Why do people buy houses on the basis of 2 salaries instead of 1?
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Anonymous
Simple---unlike cars, it's nearly impossible to save and pay cash for most people, at least not until you are in your 40s+. Whereas with cars, yes it is not that difficult for most UMC+ to pay all or mostly cash for their vehicles if they want to. Buy a car you can afford with a 3-4 year loan (at max). Then continue to save the car payment until you buy the next car. Key is to not buy that next car until 7-8+ years. If you can make it to 10 even better. In my experience, most of our cars still fetch 25-30% of what we paid for them over 8 years later (and 80-100K+ miles later). So it's not that difficult to imagine paying cash for a car in your early 30s. Once you do that, then you simply save for all future cars and include the 20%+ resale of your car into the new purchase price (but please dont' trade it in---car max and the like give you a much better deal without any hassle). |
Anonymous
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Anonymous
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When we bought our house, we were lucky. It was the end of the recession. Houses were CHEAP and interest rates were low. We bought way under what we were approved for from the bank. We absolutely could afford the house on one income. We'd have to be careful, but we could do it.
Now? In my neighborhood, houses have doubled cost, taxes have gone up and there's no way we could comfortably afford it on one income. The reality is that MOST people can't afford a 2 bedroom apartment in an iffy neighborhood on 1 income. |
Anonymous
Well, in our case, the money we have invested in the market rather than using it to buy our house in cash has been increasing in value at well more than twice our mortgage rate, so even after you account for all the interest we'll pay over the life of the loan, we'll come out ahead. |
Anonymous
There are always affordable houses within an area where someone is looking. We bought our affordable starter house in an area with top schools. It was affordable because it had carpet in the kitchen and bathroom and fake wood paneling in he kitchen. Cheap fixes and location and schools were priority over an ugly bathroom. |
Anonymous
| iwe purchased based on one and sure am glad we did! my spouse was a victim of dodge and since we have based our entire lives around one salary we have a huge safety net and a very manageable mortgage. spouse has since found a job but many of his laid off colleagues haven’t and are stressed to the max because their entire home lives had been structured around 2 government incomes they assumed would be there forever. |
Anonymous
| This question is so arbitrary. Why do people buy a house based on 100% of their salary instead of 50% or 75%? I think everyone does different things depending on where they live, their priorities and how much they have. |
Anonymous
Did you account for the gain on the property value that you missed out on? |
Anonymous
*you would hav |
Anonymous
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We bought primary home based in 1 salary. Then the next yr we bought a 2nd home at beach. Went lower on 1st home because we knew we wanted a place at the beach for fun.
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Anonymous
The market has done better overall. |
Anonymous
How have I missed out on the gain in property value? I own the house and the mortgage is against the price we paid, not the higher price it could (in theory) get if we sold it. If we sell, we repay the loan, and we keep the extra value. It's true that if I didn't have the mortgage, we'd get a check for the appreciation + the mortgage cost at closing, but again, the money we didn't put into the house has been going up in value much faster than (a) our mortgage rate or (b) our house. |
Anonymous
That is exactly why we have tried to base our lifestyle off of one income. For the 6 years before we had kids, it allowed us to pay off all our student loans (almost 80K 35 years ago), save 10% for a downpayment and get to the 20% within 2 years to remove PMI and build a 9-12 month EF all before having kids. It allowed me to be a SAHP when first kid arrived without too much concern for finances. Basically it gives you choices and lets you live with much less stress. |
Anonymous
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Well, how would this work with a single person?
Banks probably take into account how stable a person’s job (and future job prospects are). |
Anonymous
I'm impressed by your ability to afford that home on that income. Congrats on your financial discipline! |