Can You Afford A Home With The US Average Income? ($52,000): th-cam.com/video/bqzHzqQZsPg/w-d-xo.html All you Real Estate Chads that are commenting “yeah but does it include x”. Guys, I’m not Zillow. When I tell you a monthly payment it includes everything (Principle, Interest, Mortgage Insurance, Taxes, Insurance). If it seems low that’s just AZ, I’m sorry you live in an expensive state don’t take it out on me.
Hey Javier.. hoping you can help answer my question.. I currently have a goal to buy my first home in a year or two.. I’m taking all necessary steps.. building credit, staying consistent, saving.. my only issue is that I’ve been with the same company for almost 2 years now (Amazon) but my current role I need to take a break.. now I know longevity in employment is going to look amazing to the lenders (I also want to stay with the company so I can transfer because I’m moving out of state) so my option would be to take a leave but I have a temporary job set up to make my income while on leave.. I wanted to know if this would mess with my progress in any way and if lenders would turn me down if they saw this.. I only plan on taking a few weeks off.. hope you can help man.. thanks 🙂
@@gabriellaanne5419 I literally have almost the same question! Except not going out of state just hours away but to move need to take leave. What will this do to my progress??
First, you're the first TH-cam I've watched on my new 4K TV. Goodness, you're clear and vivid. Second, my house payment is $535. I'm in OKC, and I wouldn't trade it for anything. 3bed 1.75bath. I save save save my money. I've been very fortunate to have a good long career so far.
Some things never change. 25 years ago when I was house hunting, I remember the realtor telling me I could 'afford' more than I set as my budget. Friends who bought around that time had exactly the same expierience. It's important to remember that the realtor's commission is based on how much you spend!
My lender just told me the other day he’d approve me for a $400K house. I had to try so hard not to bust out laughing. I only make $63K gross and I’m a single person! It would also be my first home, so I’m not coming into this with any equity from a previous home. Insanity right!? I was trying to stay around the $250K mark, which would put me comfortably in that 28% ratio. So your video confirmed I’m being smart! Lol. Unfortunately there are no decent houses in that price range in my city. So it looks like I’ll be a renter forever...
Don’t lose hope. I was in the same situation as you a few years ago. Was looking for something livable in the $200k-$250k range. There was nothing. I stretched as far as I could for a $310k house. The payments were like $500 above what I could comfortably pay but like I said, there was just nothing cheaper than that in the area. I stuck with it and thankfully after 4 years, my income went up significantly and I was able to refinance and get the payment I wanted from the beginning.
My husband and I qualify for about a 640,000 home in CO we are looking for something in the price range on $430,000 to $475,000 since the bank will not be paying our bills 🤣🤣
That was us before the financial crisis; qualified for low $600s with *zero* down. My wife and I laughed at the mortgage broker. We ended up buying a $410 house and were able to breathe. Stick to your guns, it's worth it!
The last time I purchased a house with my ex husband I literally sat down and looked at our entire budget and came up with a payment amount I felt we could actually afford. Our take home (after all deductions including medical and 401k) was around $6k and our mortgage ended up being $1900. That included insurance and property tax with 20% down. Based on our budget I refused to go over $2k in payment. That house costed us around $325k but the lender told us that we could qualify for a $485k house. This, I never listen to the lender . I was able to maintain that house after my divorce with 2 kids to support. I ended up selling at a loss but I wasn’t upside down with the mortgage thank god.
I respect Dave Ramsey, he has some great tips to help with people that are terrible with managing money. But for the rest of us, he’ll have us eating rice and beans in our parents basements until we turn 45 so we can make an all cash offer on a house.
Well said sir, All these Dave Ramsey model is crap... Rather financial education should be given in schools that youngsters are financially disciplined.... Dave Ramsey tips will make the youngsters think that they can never achieve financial goals in life and they will quit easily
That’s not totally true, Dave Ramsey says that the only debt he feels is ok is a mortgage. I personally feel like a car is ok as well, but if you take anything from him it should be pay off your current debt as fast as possible and stay the hell away from credit cards!
That’s not true! It’s possible to buy a house cash if you think outside the box. Have you considered moving? My wife and I moved to be able to purchase a home cash. We just did a home tour and revealed how much we paid for our home on my channel to show what is possible!
@@DS54038 to be honest every year I make more than 1000$ just by using credit cards for all my expenses.... So the answer is to give financial education at schools
Following my conservative parents on the no more than 25% has been the best thing ever. After mortgage, student loans and other payments, we save so much. I think it's people who are still in the mindset of instant gratification and want that lifestyle and everything that comes with it. Champagne taste on a beer budget. Til debt do us part is an older show but really made me buckle down on over spending, saving and just being aware of what stupid things we tend to purchase. People need to not be ashamed of living within their means.
The funny thing is that you can afford a lot more champagne when you live in a modest house instead of living in a McMansion. Like, toxic levels of champagne that no one should ever consider drinking.
This is going to sound wild to you... but some markets do not have ANY homes within a persons affordability range AND renting prices are skyrocketing. There is no one stop solution for everyone.
@badinstinctsTH-cam Yeah, I got booze from some involved parties when I bought a house too. They're siphoning so much money from you that they can afford to spend a lot of it on alcohol presents for you.
We got a 12 year old home so that means, water softener is going out, HVAC is going out, water heater is going out. It's better to have some cushion of savings for any repairs regardless of cost.
The 3rd lender I got with asked me how much I had saved for closing and down payment and what I wanted my monthly payment to be and we would work from that. That’s how I knew I wanted to work with them. Asking me what my budget is and what’s my maximum I can pay really set me at ease
So I used the trulia calculator that has what you can afford but it on Dave's plan with the 25% if you make 60k a years and put 40k down you can afford up to 196k. Right now here In az that pretty much get you in a cardboard box with is over inflated market.
The "perfect home" illusion is gone from me now. First time home buying in my twenties doesn't even seem like a win in life, more like a money drain and a hassle. I earn good for myself and working on side hustles. Guess I'll just buy whenever i don't get screwed as much
@Kevin Schmidt Idk where you live or what your career is, but most people don’t have $72,000 yearly income. Most people are living pay check to pay check whether it be because they work a minimum wage job or medical expenses etc.
We refinanced to a 15 year and kept it at around 25% of our income this past march and wouldn't you know as life has it, perfect timing the first payment was due when the pandemic dropped.
Yep. Dave’s is 15 Year, 25% of your net income AND 20% down. And then, the individual should still attempt to pay it off early. Or pay cash. He’s aggressive, but he also notes on his show that’s HIS program. If you want to follow him, those are his instructions. If you want to do your own thing, great.
@@bradowen9211 If you lose a job and have a huge mortgage it could be a mess. Say your salary is $100k, but the economy tanks and you can only find a $60k job. That's why we keep our housing payment low. Less financial stress!
@@pr0wnageify You’re thinking about an ARM mortgage, fixed rate 30 year mortgages stay the same interest rate for the entire life of the loan which is 30 years.
Javier, thanks for 'spitting facts' about how dangerously loose the mortgage lending guidelines truly are. I teach personal finance for high school students and I'll be using this video as a great introduction to one of the most common financial mistakes-- buying "too much" house. You're doing great things!
I used to know someone who had a business where she'd drive her van to your home and groom your dog. She would tell us all sorts of stories about houses she went to that cost $350k, $500k or more. Huge mansions...no furniture, or crappy furniture you'd probably throw out or donate. Lesson: don;'t make yourself house-rich, but life-poor.
When I purchased my car the loan officer told me that as well. Background: We got to talking and come to find out he lives on the ‘black side’ of town(in a nice neighbor btw). He was saying how he knows people who live on the ‘white side’ of town but can barley afford it. They have little furniture, etc. I’m black and he’s white btw. I live in GA and I always wonder how these neighborhoods with 300k-400k homes sell out so fast. I think it’s the American way to be in debt. It’s sad because it’s crippling us all.
My late sister was a decorator. She saw the same thing: big house devoid of furniture, or cheap thrift store stuff. In one house the parents had outfitted their kids rooms with everything, beds, etc. But the parents were sleeping on cheap mattresses on the floor.
Those are not mansions lol! At best the 500k house was a McMansion(McDonald’s of mansions). I live in a 2.5 million dollar home. The homes you mentioned are the homes we own outright and rent out!
I guess I did the 25% without even knowing it was the best recommended one, i make $10k gross monthly my mortgage is $2,500 and I still feel is high lol but am not in debt only my mortgage I don’t drive luxury cars or wear expensive clothes, located in the Bay Area!
I’ve watched this twice now. Once a year or so ago and again today, this week we decided to go forward with actually trying to buy our first home and I am so glad I did the math with you!!!!
There are some places where home prices are so high that even a small house will typically cost more than $1,200 per month unless you put down a lot of cash up front.
Most people live way above their means. Most live to show off what they have. The more they make. The more they spends. It’s been happening for decades. It’s sad. But true.
I feel you. There’s always opportunity to make more more. With time and effort. And of course some sacrifices. But if you live in big cities. Yes , Homes are over priced.
The most real realtor. I have bought /sold many homes over the years in Scottsdale and have never heard a realtor break things down in such a non bullshit way. Keep it up!
Keep in mind, Dave recommends the 25% rule based on a 15 year mortgage which makes it almost twice as strict as a 30 year. Should we include property tax and homeowners insurance in our calculations?
To stay fair to calculations we should include tax and insurance as it makes your total housing expense, plus add 10% for fixes and repairs. Something you don't have as a renter. When you do this calculations people even with high pay is priced out. This market is a bust and not sustainable.
You should do it backwards. Add all your fixed monthly payments and monthly saving/investments. Then subtract that from you net monthly income. Whatever the number is, that's what you really could afford.
I really appreciate some vids here, man. I was recently approved and shopping for mid-600s. I had my sights set on 19’ ceilings and a bunch of other stuff in a house I didn’t need but certainly was convinced of getting into anyway. I’ve since done a complete 180 and searching for a modest yet still nice home in the mid-300’s. I’m trying to raise my boys to not repeat my financial mistakes of overspending in life…but how can I do that in an extravagant house with very little going to savings and whatnot? My boys and I have a weekly routine now where we sit down and transfer at leassssst 20% of our weekly income to savings. And now all three of us are building savings and it’s really heartwarming to be doing this with them. My youngest is now moving 20% of his $18 allowance online before I even come around to check it’s pretty cute lmfao So anyway, if you see this and managed to read this far cheers to helping get my head out the clouds and making sensible financial decisions!
We bought a foreclosed home in texas in 2012. Qualified for 150(husband was 23 at the time and making alot less. now as a truck driver he is making about 80k a yr) and realtor was showing us houses at the price range. Then we found a foreclosure selling at 95 that was way better looking than the ones at 150. Had to do a few repairs here and there through out the years but luckily we had savings to do repairs without worries. Definitely glad we found our home for alot less than what everyone else in the neighborhood... home ins, taxes included.
Thanks for this video. In the process of looking for my first home, this made me realize playing to the low end of my budget is the right thing to do! I have been looking at about the 28% rule ballpark without even knowing I was doing it! 😁Your videos have been very helpful as a first time and first generation homebuyer I appreciate you!
Don’t forget that’s on a 15 year not a 30. He recommends 25% of your take home on a 15 year mortgage. That’s why a bug down payment is required. By putting down 20% you avoid PMI
Hes more intense than most. He believes debt is evil so you have to live like youre poor until youre out of debt. The thing is the formula works. Most millionaires dont make 500k a year. Its mainly regular people with no debt who invested their money intelligently. You can do this making 50k a year if you work at it. His method is intense so people tend to not take him seriously because its so uncommon for people to live the way he talks about. But his method works love him or hate him
@@xJayhawkFANx It's hard to invest when you have mountains of medical debt that will be impossible to pay back and you're forced to file bankruptcy. I'm sure Dave Ramsey isn't a fan of Medicare for All either.
Hi Javier, love your live stream and video. My wife and I are millennials and follow Dave Ramsey’s plan and are on Baby Step 7, completely debt free, paid off mortgage, household income of $240K a year. Ramsey’s definition of “net” is 25% prior to any 401K deductions. He’s clarified that many times recently due to many callers asking whether they can afford a house or not based on income/debt ratio. Hope that helps anyone that want to follow Dave’s plan.
Thats how they convince you to apply for the loan, but when the final computation comes before your closing, they say a totally different thing possibly denying your application.
I really like your style. You didn't copy other TH-camrs by talking fast, quick intro, and with weird thumbnails. You stick to your own thing and it's entertaining Props!
SMFH. "MAKE SURE......" WHAT???? Hahahah, in all honesty. You're my favorite realtor and I wish to find a Javy in my city soon to help me buy a houseeeeeeeee :-) :-)
I bought near the top of what I qualified for. I even sold a vehicle that had a high payment to help get there. It was tough for a few years. 4 years later and my income has doubled and we are right around the 25% net. Now we can save for retirement and date night is no longer the never ending pasta bowl at Olive Garden. I don't regret jumping in early, but I wouldn't recommend maxing out on house unless you know big growth in your earnings are near.
Ironically, this video made me more comfortable with going up in price a bit on a house, because I CAN afford it. Aside from my mortgage, I have no debt. My car is well maintained. I have a stable job. I'm selling my current one due to personal issues, and I need a fresh start. Home is where I spend most of my time, so I can afford to spend the 28% of my gross, rather than 25% of my net. Thanks Javier!
Thank you for what you are saying, but a lot depends on whether you have school age children. Often, that bigger house comes with a more exclusive neighborhood with a better school district. A better school district is a big reason why many families push for a more expensive home. Sadly, it's not always keeping up appearances, but making sure your kids have the best shot at succeeding in college, and beyond.
I totally get that! My wife and I took the plunge in a home a little bit outside of my comfort about two years ago because of the school district (it was the district I dreamed about my kids going to). However I’m in a career that’s limitless, some folks are capped so I’d rather be safe and advise people to not push it
Still doesn’t really make sense. If you can’t afford it you can’t afford it. Those school districts aren’t really getting those kids into any better colleges than the neighborhood with .5 lower rating then the parents don’t even have money to send their kid to college and leave them to take out a bunch of loans. In this case, it’s still trying to keep up appearances. More than half of the parents aren’t even involved in the kids learning
Sometimes life throws a curveball. We bought our home and our monthly payment was $2400 which hovers around a bit above Dave Ramsey at ~28% of our Net income. Two years into home ownership our taxes had been reassessed during our home purchase and the ESCROW was VERY far behind. Lo and behold to cover the negative ESCROW and pay the new higher taxes our monthly payment increased to $3,150. WHICH IS INSANE. Now being 36% of our net for the next year - uncomfortable but doable. Be conservative life sure can take some wild turns.
Wow Javier what a growth of subscribers in ur you tube channel.. congratulations! 🎉 I started watching your videos last year probably around March or april while I’m deciding to buy my first house.. fast forward to 2021 and you almost have 80k subscribers! Happy for you 😀 congratulations !
My thoughts: If I can buy a house that is smaller than the apartment I am currently renty, has a higher mortgage payment and is 60 minutes further away from my work, then I keep on renting.
@@Spedfree If houses keep going up they way they are I imagine mortgage payments will too. I had 20% saved for a 245k loan last year because that was the usual price in my area, all of the sudden in 2020 they bumped prices to over 300k, so I no longer had 20% for a house in the area and my mortgage would be 30% more than my current rent.
Amazing that $250k is considered budget in AZ. 10 years ago that was living large. The way my lender did it was he asked me what I was comfortable paying a month and that's where he maxed my loan at.
This is real! I got a realtor and loan officer talking about getting pre qualified. I told them, no need. I know how much money I have to dedicate to housing and it will be half of what they tell me. Thought I had a good job for someone with only HS education. Thought about a house and realized, can't have car note and house note and keep same lifestyle.
Finally!!!! someone that is dishing out EDUCATION!!!!! You can't afford it when you are in DEBT!!!! Amen bro!!! The keys to the castle! always think 20% and reach that goal for the amount of house you seek!
Well im glad i bought in 2010. House is paid off. House prices in Cali are stupid!!!!! Im glad i bought cheap because its true what they say as soon as you buy a house the heater goes out, the plumbing goes out... i have replaced all these things. But better than paying 2k dollar rent screw that
Superb advice! People often forget with homeownership their are all kinds of maintenance costs, upkeep, lawn, new roof, association fees, just all kinds of things, that you really need to have room in your budget for. Not to mention if you have a personal emergency medical or otherwise, or car repair bill etc who knows but your advice is spot on coming from someone whose owned several homes throughout my life.
I was able to save about 5% of my 7% down payment goal in 2 yrs living on 30% of my budget. I already put my mindset that this is what is necessary to be able to own a home & live comfortably without the risk of losing my home in the future.
Elizabeth Warren (back when she was same) wrote about the 2 income trap. How people would buy homes (or stuff) on the premise of two incomes. But can you afford the home on one? She was right. Always purchase a home based on one income.
I’m using the 30% rule where making sure my mortgage, insurance and taxes are not more than 30% of my monthly gross income (before taxes). You can use this to easily figure out how much house you can afford.
What a great video! Really nice to see the breakdown of what you get approved with versus what will actually be a feasible mortgage payment. Too many people house broke because they didn’t do their budget homework.
While Dave ramsey is kind of extreme conservative, some of the other rules in the other direction are a recipe for ruin. I feel comfortable with 25% of net but on a 30 year, not a 15 which is what Dave recommends and which Javier left out and is a huge difference in the monthly payment. Gives the option of overpaying every month towards principal. But if something terrible happens, there's breathing room by paying the usual monthly.
I would say 95% of the people would not have the discipline to pay at a 15 year rate each month. I have a 15 year, and I can tell you, i am excited to pay that thing off by 35. I still save 20% for retirement. You can not put a number on peace of mind. When the home is payed off you get that. I get the views of all sides and take what you can. Daves thought's on credit cards are Ludacris if you a responsible.
Strive for positive thoughts. You can get a home w/o being w/ someone. I know people who’ve done it and I’m getting my first home built from the ground up this year. Just have to wait a bit longer, save strategically, and live under your means. Don’t think like most Western Society individuals, be your own person.
That’s not true! Look into house hacking. Find some roommates and rent out your extra bedrooms essentially living rent free while others are paying down most if not all of your mortgage. 👍🏽
When our lender told us what we qualified for, we just laughed. Our goal was to spend around what we were paying in rent, but we were willing to go a little over that, since our rent had been going up so rapidly. We managed to find a small starter home in poor condition that we could comfortably afford the payments on, and have been spending our money fixing it up. If we had followed the Dave Ramsey model, we would not have been able to afford a house at all (and in a few more years, we wouldn't have been able to afford rent, either). There are those who tell people that they should just move out of areas like mine, and that's great if people want to do that. But most people have ties to the areas they live in, and it isn't reasonable to ask them to move to another state.
Javier! Thank you! You actually get it. I have these convs. with my friends who are also house hunting and I keep telling them "well yeah, you qualify for it and I qualify for it too", but look at how much that's going to reduce your monthly income. System is setup to get you as tight as possible. Again, how much can you afford! Not qualify for ;] thanks man!
Interesting data. My wife and I have always just figured whatever 1/3rd of our take-home is per month, that's what monthly payment we can afford, ideally 1/4 (pipe dream for us to achieve that...). Living in California, that has made it quite a struggle to get a home, we did eventually get one by saving up for YEARS to get a big enough down payment to make it possible. But I am certain younger adults trying to enter the home buying market today are facing a real freaking challenge.
I've watched like 50 videos on this topic already but I can't stop lol. I guess at this point I'm mentally archiving them for when a friend needs advice.
Thanks for your videos and honesty! We built a house 4 years ago and are about to start building again...gives me a lot of things to think about. Much appreciation from Louisiana!
After moving around and buying and selling 5 houses in 10 years and getting mortgages each time. I can completely agree that 25% or less of your monthly take home pay (after taxes and everything else, what you actually get in your pocket) is completely the sweet spot. At that rate you can save, invest, vacation, not be in debt, and even pay down on your home...just have a full life. Whenever I talk to family and friends struggling financially, 9 times out of 10 it’s that they are 35% to 50% (or even more) of their take home pay on their mortgage.
Thank you for posting this exercise! Very helpful and reassuring. Although I know Dave Ramsey recommends a 15 yr mortgage, we're doing a 30 and I still feel like our payment is conservative based on all these different rules. Much appreciated!
You are great at what you do. Really appreciate this info and your time. We live in Glendale, AZ. Moved here 2 yrs ago and its insane how much houses have gone up in this time. Truly difficult to buy a home in this climate.
I went into it by saying "this is what my rent is, this is what my rent is going to be, I don't wanna spend more on mortgage + maintenance than what my rent is going to be if I stay." And my rent was getting real crazy so that wasn't a big ask lol
Great video! I am definitely trying to be more conservative with my budget, making sure to account for my 20% savings/month when calculating my monthly expenses.
Don't forget their electricity bill,water bill ,Wi-Fi Bill ,cable bill, house insurance. So basically 100% of their income is going solely to their house 🤦
New subscriber here, this is such great advice!! Most people go by what they qualify for and not what they can actually afford, this is how people end up defaulting on their mortgage payments.
The 30 percent rule just ain't happening in California. Me and the wife are paying 40% to mortgage and utilities, and we gross 140k a year. We still have some left over at the end of each month to put towards savings. I suggest doing what we did. Sit down together and spend a solid 2 hours going through your monthly recurring payments. Add all those up. Then figure out your monthly combined net take home. Subtract your combined expenses+rent from that number to get your total monthly leftover. Now if you're eyeballing a house that's gonna be 2500 a month in mortgage, put the rent back into your "take home" pay amount, then subtract again using 2500 as your potential mortgage payment. Then factor in your taxes, pmi, insurance etc... That will give you the most realistic debt to income you can expect.
I remember back in 2008, I was 32, and "qualified" at the time for a $360,000 mortgage. I sat down and worked out the basic math of that, and couldn't wrap my mind around how I could possibly afford the payment on that making what I was making - well under $50k per year at the time. I turned down the offer and started digging a little deeper - I tried warning all of my friends not to buy and they looked at me like some leper on meth that busted into their party. It was sad to watch them lose their shiny new homes in 2009... made for a great time for me to buy though, at a MUCH more reasonable rate. I'm watching the same housing market jump take place here again in AZ - 10 years later... I'll be in a great position to take on a second or possibly third home for investment properties when it goes down again.
Can You Afford A Home With The US Average Income? ($52,000): th-cam.com/video/bqzHzqQZsPg/w-d-xo.html
All you Real Estate Chads that are commenting “yeah but does it include x”. Guys, I’m not Zillow. When I tell you a monthly payment it includes everything (Principle, Interest, Mortgage Insurance, Taxes, Insurance). If it seems low that’s just AZ, I’m sorry you live in an expensive state don’t take it out on me.
And that’s that on that!
Guys I'm not Zillow....stay on their neck 😂😂😂
Californians be like..... lol
I can talk I’m a Californian hahahaba
Hey Javier.. hoping you can help answer my question.. I currently have a goal to buy my first home in a year or two.. I’m taking all necessary steps.. building credit, staying consistent, saving.. my only issue is that I’ve been with the same company for almost 2 years now (Amazon) but my current role I need to take a break.. now I know longevity in employment is going to look amazing to the lenders (I also want to stay with the company so I can transfer because I’m moving out of state) so my option would be to take a leave but I have a temporary job set up to make my income while on leave.. I wanted to know if this would mess with my progress in any way and if lenders would turn me down if they saw this.. I only plan on taking a few weeks off.. hope you can help man.. thanks 🙂
@@gabriellaanne5419 I literally have almost the same question! Except not going out of state just hours away but to move need to take leave. What will this do to my progress??
First, you're the first TH-cam I've watched on my new 4K TV. Goodness, you're clear and vivid. Second, my house payment is $535. I'm in OKC, and I wouldn't trade it for anything. 3bed 1.75bath. I save save save my money. I've been very fortunate to have a good long career so far.
Finally someone appreciates the fact I upload 4K! 😅
@@JavyVidana Your 4K beauty knows no bounds.
Are you in a safe neighborhood??
@@Silvio67 absolutely
@mr.RaiderNation13 LaPlayaLarga 80k
Some things never change. 25 years ago when I was house hunting, I remember the realtor telling me I could 'afford' more than I set as my budget. Friends who bought around that time had exactly the same expierience. It's important to remember that the realtor's commission is based on how much you spend!
My lender just told me the other day he’d approve me for a $400K house. I had to try so hard not to bust out laughing. I only make $63K gross and I’m a single person! It would also be my first home, so I’m not coming into this with any equity from a previous home. Insanity right!? I was trying to stay around the $250K mark, which would put me comfortably in that 28% ratio. So your video confirmed I’m being smart! Lol. Unfortunately there are no decent houses in that price range in my city. So it looks like I’ll be a renter forever...
No, you can buy. Rent a room in a house, within biking distance to work and save like mad. You will be able to buy with cash.
I'm in the same boat smh
why bot just buy a nice house in a nice location for 350-400k and treat the higher mortage it like a savings account…the home will appreciate.
Don’t lose hope. I was in the same situation as you a few years ago. Was looking for something livable in the $200k-$250k range. There was nothing. I stretched as far as I could for a $310k house. The payments were like $500 above what I could comfortably pay but like I said, there was just nothing cheaper than that in the area. I stuck with it and thankfully after 4 years, my income went up significantly and I was able to refinance and get the payment I wanted from the beginning.
@@NadyaPena-01 yeah I’ve extended my budget to $300K and I still can’t find anything 😞. Thanks for your comment though, it gives me some hope!
My husband and I qualify for about a 640,000 home in CO we are looking for something in the price range on $430,000 to $475,000 since the bank will not be paying our bills 🤣🤣
Natasha Fusilier lol, I’m in the same boat !
Lol 🤣 similar Houston TX but lower, around $330k
Smart - being house poor adds even more stress to an already stressful life!
Exactly!
That was us before the financial crisis; qualified for low $600s with *zero* down. My wife and I laughed at the mortgage broker. We ended up buying a $410 house and were able to breathe. Stick to your guns, it's worth it!
The point is - are you worried about your image of success or the actual success. Minimalism plays into this as well.
The last time I purchased a house with my ex husband I literally sat down and looked at our entire budget and came up with a payment amount I felt we could actually afford. Our take home (after all deductions including medical and 401k) was around $6k and our mortgage ended up being $1900. That included insurance and property tax with 20% down. Based on our budget I refused to go over $2k in payment. That house costed us around $325k but the lender told us that we could qualify for a $485k house. This, I never listen to the lender . I was able to maintain that house after my divorce with 2 kids to support. I ended up selling at a loss but I wasn’t upside down with the mortgage thank god.
I respect Dave Ramsey, he has some great tips to help with people that are terrible with managing money. But for the rest of us, he’ll have us eating rice and beans in our parents basements until we turn 45 so we can make an all cash offer on a house.
Wow. Very well said!
Well said sir, All these Dave Ramsey model is crap... Rather financial education should be given in schools that youngsters are financially disciplined....
Dave Ramsey tips will make the youngsters think that they can never achieve financial goals in life and they will quit easily
That’s not totally true, Dave Ramsey says that the only debt he feels is ok is a mortgage. I personally feel like a car is ok as well, but if you take anything from him it should be pay off your current debt as fast as possible and stay the hell away from credit cards!
That’s not true! It’s possible to buy a house cash if you think outside the box. Have you considered moving? My wife and I moved to be able to purchase a home cash. We just did a home tour and revealed how much we paid for our home on my channel to show what is possible!
@@DS54038 to be honest every year I make more than 1000$ just by using credit cards for all my expenses....
So the answer is to give financial education at schools
Following my conservative parents on the no more than 25% has been the best thing ever. After mortgage, student loans and other payments, we save so much. I think it's people who are still in the mindset of instant gratification and want that lifestyle and everything that comes with it. Champagne taste on a beer budget. Til debt do us part is an older show but really made me buckle down on over spending, saving and just being aware of what stupid things we tend to purchase.
People need to not be ashamed of living within their means.
The funny thing is that you can afford a lot more champagne when you live in a modest house instead of living in a McMansion. Like, toxic levels of champagne that no one should ever consider drinking.
100% agree! Love that old show too!
This is going to sound wild to you... but some markets do not have ANY homes within a persons affordability range AND renting prices are skyrocketing. There is no one stop solution for everyone.
@@notanotherone5564 Some places just aren't hospitable for humans, and sensible people don't try to live in those places.
@badinstinctsTH-cam Yeah, I got booze from some involved parties when I bought a house too. They're siphoning so much money from you that they can afford to spend a lot of it on alcohol presents for you.
Ha! Jokes on you, I don’t pay for food! I only make home made pasta, I grow the wheat out back too.
I hear you don’t have to eat you just live off the nutrients of the rich forest air in your cabin as you astral project yourself.
I love this bromance 🤣
@@JavyVidana literally best retort ever.
@@JavyVidana lol
We got a 12 year old home so that means, water softener is going out, HVAC is going out, water heater is going out. It's better to have some cushion of savings for any repairs regardless of cost.
The 3rd lender I got with asked me how much I had saved for closing and down payment and what I wanted my monthly payment to be and we would work from that. That’s how I knew I wanted to work with them. Asking me what my budget is and what’s my maximum I can pay really set me at ease
So I used the trulia calculator that has what you can afford but it on Dave's plan with the 25% if you make 60k a years and put 40k down you can afford up to 196k. Right now here In az that pretty much get you in a cardboard box with is over inflated market.
Time to move maybe? That’s what I did.
In CA you get a Happy Meal for that price! Lol 😆
In Texas you can get a really nice house for that $
@@gojereme probably what I'm gonna end up doing.
@@maryb1323 yup use to live in Texas moved back to az because wife mom got breast cancer
The "perfect home" illusion is gone from me now. First time home buying in my twenties doesn't even seem like a win in life, more like a money drain and a hassle. I earn good for myself and working on side hustles. Guess I'll just buy whenever i don't get screwed as much
I think buying a house now in days its just a dream
Bro its better than renting and paying off someone's else's mortgage for them to retire on the equity...
Don’t forget that Dave also wants you to get a 15yr mortgage too that’s under 25% of your take home pay, so that makes you qualify for even less lol
Oh dang
@Kevin Schmidt Idk where you live or what your career is, but most people don’t have $72,000 yearly income. Most people are living pay check to pay check whether it be because they work a minimum wage job or medical expenses etc.
I paid cash because paying just the yearly property taxes is enough for me. Plus, I have no income.
We refinanced to a 15 year and kept it at around 25% of our income this past march and wouldn't you know as life has it, perfect timing the first payment was due when the pandemic dropped.
Yep. Dave’s is 15 Year, 25% of your net income AND 20% down. And then, the individual should still attempt to pay it off early. Or pay cash. He’s aggressive, but he also notes on his show that’s HIS program. If you want to follow him, those are his instructions. If you want to do your own thing, great.
I remember when everyone told me “buy the most house you can afford.” I said screw that. Current house is 14% of net. Dave Ramsey would be proud lol
agree better to stick to hard budget even if approved for higher amount. You don't want to end up house poor.
Yes but right now the interest rates are so low !! So if you lock in your mortgage payment so low , how can you go house broke ? I don’t understand
Same, our mortgage, taxes, insurance, HOA is all 17% of the net! Feels good to not have to stress and lose sleep over a crazy large payment.
@@bradowen9211 If you lose a job and have a huge mortgage it could be a mess. Say your salary is $100k, but the economy tanks and you can only find a $60k job. That's why we keep our housing payment low. Less financial stress!
@@pr0wnageify You’re thinking about an ARM mortgage, fixed rate 30 year mortgages stay the same interest rate for the entire life of the loan which is 30 years.
Not many buyers take the time to run these numbers... We need more of this!
Javier, thanks for 'spitting facts' about how dangerously loose the mortgage lending guidelines truly are. I teach personal finance for high school students and I'll be using this video as a great introduction to one of the most common financial mistakes-- buying "too much" house. You're doing great things!
I used to know someone who had a business where she'd drive her van to your home and groom your dog. She would tell us all sorts of stories about houses she went to that cost $350k, $500k or more. Huge mansions...no furniture, or crappy furniture you'd probably throw out or donate.
Lesson: don;'t make yourself house-rich, but life-poor.
When I purchased my car the loan officer told me that as well.
Background:
We got to talking and come to find out he lives on the ‘black side’ of town(in a nice neighbor btw). He was saying how he knows people who live on the ‘white side’ of town but can barley afford it. They have little furniture, etc.
I’m black and he’s white btw.
I live in GA and I always wonder how these neighborhoods with 300k-400k homes sell out so fast.
I think it’s the American way to be in debt. It’s sad because it’s crippling us all.
My late sister was a decorator. She saw the same thing: big house devoid of furniture, or cheap thrift store stuff. In one house the parents had outfitted their kids rooms with everything, beds, etc. But the parents were sleeping on cheap mattresses on the floor.
Where do you live that $350k-$500k feel like "mansions"?!
Was this like 20 years ago 😂😂😂 also expensive furniture is just stupid…
Those are not mansions lol! At best the 500k house was a McMansion(McDonald’s of mansions). I live in a 2.5 million dollar home. The homes you mentioned are the homes we own outright and rent out!
I guess I did the 25% without even knowing it was the best recommended one, i make $10k gross monthly my mortgage is $2,500 and I still feel is high lol but am not in debt only my mortgage I don’t drive luxury cars or wear expensive clothes, located in the Bay Area!
That’s where we are, no other debt, but want to pay down as fast as we can.
It’s supposed to be 25% of net income not gross
I’ve watched this twice now. Once a year or so ago and again today, this week we decided to go forward with actually trying to buy our first home and I am so glad I did the math with you!!!!
There are some places where home prices are so high that even a small house will typically cost more than $1,200 per month unless you put down a lot of cash up front.
Most people live way above their means. Most live to show off what they have. The more they make. The more they spends. It’s been happening for decades. It’s sad. But true.
I live below mine but the housing cost around me is ridiculous, I can't even afford to move if I wanted to
I feel you. There’s always opportunity to make more more. With time and effort. And of course some sacrifices. But if you live in big cities. Yes , Homes are over priced.
I never fell into that trap of having debt I have always lived below my income. At the age of 67 I don't need more stuff
Javier: “MAKE SURE.”
Me: “Look at Javy man, so inspirational.”
The most real realtor. I have bought /sold many homes over the years in Scottsdale and have never heard a realtor break things down in such a non bullshit way. Keep it up!
Keep in mind, Dave recommends the 25% rule based on a 15 year mortgage which makes it almost twice as strict as a 30 year. Should we include property tax and homeowners insurance in our calculations?
To stay fair to calculations we should include tax and insurance as it makes your total housing expense, plus add 10% for fixes and repairs. Something you don't have as a renter. When you do this calculations people even with high pay is priced out. This market is a bust and not sustainable.
You forgot that dave's model is a 15 year plan, limiting the house price even more
his plan is not realistic in large city and metro areas like California.
I came to the comments to point this out too! You beat me to it
@@GuitarsAndSynths He also says if you can’t afford it to move to a lower cost area
Your channel is incredibly underrated.
You should do it backwards. Add all your fixed monthly payments and monthly saving/investments. Then subtract that from you net monthly income. Whatever the number is, that's what you really could afford.
This method works better for high income households too.
Most people forget that homeownership is expensive there is a lot of maintenance, insurance, taxes etc. in addition to just the mortgage.
I can't afford a starter home according to Dave 😩 living in the city sucks
Same 🙃 I can’t even afford to live where I grew up
He does not even say how strict Dave is. It is 25% with a 15 year mortgage. That is super hard even in the Midwest right now.
Following old Dave is hard
But will worth it.
Walked through Covid financial with easy.
Now just have the house to payoff.
Ignore Dave's advice for a house, he's living in la la land. He's a boomer and needs to get with the times now.
Your last advice was great 😂
It’s life changing
Lol
I guess -whatever you do “MAKE SURE “🤷🏻♀️😅😂🥲
Best advice I ever heard! Lol
Lol!
I really appreciate some vids here, man. I was recently approved and shopping for mid-600s. I had my sights set on 19’ ceilings and a bunch of other stuff in a house I didn’t need but certainly was convinced of getting into anyway.
I’ve since done a complete 180 and searching for a modest yet still nice home in the mid-300’s.
I’m trying to raise my boys to not repeat my financial mistakes of overspending in life…but how can I do that in an extravagant house with very little going to savings and whatnot?
My boys and I have a weekly routine now where we sit down and transfer at leassssst 20% of our weekly income to savings.
And now all three of us are building savings and it’s really heartwarming to be doing this with them. My youngest is now moving 20% of his $18 allowance online before I even come around to check it’s pretty cute lmfao
So anyway, if you see this and managed to read this far cheers to helping get my head out the clouds and making sensible financial decisions!
We bought a foreclosed home in texas in 2012. Qualified for 150(husband was 23 at the time and making alot less. now as a truck driver he is making about 80k a yr) and realtor was showing us houses at the price range. Then we found a foreclosure selling at 95 that was way better looking than the ones at 150. Had to do a few repairs here and there through out the years but luckily we had savings to do repairs without worries. Definitely glad we found our home for alot less than what everyone else in the neighborhood... home ins, taxes included.
Thanks for this video. In the process of looking for my first home, this made me realize playing to the low end of my budget is the right thing to do! I have been looking at about the 28% rule ballpark without even knowing I was doing it! 😁Your videos have been very helpful as a first time and first generation homebuyer I appreciate you!
Don’t forget that’s on a 15 year not a 30. He recommends 25% of your take home on a 15 year mortgage. That’s why a bug down payment is required. By putting down 20% you avoid PMI
Honestly Dave Ramsey is underrated. I like his model it gives you peace in mind
Hes more intense than most. He believes debt is evil so you have to live like youre poor until youre out of debt. The thing is the formula works. Most millionaires dont make 500k a year. Its mainly regular people with no debt who invested their money intelligently. You can do this making 50k a year if you work at it. His method is intense so people tend to not take him seriously because its so uncommon for people to live the way he talks about. But his method works love him or hate him
@@xJayhawkFANx It's hard to invest when you have mountains of medical debt that will be impossible to pay back and you're forced to file bankruptcy. I'm sure Dave Ramsey isn't a fan of Medicare for All either.
@@corbinsmith50 Well I believe medical care should be privatized inorder to create competition which would drive medical costs down.
I wouldn’t say he’s “underrated” I lot of him rate his stuff pretty well.
Boom. I agree. Peace of mind. 👌🏽
Hi Javier, love your live stream and video.
My wife and I are millennials and follow Dave Ramsey’s plan and are on Baby Step 7, completely debt free, paid off mortgage, household income of $240K a year. Ramsey’s definition of “net” is 25% prior to any 401K deductions. He’s clarified that many times recently due to many callers asking whether they can afford a house or not based on income/debt ratio. Hope that helps anyone that want to follow Dave’s plan.
My 15 year mortgage payment is ~7% of my gross income and ~9.5% of my net income. This is a pretty comfy place to be.
Flex on them
@@JavyVidana Lol. That's only counting w2 income. This isn't even my final form.
The point is to own the house and not let the house own you
Bro this was great. Lets be friends haha. The outtro killed me. Literally laughed out loud.
I literally laughed in my mortgage broker's face when she told me I could afford 2.5 times my price range.
I don’t think I ever asked what they would loan us, we just gave the price we wanted to pay.
SAAAAAME. I already calculated my max house price and they quoted me way above what I could afford
Same here...
Thats how they convince you to apply for the loan, but when the final computation comes before your closing, they say a totally different thing possibly denying your application.
I really like your style. You didn't copy other TH-camrs by talking fast, quick intro, and with weird thumbnails. You stick to your own thing and it's entertaining Props!
SMFH. "MAKE SURE......" WHAT????
Hahahah, in all honesty. You're my favorite realtor and I wish to find a Javy in my city soon to help me buy a houseeeeeeeee :-) :-)
I joined your live for the 1st time this morning. Vary informative, thanks!!
I bought near the top of what I qualified for. I even sold a vehicle that had a high payment to help get there. It was tough for a few years. 4 years later and my income has doubled and we are right around the 25% net. Now we can save for retirement and date night is no longer the never ending pasta bowl at Olive Garden.
I don't regret jumping in early, but I wouldn't recommend maxing out on house unless you know big growth in your earnings are near.
the sick alternative is, people are already paying more in rent.
This.
Anywhere near a big city and the last math means 90pct of the population should not buy a home and can barely afford rent.
But fees for the property are paid by the landlord not by you
@@kombe971 not enough to make a difference. Im a home owner and it’s way way cheaper than renting.
@@boot-strapper a house is way more expensive so that's not true
@@kombe971 my mortgage plus maintenance tax and utilities is still way less than my apartment rent was.
Ironically, this video made me more comfortable with going up in price a bit on a house, because I CAN afford it. Aside from my mortgage, I have no debt. My car is well maintained. I have a stable job. I'm selling my current one due to personal issues, and I need a fresh start. Home is where I spend most of my time, so I can afford to spend the 28% of my gross, rather than 25% of my net. Thanks Javier!
You the most honest person on TH-cam. And I love it.
Thank you for what you are saying, but a lot depends on whether you have school age children. Often, that bigger house comes with a more exclusive neighborhood with a better school district. A better school district is a big reason why many families push for a more expensive home. Sadly, it's not always keeping up appearances, but making sure your kids have the best shot at succeeding in college, and beyond.
I totally get that! My wife and I took the plunge in a home a little bit outside of my comfort about two years ago because of the school district (it was the district I dreamed about my kids going to). However I’m in a career that’s limitless, some folks are capped so I’d rather be safe and advise people to not push it
Still doesn’t really make sense. If you can’t afford it you can’t afford it. Those school districts aren’t really getting those kids into any better colleges than the neighborhood with .5 lower rating then the parents don’t even have money to send their kid to college and leave them to take out a bunch of loans. In this case, it’s still trying to keep up appearances. More than half of the parents aren’t even involved in the kids learning
Pffft college...
Sometimes life throws a curveball. We bought our home and our monthly payment was $2400 which hovers around a bit above Dave Ramsey at ~28% of our Net income.
Two years into home ownership our taxes had been reassessed during our home purchase and the ESCROW was VERY far behind. Lo and behold to cover the negative ESCROW and pay the new higher taxes our monthly payment increased to $3,150. WHICH IS INSANE. Now being 36% of our net for the next year - uncomfortable but doable.
Be conservative life sure can take some wild turns.
Wow Javier what a growth of subscribers in ur you tube channel.. congratulations! 🎉 I started watching your videos last year probably around March or april while I’m deciding to buy my first house.. fast forward to 2021 and you almost have 80k subscribers! Happy for you 😀 congratulations !
I know!! I have no idea what’s going on lol
Tin Foil Javier is my favorite Javier!
I am a teacher in California it seems as if I’ll rent forever. 🤣
Of course Javier and Dave Ramsey's rules don't apply to different Worlds like California.
@brandon starting 50k that is correct
@@OnLyhereAloneexactly too bad I love the weather 😭
My wife is a teacher (out here in CA), and we have also resigned ourselves to rent forever.
Seems fitting
My thoughts: If I can buy a house that is smaller than the apartment I am currently renty, has a higher mortgage payment and is 60 minutes further away from my work, then I keep on renting.
You wont be renting for long if thats your cut off haha
@@Spedfree If houses keep going up they way they are I imagine mortgage payments will too. I had 20% saved for a 245k loan last year because that was the usual price in my area, all of the sudden in 2020 they bumped prices to over 300k, so I no longer had 20% for a house in the area and my mortgage would be 30% more than my current rent.
@@MR3DDev I see what you mean yeah if you include your downpayment as locked in money you may be right.
Amazing that $250k is considered budget in AZ. 10 years ago that was living large. The way my lender did it was he asked me what I was comfortable paying a month and that's where he maxed my loan at.
Can't even get a small house in my area of Ontario for less than 450,000k. It's so sad how much things have changed over the years
This is real! I got a realtor and loan officer talking about getting pre qualified. I told them, no need. I know how much money I have to dedicate to housing and it will be half of what they tell me. Thought I had a good job for someone with only HS education. Thought about a house and realized, can't have car note and house note and keep same lifestyle.
Finally!!!! someone that is dishing out EDUCATION!!!!! You can't afford it when you are in DEBT!!!! Amen bro!!! The keys to the castle! always think 20% and reach that goal for the amount of house you seek!
WITH THE ADDED LAUGHTRACK!! . . . legendary
Well im glad i bought in 2010. House is paid off. House prices in Cali are stupid!!!!! Im glad i bought cheap because its true what they say as soon as you buy a house the heater goes out, the plumbing goes out... i have replaced all these things. But better than paying 2k dollar rent screw that
Superb advice! People often forget with homeownership their are all kinds of maintenance costs, upkeep, lawn, new roof, association fees, just all kinds of things, that you really need to have room in your budget for. Not to mention if you have a personal emergency medical or otherwise, or car repair bill etc who knows but your advice is spot on coming from someone whose owned several homes throughout my life.
You should make this videos in Spanish too !!! Thank you for all this info it’s great
Thanks for being real and honest!! 💯
I was able to save about 5% of my 7% down payment goal in 2 yrs living on 30% of my budget. I already put my mindset that this is what is necessary to be able to own a home & live comfortably without the risk of losing my home in the future.
I follow Dave, my house mortgage is only 21 percent of my income . That financial piece is amazing. Strongly recommend it
If people did the right thing we wouldn't be seeing so many fixer upper homes going for 300k
Elizabeth Warren (back when she was same) wrote about the 2 income trap. How people would buy homes (or stuff) on the premise of two incomes. But can you afford the home on one? She was right. Always purchase a home based on one income.
Javier your knowledge just made me a subscriber today. Thanks for all your help
Thank you my man!
2700 dollars mortgage here in California get you in to small 700 square foot 2 bd home in the ghetto area specially in the San Francisco area.
That sucks, but at least the beach is nearby?
Ghetto area...??🙄
great video. love the 25% rule. Has really helped me save and not be stressed about the mortgage!!!
I’m using the 30% rule where making sure my mortgage, insurance and taxes are not more than 30% of my monthly gross income (before taxes). You can use this to easily figure out how much house you can afford.
What a great video! Really nice to see the breakdown of what you get approved with versus what will actually be a feasible mortgage payment. Too many people house broke because they didn’t do their budget homework.
Solid stuff man! Nice to see another TH-cam channel based here in Phoenix doing well.
While Dave ramsey is kind of extreme conservative, some of the other rules in the other direction are a recipe for ruin. I feel comfortable with 25% of net but on a 30 year, not a 15 which is what Dave recommends and which Javier left out and is a huge difference in the monthly payment.
Gives the option of overpaying every month towards principal. But if something terrible happens, there's breathing room by paying the usual monthly.
I agree
I would say 95% of the people would not have the discipline to pay at a 15 year rate each month. I have a 15 year, and I can tell you, i am excited to pay that thing off by 35. I still save 20% for retirement. You can not put a number on peace of mind. When the home is payed off you get that. I get the views of all sides and take what you can. Daves thought's on credit cards are Ludacris if you a responsible.
Well seems like I’m never getting a house since I’m single 😂
Same here
Strive for positive thoughts. You can get a home w/o being w/ someone. I know people who’ve done it and I’m getting my first home built from the ground up this year. Just have to wait a bit longer, save strategically, and live under your means. Don’t think like most Western Society individuals, be your own person.
Maybe look for a condo. i can afford that off my single income. Than work your way into a home
House hacking
That’s not true! Look into house hacking. Find some roommates and rent out your extra bedrooms essentially living rent free while others are paying down most if not all of your mortgage. 👍🏽
When our lender told us what we qualified for, we just laughed. Our goal was to spend around what we were paying in rent, but we were willing to go a little over that, since our rent had been going up so rapidly. We managed to find a small starter home in poor condition that we could comfortably afford the payments on, and have been spending our money fixing it up. If we had followed the Dave Ramsey model, we would not have been able to afford a house at all (and in a few more years, we wouldn't have been able to afford rent, either).
There are those who tell people that they should just move out of areas like mine, and that's great if people want to do that. But most people have ties to the areas they live in, and it isn't reasonable to ask them to move to another state.
That outro was the best I've ever seen!! Thank you for the info.
Javier! Thank you! You actually get it. I have these convs. with my friends who are also house hunting and I keep telling them "well yeah, you qualify for it and I qualify for it too", but look at how much that's going to reduce your monthly income. System is setup to get you as tight as possible. Again, how much can you afford! Not qualify for ;] thanks man!
So in other words, stay within your means. This video was helpful.
Interesting data. My wife and I have always just figured whatever 1/3rd of our take-home is per month, that's what monthly payment we can afford, ideally 1/4 (pipe dream for us to achieve that...). Living in California, that has made it quite a struggle to get a home, we did eventually get one by saving up for YEARS to get a big enough down payment to make it possible. But I am certain younger adults trying to enter the home buying market today are facing a real freaking challenge.
Thank you for your explanation. Easy to follow and clear. Thank you so much 👍
I've watched like 50 videos on this topic already but I can't stop lol. I guess at this point I'm mentally archiving them for when a friend needs advice.
Thanks for your videos and honesty! We built a house 4 years ago and are about to start building again...gives me a lot of things to think about. Much appreciation from Louisiana!
Just what I needed to see for perspective. I'm in a good spot to adjust more.
This video comes right on time! Thank you.
Thumbs up for calling us " Ramsey-heads" 🤣🤣
5:41 35% of gross or 45% of net income
7:14 28% of gross income
8:30 25% of net income
Living debt free was the best decision I've made.
After moving around and buying and selling 5 houses in 10 years and getting mortgages each time. I can completely agree that 25% or less of your monthly take home pay (after taxes and everything else, what you actually get in your pocket) is completely the sweet spot. At that rate you can save, invest, vacation, not be in debt, and even pay down on your home...just have a full life. Whenever I talk to family and friends struggling financially, 9 times out of 10 it’s that they are 35% to 50% (or even more) of their take home pay on their mortgage.
This has changed my perspective! I really want a loft but may really have to reconsider if that’s a wise purchase.
Thank you for posting this exercise! Very helpful and reassuring. Although I know Dave Ramsey recommends a 15 yr mortgage, we're doing a 30 and I still feel like our payment is conservative based on all these different rules. Much appreciated!
You are great at what you do. Really appreciate this info and your time. We live in Glendale, AZ. Moved here 2 yrs ago and its insane how much houses have gone up in this time. Truly difficult to buy a home in this climate.
I went into it by saying "this is what my rent is, this is what my rent is going to be, I don't wanna spend more on mortgage + maintenance than what my rent is going to be if I stay." And my rent was getting real crazy so that wasn't a big ask lol
Great video! I am definitely trying to be more conservative with my budget, making sure to account for my 20% savings/month when calculating my monthly expenses.
Don't forget their electricity bill,water bill ,Wi-Fi Bill ,cable bill, house insurance. So basically 100% of their income is going solely to their house 🤦
New subscriber here, this is such great advice!! Most people go by what they qualify for and not what they can actually afford, this is how people end up defaulting on their mortgage payments.
The 30 percent rule just ain't happening in California. Me and the wife are paying 40% to mortgage and utilities, and we gross 140k a year. We still have some left over at the end of each month to put towards savings.
I suggest doing what we did. Sit down together and spend a solid 2 hours going through your monthly recurring payments. Add all those up. Then figure out your monthly combined net take home.
Subtract your combined expenses+rent from that number to get your total monthly leftover.
Now if you're eyeballing a house that's gonna be 2500 a month in mortgage, put the rent back into your "take home" pay amount, then subtract again using 2500 as your potential mortgage payment. Then factor in your taxes, pmi, insurance etc...
That will give you the most realistic debt to income you can expect.
Thank you for not just being a shark. Your advice is so valuable!
Love you videos man, you are very witty and funny dude but at the same rime informative.
I remember back in 2008, I was 32, and "qualified" at the time for a $360,000 mortgage. I sat down and worked out the basic math of that, and couldn't wrap my mind around how I could possibly afford the payment on that making what I was making - well under $50k per year at the time. I turned down the offer and started digging a little deeper - I tried warning all of my friends not to buy and they looked at me like some leper on meth that busted into their party. It was sad to watch them lose their shiny new homes in 2009... made for a great time for me to buy though, at a MUCH more reasonable rate. I'm watching the same housing market jump take place here again in AZ - 10 years later... I'll be in a great position to take on a second or possibly third home for investment properties when it goes down again.
This channel is amazing, opening my eyes