive taxes (state, local, federal).
Yes! Preach!
Hi Tess,
That sure is a lot useful information.
Good conservative estimate. 35% of your take-home pay. That just brings up some hard truths for people. If you want to buy a $300,000 home with a $1800/mo total payment, you need to take home $5,142 per month. Assuming you withhold 30% for taxes, your gross pay needs to be $88,149. Many young professionals aren't there, yet, and it means either buying a smaller home OR renting. Or marry up 😂
Hey Tess, Clarification question: for the 1% we're supposed to be tacking onto what we are calculating, is it 1% of the home price, then divide it by 12 or is it the house price divided by 12 then 1% of that answer?
1% of the Home price is essentially what you can expect to spend on home maintenance each year. It’s an average obviously - some years will be higher, some lower. So when you’re budgeting you want to think of saving that up on a monthly basis so then you divide by 12 to budget for the monthly cost. Ex: $250,000 home means expect to spend $2,500 per year. Budget about $208 per month for that.
Me 2020
Very very helpful and "are you single??