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March 27, 2006

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I totally agree. It stinks living a big place with your old disposable college furniture. Because I'm sure folks aren't buying furniture on credit! ;-)

I could have maxed out the loan I was initially approved for, but I decided to look in a cheaper neighborhood for a place to live. I don't regret it. I don't sweat the mortgage payment every month, which is good, because my 'fixed' payment has gone up a little bit every year due to escrow requirement changes.

28-33 percent of your monthly income should be your mortgage payment

Living in San Francisco, my mortgage (including tax and homeowner's dues) is 50% of my net income. The interest tax deductions dropped me a few brackets to help pay for the hefty SF mortgage, and the appreciation has more than made up for the hardship (500% return on investment in 2 years). It really is a personal decision rather than a fixed percentage. People should do all the homework, and figure out the appropriate risk. Too many people buy their homes with their heart.

A great calculator I came across was www.mortgagecalculatorplus.com. It breaks down the payment with taxes and PMI, something many calculators leave out.

Great Advice!

We recently applied for a mortgage loan for the first time on 1-income and I Was worried we would not qualify for our current $200k loan. No, instead we qualified for about $600k max - *choke choke* - about 10 times my income. & I Said I only wanted a fixed rate.

Considering about $200k is our comfort zone (payments about 1/3 of my income), you see the big gap. I could only imagined if we ventured into ARM territory. Since we have excellent credit they would probably write us a blank check for whatever we wanted - no-doc loan and all that. About as bad as going sub-prime if you take the max.

We are from the San francisco area as well and refused to put 50% of 2 incomes on a mortgage so we moved. I know to many we have a big house and a big mortgage, but compared to what we grew up with thinking we had to buy, its peanuts. For a while our mortgage was 50% of 1-income, but that is completely different, and we felt comfortable. Today it is about 25% of just 1 income. We never could have dreamed of owning a home so cheaply back home.

We are considering moving again since our house more than doubled the first couple of years and is going strong. I just worry we will always be moving somewhere cheaper our entire life. Then again we have never made a smarter financial decision than to move. SO why not do it again.


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