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View Poll Results: % Of Income Spent on Housing/Rent per Month in your city
Under 15% 7 14.58%
15-25% 16 33.33%
26-30% 10 20.83%
31-35% 4 8.33%
36-40% 1 2.08%
41-49% 5 10.42%
50%+ 2 4.17%
No payments bar Property taxes/HOA/Maintenance 3 6.25%
Voters: 48. You may not vote on this poll

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  #21  
Old Posted May 16, 2020, 1:22 PM
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Two months ago, I left rent to homeownership (with mortgage). Total costs doubled, but that's because I decided to go short-term (15 years) with decreasing installments.

Anyway, pre-covid total housing costs were around 35%, now it's around 55%. I'd be better off with rent now.
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  #22  
Old Posted May 16, 2020, 3:03 PM
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The great thing about a short loan is a large percentage of the payment is principal, i.e. paying yourself. I consider that another form of retirement savings.
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  #23  
Old Posted May 16, 2020, 3:24 PM
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^ I like the flexibility of a 30 year.

Yeah, you'll pay a lot more interest if you stick to the minimum monthly payments for all 3 decades of a 30 year, but most 30 year loans let you pre-pay princincipal if you want to, which can get you pretty close to a 15 year if you're disciplined and consistent.

However, on the other side of the coin, a 30 year sure comes in handy when your wife quits her job to start her own business and then you get laid-off and your income drops to zero for a stretch of time.
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  #24  
Old Posted May 16, 2020, 3:35 PM
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Quote:
Originally Posted by mhays View Post
The great thing about a short loan is a large percentage of the payment is principal, i.e. paying yourself. I consider that another form of retirement savings.
Indeed, but right now the installments are crushing me. I cut everything else, which would not be an option anyway. My credit card is all restaurants and bars, which are down with the pandemia.

Quote:
Originally Posted by Steely Dan View Post
^ I like the flexibility of a 30 year.

Yeah, you'll pay a lot more interest if you stick to the minimum monthly payments for all 3 decades of a 30 year, but most 30 year loans let you pre-pay princincipal if you want to, which can get you pretty close to a 15 year if you're disciplined and consistent.

However, on the other side of the coin, a 30 year sure comes in handy when your wife quits her job to start her own business and then you get laid-off and your income drops to zero for a stretch of time.
Me too. I financed my first apartment (outside São Paulo) with a 30-year morgage. It's been running for 4 years, but I've paid off the the last 9 years or so.

However, in this case here in SP, yearly interest rates for 15 years were 1% less than for 30 years. That's the main reason I opted for short-term this time. I knew things would get tight, but Covid made things even worse.
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  #25  
Old Posted May 16, 2020, 5:45 PM
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I agree that you should keep the monthly payments in a safe zone. It's easier if you also have a lot of equity, which means you can pull some out if needed.
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  #26  
Old Posted May 16, 2020, 6:00 PM
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Quote:
Originally Posted by Steely Dan View Post
^ I like the flexibility of a 30 year.

Yeah, you'll pay a lot more interest if you stick to the minimum monthly payments for all 3 decades of a 30 year, but most 30 year loans let you pre-pay princincipal if you want to, which can get you pretty close to a 15 year if you're disciplined and consistent.

However, on the other side of the coin, a 30 year sure comes in handy when your wife quits her job to start her own business and then you get laid-off and your income drops to zero for a stretch of time.
I agree with you. And I've said this before but in earthquake country I don't really want to pay off my loan. There's additional "flexibility" in having the bank's capital tied up in my home rather than mine should nature hit us hard. Meanwhile, I get the major benefit of owning rather than renting: Transparent costs way into the future. Nobody's gonna raise my rent . . . ever. They do, however, raise my condo HOA fee and that's now larger than my mortgage payment.
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  #27  
Old Posted May 16, 2020, 6:05 PM
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We spend about 10% of our gross income and about 23% of net on housing including mortgage, real estate tax and insurance.
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  #28  
Old Posted May 16, 2020, 6:07 PM
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Quote:
Originally Posted by yuriandrade View Post
Indeed, but right now the installments are crushing me. I cut everything else, which would not be an option anyway. My credit card is all restaurants and bars, which are down with the pandemia.



Me too. I financed my first apartment (outside São Paulo) with a 30-year morgage. It's been running for 4 years, but I've paid off the the last 9 years or so.

However, in this case here in SP, yearly interest rates for 15 years were 1% less than for 30 years. That's the main reason I opted for short-term this time. I knew things would get tight, but Covid made things even worse.
You are describing what happened in the US in 2008 and it's starting to happen again: Millions and millions of people buying what they could just afford in good times but not when times unexpectedly went bad.

The good news is that here anyway, if you still have good credit you may be able to refinance to an even lower rate. Mortgages track the 10 year Treasury bond, the interest on which has collapsed and now there is even talk of European-style negative rates.


https://ycharts.com/indicators/10_year_treasury_rate
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  #29  
Old Posted May 16, 2020, 6:47 PM
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I feel so blessed to still be working, backed by a strong union, and have a landlord with the biggest heart who has only been charging us half a month's rent, so my income to rent ratio is now about 15%. I'm actually able to start building up a rainy day fund for the first time in a while. Once I finish my finals (I'm getting my MBA at night) I plan on giving back somehow by volunteering.
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  #30  
Old Posted May 16, 2020, 6:58 PM
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Quote:
Originally Posted by Pedestrian View Post
You are describing what happened in the US in 2008 and it's starting to happen again: Millions and millions of people buying what they could just afford in good times but not when times unexpectedly went bad.

The good news is that here anyway, if you still have good credit you may be able to refinance to an even lower rate. Mortgages track the 10 year Treasury bond, the interest on which has collapsed and now there is even talk of European-style negative rates.
In my case, savings are bigger than the two mortgages, so aside the massive anxiety of not having anything left to save in the end of the month, it should be fine.

Down here, same thing: Central Bank interest rates have dropped from 14.25% (2016) to 3.00% and they will probably slash another 0.50% on their next meeting. Banks, however, became very conservative with Covid and aside avoiding new loans, they won't touch current contracts. Future interest rates climbed due uncertainty.
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  #31  
Old Posted May 16, 2020, 11:27 PM
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The problem with 2008 is that mortgages were given to people who couldn’t truly afford it even in good times, yet alone in bad.
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  #32  
Old Posted May 17, 2020, 2:27 AM
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40.1% of my take home pay goes to housing.
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  #33  
Old Posted May 17, 2020, 2:44 AM
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My wife and I are spending ~28-29% of our gross income (well, it's basically all my gross income since she's not currently working) on rent + utilities. Also, our apartment building isn't raising rent on our next lease, so that's nice. Fortunately we only spend like 3% of our gross income on transportation.
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  #34  
Old Posted May 20, 2020, 4:54 AM
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Thanks for the responses all. I was actually kinda surprised at the range. Was expecting it to be a little higher for a lot of folks. Good spending habits and budget discipline for a lot of folks here. Was expecting to see more above 34/35-40%, but a lot of folks below 30%.
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  #35  
Old Posted May 21, 2020, 5:10 PM
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Wow, I am seriously jealous of a lot of you guys!

I am paying around 38% of gross pay to housing but the good thing is that a significant minority of our income(the gf and mine) is not taxable, so our net income burden isn't too much higher.
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