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SmarterShelter OP t1_iybjzr5 wrote

Reply to comment by Nickyweg in If Buying a House Is Cheaper Than Paying Rent...? by SmarterShelter

New total rent is about $2250. Income varies but averages to about 5K/mo and I typically live off 3k of that and save the other 2K. Home cost would need to beat that $2250 in rent to be worth it - which is probably a 400-500K condo or fixer-upper in my HCL area.

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mcmpearl t1_iyblv76 wrote

For a condo, there are condo fees to consider. They never go down and at best, only some of it is deductible on taxes. On the up side, the fees may cover some of those maintenance costs mentioned elsewhere. Speaking of taxes, you will likely be able to itemize and this may reduce the amount you pay in federal and state taxes. So, I would set money aside monthly into a maintenance reserve, but also estimate my taxes and reduce withholding by any reduction in taxes (the target is to have just a little more withheld than you will owe so that you get a small return).

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SmarterShelter OP t1_iybm22b wrote

Good point... I definitely wouldn't want a condo long term. And I'll have to do a deep dive into homeownership and taxes cause I think that's going to be important.

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Nickyweg t1_iybkdyd wrote

What do you have in savings and how much of a down payment can you afford ?

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SmarterShelter OP t1_iybkx43 wrote

I've got about 100K including my retirement savings. I'd like to put down no more than 64K to keep a year of living expenses, but I'm not sure if that's realistic.

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Nickyweg t1_iyblilk wrote

Where in the country are you located? Do you plan to stay there a while ?

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SmarterShelter OP t1_iyblphm wrote

Los Angeles. I don't care for the city but don't have any plans to leave in the next 15 years.

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Nickyweg t1_iybm0hr wrote

It’s going to cost more monthly for now, but you will lock in that price.

500k with 60k down will run like 3300-3500 a month.

It looks like your break even point would like year 16.

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SmarterShelter OP t1_iybm7yh wrote

Would lenders qualify me for a $3500 mortgage payment if I'm making like 5K a month? I know for rent, they wanted to see 2.5x the rent in income.

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Nickyweg t1_iybmftw wrote

Probably not. I think it’s usually 2-3x yearly income.

You may need more down, moving to a cheaper COL area, or raising your income.

Is 5k post tax ?

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SmarterShelter OP t1_iybnf8a wrote

Hmm... That's helpful. I need to run some numbers with a professional.

The 5k is an ugly mix of pre and post tax income. I'm a professional artist.

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Nickyweg t1_iybnj5q wrote

That’s going to be hard if your income varies a lot month to month

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SmarterShelter OP t1_iybnwmq wrote

Yeah... I mean, it's a hazard of what I do. I've had very brief non-number-based chats with two loan officers, and they said they see it all the time cause everybody in LA works in arts and entertainment.

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