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Mortgage question

newmommy74newmommy74
in Washington Babies

What is a 'big' mortgage to you? We are in the process of building a new home and re financing and it is quiet daunting seeing all the figures!

I have a few friends that have mortgages $500,000 upwards and to me that is just insane!! At the moment we have a $220,000 loan but once we build again it will be slightly more.

How much is too much do you think? 

collage Cooper Flynn is 3 years old and growing! May 10,2009 Miscarriage April 2008 Ectopic pregnancy August 2011
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Re: Mortgage question

  • sunmountainsunmountain
    That is entirely subjective to where you live. If you live in the midwest, $220K is an average mortgage for an average house. 220k wouldn't get you much in Seattle proper - maybe a condo. Our house in a great neighborhood/the better Seattle schools is about $500k in value at this point. The homes we are looking at near san francisco (although we are going to rent for a year) w/ the same sq. footage and amentities as our house here would be 1.3 million or so.  it's all in where you live and what you can get for your money in your neighborhood and the COL in those areas. I wouldn't blink at paying $500k in Seattle or Bellevue for a house, in fact I'd pay more.
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  • Mama_v2.0Mama_v2.0
    I agree it is relative, but I would say relative to what you make. If your loan is more than 3 times your annual income that to me is big. So if you make $100K a year and you have to barrow $400k that is too big (especially when you consider that is really $800K out of your pocket.)
    Mama to Z - 5.5 years, G - 3.5 years, & M - 1.5 years.
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  • IdahoGirlIdahoGirl

    imageMama_v2.0:
    I agree it is relative, but I would say relative to what you make. If your loan is more than 3 times your annual income that to me is big. So if you make $100K a year and you have to barrow $400k that is too big (especially when you consider that is really $800K out of your pocket.)

    This.  It's why so many people live in the suburbs and you've seen so much foreclosure in this economy.  Homes are obviously more expensive in different parts of the city...and if you're not making enough to safely cover that mortgage payment  AND be putting a fair share of money into your emergency savings and retirement plans, then IMHO, you've made poor financial decisions.  Especially when housing prices are only very slowly rising after a big drop and no huge recovery looming on the horizon.  Should you need to get out quickly anytime in the near term future, you could be in trouble.

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  • outlandartistoutlandartist

    imageMama_v2.0:
    I agree it is relative, but I would say relative to what you make. If your loan is more than 3 times your annual income that to me is big. So if you make $100K a year and you have to barrow $400k that is too big (especially when you consider that is really $800K out of your pocket.)

    This. I've also heard your monthly payment should be no more than 30% of your monthly take home pay.

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  • Seattle_JiLLnSeattle_JiLLn
    It depends on what you make. Look at your budget and see what you can afford for a monthly payment. I think it's ok to stretch even closer to 50% of your take home pay at first if you have a fixed rate. You will keep making more with raises at work but your mortgage will stay the same. So IMO it's ok to be a little tight at first if you need to be.
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  • koosh ballkoosh ball member
    Our mortgage is about 150K more than we make every year and I still think its a crapton of money. :)
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  • newmommy74newmommy74
    imageoutlandartist:

    imageMama_v2.0:
    I agree it is relative, but I would say relative to what you make. If your loan is more than 3 times your annual income that to me is big. So if you make $100K a year and you have to barrow $400k that is too big (especially when you consider that is really $800K out of your pocket.)

    This. I've also heard your monthly payment should be no more than 30% of your monthly take home pay.

    Very true! I have also heard about the 30% rule too - wow those people that have $500,000 plus mortgages must be on some good $$$!

    collage Cooper Flynn is 3 years old and growing! May 10,2009 Miscarriage April 2008 Ectopic pregnancy August 2011
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  • Seattle_JiLLnSeattle_JiLLn
    imagenewmommy74:
    imageoutlandartist:

    imageMama_v2.0:
    I agree it is relative, but I would say relative to what you make. If your loan is more than 3 times your annual income that to me is big. So if you make $100K a year and you have to barrow $400k that is too big (especially when you consider that is really $800K out of your pocket.)

    This. I've also heard your monthly payment should be no more than 30% of your monthly take home pay.

    Very true! I have also heard about the 30% rule too - wow those people that have $500,000 plus mortgages must be on some good $$$!

    Or they have to eat ramen noodles. :)
    image
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