The sad thing is that people who are struggling to make a PITI payment now are at the mercies of prices continuing to go up, which eventually has to stop as the number of people who can afford a house at higher prices dwindles. It's all funny money anyway as you don't get the value of your house until you sell -- unless you mortgage yourself silly with home-equity loans and then you still owe the money.

Used to be that people had stable and -- generally -- rising incomes. With business the way it is and with at least half of all marriages ending in divorce, that's no longer any kind of sure thing.

3 bedroom, 2500 sq ft, on 4 acres.

my parents have a similarly sized and mortgaged house in a subdivision in city limits. their payments are about 1000 for the note, 100 for the insurance, and 150 for the taxes. they only have a quarter acre.

BTW, they live just 1 mile from me, yet they pay 3 times the taxes i do!

Prices are where they are because people are paying them. There's no objective standard for what a house "should" cost, and people always have other options - like renting, or buying in a less expensive area. Prices for houses, like everything else, are where they are because that's the level that balances supply and demand. Prices and interest rates have gotten high enough so that demand is down and lots of places are now either neutral or buyer's markets.

This is actually a lot less than what we'd pay for rent for a smaller house!

In our area the market is exploding. We bought our house last year and the market has brought it up over 25% what we paid. Smaller, new homes on zero lot-line plots in a subdivision nearby are going for up to 50% more than what we paid. They can't build houses fast enough in our town.

House is on the high end for this area. 2,550 sq ft, not *that* large but lots of custom features. 1.1 acres. I paid close to 63% down.

Taxes are the killer. And they're going up, up, up. Bond issue passed for a new school.

Which has meant that many have bought more house than they felt they needed - with prices rising as they have been, 10% increase on a $300,000. is $30,000. (less the larger interest that you paid in the meantime) while it's only $20,000. on a home that costs $200,000. now.

Trouble is:

The U.S. government carries a huge debt.

Their huge annual deficit is adding to the debt, annually.

There are many who say that they are printing much larger amounts of money.

Foreign entities are carrying very large amounts of U.S. debt.

The U.S. gov't. has been complaining for a long time that China pegged the Yuan to the U.S. Dollar, despite U.S. entities buying many times the value of stuff from China that China buys from them.

Which would ordinarily mean that if a U.S. person wanted to buy Chinese currency to buy stuff from China - the price of Chinese currency would have gone up, since so many people want it. But the Chinese gov't. kept the price pegged.

Accepting a lot of U.S. debt instruments to soak up the slack.

What may happen if the Chinese Gov't. says, "Pay up, pleased"?

Some of my clients chortle as they tell me how they got 19% interest on Canada Savings Bonds back about 1981.

And I reply that, though those figures look good when they show up in your bank book, there are a couple of problems, or, as I put it rather vividly, there are two rats that eat your cheese.

The Income Tax people want to talk to you every year about all of your income in that year - and they want part of it.

I find it hard to believe how few people in Canada (including some bank people) know that certain kinds of income are taxed at a lower rate than others.

So much for your income.

If you have your assets invested in investments offering guaranteed dollars (i.e. principal) - they guarantee that they'll give back every dollar that they got, as well as rent on the money.

There's a problem (that they never mention): they won't give back one dollar more, either.

However - had you put $10,000. in the bank on a guaranteed certificate for 5 years, 15 years ago, and renewed it twice since, there's a problem.

That $10,000. would have bought a fairly decent car, 15 years ago.

A sinmilar car will cost you a great many more dollars, now.

So the inflation rats gnaw a little bit off of the corner of every such invested dollar, every year.

I tell those folks that, were they in 25% tax bracket, that'd cut their 19% to just under 15%, after-tax return.

And do they know wwhat rate inflation was, in 1981?

Almost no one does - it was 12%.

Take that from the amount that you had, after taxes - and there isn't much left in your hand.

If interest rates rise again, as they may well do, considering those huge debts, both government and private - those expensive houses may well be put on the market again.

And if there are a lot of them, and the interest rates are high at the time - who'll be willing to buy them?

If you have a house valued at $300,000. now and are carrying a mortgage for $260,000., if you lose your job, or for other reason must sell ...

... and many others are doing the same ...

... and your house eventually sells for $225,000. ...

... you may well find that you owe the bank $35,000.

In addition to foreclosure, selling and other costs.

Not a pretty picture.

Sorry to rain on your parade.

ole joyful

A sinmilar car will cost you a great many more dollars, now.

In fairness, joyful, cars offer far more than they did fifteen years ago. Better performance, smarter transmissions, longer service intervals, multiple airbags, anti-theft systems, high-end audio, and more standard features. It is not purely inflation that has driven up the price of cars; it's content, too.

That said, I do agree that there's value to looking at not just numbers but what those numbers could buy in the form of goods and services. We just need to keep comparing apples to apples.

If they're financing, though, some lending institution is agreeing to this. Granted, they make good money on mortgages, but most banks and credit unions I know of don't want to be in the real estate business -- they want to make loans that have excellent odds of being paid off. I agree wholeheartedly that it's a bad situation to get into -- and the effects of hot markets on prices hasn't helped a bit. But someone is loaning these folks several hundred thousand dollars and I don't think they'd be doing it if they weren't pretty sure there was a payoff.

The new "american way" is to charge charge charge and refinance-skate by. It wasn't this hard for our parents & grandparents.

I grew up in the 70s, when inflation was rampant and double-digit mortgage rates were not unheard of. I know of many people who bought stuff on credit because they perceived that the same product was only going to cost more later, so why not buy it and enjoy it now? Cars, houses, boats, ...

Our parents and grandparents had a few benefits we do not have. Employment was far more stable "back in the day". Now there is no company so large it cannot be bought or bankrupted. "Productivity" was not the mantra it is now, with its insistence on squeezing people out of decent-paying jobs. We were not competing with developing countries like China, India, and Mexico for jobs. Credit was not as easy to come by (when I was in college, the only credit I was ever extended was an Amoco credit card; now kids are showered with offers). 100% mortgages were unheard of; you couldn't even get yourself into that kind of trouble.

There were some disadvantages, too: being laid off or divorced now does not carry the stigma it used to (primarily because it happens to so many people now). I'm not defending poor lending practices and buying on hope and expectation rather than on a sound financial footing. But it's a different world out there now. Someday the pendulum will swing back.

The poster makes a good point. I live in San Diego, and my mortgage was $2430, my taxes $3300/year, homeowners insurance $1700/yr and earthquake insurance $600/yr. My mortgage was $425K for a 30 yr fixed. We built this house on a 5 acre lot.

I just finished building my house, and moved into it in September 2005, and realized that we would be debt slaves to it forever, a concept that was okay at first, but as I woke up the reality of the housing bubble, realized we would lose all our equity after a 50% correction. So we sold and are now renting for $2300/month. We have a huge windfall from the house, which more than doubled what we had saved for retirement in over 20 years! We will continue renting until the correction is complete. It has barely started, with about 30% of SD homes with price reductions, sales half of January 2005 numbers, and inventory double of January 2005 numbers.

As the poster said, folks are in over their heads with 100% financing, no doc and stated income loans, negative amortization loans, and as their adjustable rate mortgages adjust, they will be foreclosed on. Next year, the foreclosures will peak, as the 3-yr ARMs from 2004 adjust. In most cases, the payments will double when the teaser rate expires.

Even $2300/month rent is too high, in my opinion. I think we are all just having a hard time getting by, between paying rent/mortgage, and raising our kids. Throw in a car repair or housing expense, and you pretty much have to put it on the credit card. That's the cycle we were in. Now, we have about $700/month in lower payments, and despite the lack of tax deduction, we are better off. Money in the bank earning 4.75% interest. It's a good feeling!

Recently I moved from a 2 br. townhouse, about 30 yrs. old, electric heat but inadequately insulated, to a farmhouse about 10 miles from a village, formerly owned by my step-uncle, a farmer raising beef cattle, now deceased, new owner a sod farmer growing sod to lay around new homes.

Former rent was $750./mo., to go to $771. last May.

Current rent $450.: some difference. Well is too near the (now unoccupied) barnyard, its water smells, so I must carry water for drinking, cooking - but that's not a problem: I've done that before.

Your housing situation boggles my mind.

If you are expecting inflation to mount, which I agree may be a good possibility, best not keep your assets in dollar-denominated situations.

I wrote a thread a while ago asking if readers knew which investor gains from inflation ... and which loses. And made some observations on that issue that you might find interesting.

Good wishes as you seek to learn more about living effectively.

ole joyful

Let's go with the current ballpark 6% 30 year mortgage costing $6 per thousand borrowed in principal and interst. A hundred grand = $600, two hundred grand = $1200, three hundred = $1800, etc. Throw in taxes ($400/ month in my high tax state) and $50 in insurance and those are some awful hefty monthly payments.

I cannot fathom a young person or couple borrowing $200,000 and biting off the $1650 a month payment needed for an "average" house in these parts. What kind of income(s) makes that seem reasonable? The rule of thumb used to be a bank would let you borrow (roughly) three times your income. But it seems as though a household pretax income of $67,000 would be strained by a payment that size. Certainly with taxes, gasoline, healthcare, childcare and everything else spiraling out of control.

So who is building and buying all these even more expensive 300, 400, 500, 600 thousand and up houses??? Are there that many people earning over $100,000?? $200,000??? I am quite confused.

One theory is that the shift to two income households floated one run up in housing prices, and the stunning drop in mortgage interest rates (I remember 14%!!) floated another round. And the equity surge lately floated itself by allowing people to roll magic equity into bigger homes or pull out magic equity to make ends meet.

Meanwhile household savings rates just dropped below zero last year. This is not good. We have run out of ways to keep this ride afloat. I anticipate a serious slowdown (or reversal) in real estate appreciation and a lot more foreclosures. Markets are based on "what people will pay" and I see what you see: past a point, people simple cannot pay for these houses. We are at that point.

Be happy you did not overextend yourself too far.

Don't be envious - as the saying goes, "You don't know who's swimming naked until the tide goes out".

When the ARMs reset, you will see how many of your neighbors are foreclosed on.

Now I keep thinking back on that when I hear about interest only mortages. Well, THAT's what he was talking about. I never heard of such a thing back then.

People are so much more aggressive about how they finance homes than we have ever been. Everytime we were told how much we qualified for I thought - no way can we afford that much of a house payment. Now as you say rosalynd, it seems people are maxed out. I'm sure that is one of the things that in turn leads to maxing out credit card debt too - there is no money left to pay for other things or to save up for major purchases.

I've noticed too how people move up or refinance and take alot of cash out - rather than continuing to build equity and shorten the term or keep payments lower. BIL/SIL bought a bigger better house and completely redecorated - something I have never felt I could afford to do when I've moved. I just did it over time as I saved enough money. Come to find out they took most of their equity out in cash so they could decorate and take a tropical vacation.

I think it all has to do with our culture of instant gratification and maybe too much keeping up with the Jones. I really think we could stand a major correction to get grounded in reality again.

We're down to paying off the last of our mortgage - it will end July 2009 at the latest, sooner if we prepay faster than we already are. And even though we have a fixed 4.75%, I still would like to be rid of that debt.

We bought way below what a bank would finance, refinanced at a good time. We redecorate conservatively, paying cash, and DIY where possible. One car is 11 years old, the "new" car we bought last year is 6 years old. I cut DH's hair. Then again, we travel and we eat very, very well. ;-) Some things are worth splurging on!

I do appreciate the beauty of wonderful things - I'm just not willing to gamble or dilute my financial security to own them.

"Home foreclosures were up 45% in January over the year before and 27% from December 2005 across the country"

Buckle in - it's going to be a bumpy ride.

FYI, January went much better for Chicagoland! Stopped climbing and dropped 2%, though foreclosures still higher than NYC and other places. See http://www.realtytrac.com/news/press/pressRelease.asp?PressReleaseID=88.

If that link doesn't work, go to press releases button at top of link below to find 2/21 Chicago article.

"I cannot fathom a young person or couple borrowing $200,000 and biting off the $1650 a month payment needed for an "average" house in these parts. What kind of income(s) makes that seem reasonable? The rule of thumb used to be a bank would let you borrow (roughly) three times your income. But it seems as though a household pretax income of $67,000 would be strained by a payment that size. Certainly with taxes, gasoline, healthcare, childcare and everything else spiraling out of control."

I am a part of one of those young couples you cannot fathom. We mortgaged over $200,000 and have a $1750/month payment. Our house is nice but nowhere near our "dream house" and we plan on moving in about 3 years (we've already lived there for two). Our pre-tax income is about $118,000 and when we were looking we were preapproved for $350,000 which we both knew we could never afford. We have no problems making the monthly payments, and we don't intend to have children so that's not an issue. So I don't consider us "over-extended" by any means. But I do know if our income was much less than what it is, we probably would be having a hard time of it.

Jennifer

It took me 2 years to get a coffee table. I save what I can when I can. I will have no intention of touching my equity.

But I can't see borrowing to buy food, or go on vacation.

If you can't live now on this year's income ...

... how are you going to afford next year to live through the year on (more or less) the same income - and pay off not only the debt that you used for living expenses this year ... but interest on the loan, as well?

But adding it to a mortgage, that'll take 25 years to retire ...

... more than doubled (probably nearly tripled) the cost of that vacation, in fact.

Not my idea of a good time.

ole joyful

I'm not being critical so much as awestruck. I wonder how people make it with those debts.

Obviously, since they were married they would have to move out to their parents homes. They did not even have money for furniture. They got an apartment and settled into married life. Now that Mom and Dad could not see the bills coming in, it was like freedom to spend money however they wanted because there was no one to tell them no. Oh, I just got some Kate Spade sunglasses, they were only $150. Oh, I just got a Dyson vacuum it was only $500. We got a new computer because Best Buy had a finaning deal. Oh I think I'll drive 20 miles to that one department store where I have a credit card to get the Chanel lipstick. I know 2 incomes are better then 1 but it's quite obvious they are over extended.
Now she's pregant and they are trying to buy a house. They only got approved for a $120,000 mortage. Not saying they could afford more, but in the area they are trying to buy, this will not buy anything. I mean literally. The cheapest place listed is $150.

The list is neverending. She ended up in the emergency room and had to stay overnight. Her insurance only covered so much and boom a $700 bill. When she told me this, I said you better check to see what it's going to cost to deliver. No, we will deal with that when we get there.

Now seeing all this, standing back, I watched and learned and decided I did not want to be them. I do not want to always having to play catch up. We were looking at a fashion magazine the other day. The spring sandals are out. 2 identical pairs, one $150 the other $15. I said I would get the $15 ones because they were not pratical everyday shoes. Of course she wants the $150.

I guess I have learned life is about comprise. Do I want more? Who doesn't? I wish I had granite in my kitchen, but I could only afford the laminte. I want new sinks, but hey their is nothing wrong with the ones I have. Would I love to be able to drive a BMW 645? YES? Will I in this lifetime, probably not.

I glad to say I am getting wiser as I get older. If I can't afford it, I can't have it. Simple as that.

To be fair, I am extravagant on some things in my life. I have unhealthy obession with designer handbags. I believe in quality vs. quanity. I had no problem with spending $$$ money on furniture. But on the other hand, I do not spend a lot of money on clothes anymore, I've discovered Payless Shoes and the wonderful frozen food section at Trader Joe's.
It's all about balance.

we did not have hardly any money to put down, so we had to finance 98% of the sale price. the first couple of loan offers were 3 year ARMs, and i flat out refused them. sure, i could have saved a bundle each month for the first 3 years, but then in 2008 our payment could easily double and cause us to lose the house. That was why we went the route we did, we could easily afford the payments, and since they are fixed there is no need to worry about them suddenly jumping on us. the lendor actually pressed me to go with ARM, since they said i would likely refi by then anyway. I asked them if they honestly though rates would drop back under 5% in 3 years and they said very doubtful. I then asked why i would refi at a higher rate, and they could not answer. that is why i took the fixed loans.

too bad many others did not think about this when buying/refinancing their homes. and honestly i probably would not have either, i had my stepdad look over all the proposals, since he frequently handles multi million dollar business acquisitions for other companies.

as to shopping frugally, my wife and i spend about 150 a week on groceries to feed 4 people. We only buy ourselves new clothes when our old ones get too worn for regular wear. for the kids, we never get the chance to buy them new clothes, as their grandparents bring them new clothes every couple weeks or so, regardless of what we say about it.

we have cut all unnecessary bills, and only splurge on our satellite tv. 130.00 a month, but to me it is worth it. If we were to have a finacial set back, i would get rid of it, but as long as we can truly afford it i will keep it as is.

I've been very careful with my money, even through layoffs and a divorce. All I can say is that, if I end up funding the people who are eating, drinking, and partying now at the expense of their own retirement, I'll be outta here so fast...

We were the successful buyers of our house because our realtor made the sellers mad and they took a lower offer just to make sure we bought it and the realtor wouldn't get the commission (FSBO sale). We'd found it without the realtors help and she tried to get the sellers to 'cooperate' and they refused, so she lied to us about things, the owners found out about her lies and ended up so mad at her that they insisted we would get the house!

We also bought at precisely the perfect time, the market started to sizzle 3 months later and inventory was non-existant in our price range. Now there are no homes at that price range at all (up to $145K). We bought at the middle of our comfort zone, got a payment we could afford on one salary (DH had just sold his business and hadn't started up the new one yet so we had to be sure we could make payments on one salary). So we feel pretty good. We will have to refi on the 2nd, but we've put back money for the costs and we know that the appraisal will come back fine (even the assessors office values it higher than what we paid, and the home inspection we got shows the house is in PERFECT condition...we're kind of tickled that realtor was so hot to make a comission she blew it for herself) We also are adamant that we won't take out equity, just refi into one payment and even though we'd love to get the backyard relandscaped into our dream grotto, or completely remodel the kitchen, we're not going to take out $ from the house to do that. That is what our extra income is for.

"outta here so fast..." to where?

I have no problems helping people who end up in bad situations largely outside of their control. But I'm in no mood to fund people who are shortsighted enough to eat their own seed corn out of choice.

You can't get another loan once you have a "mortgage late".

So your monthly payment, which should be based on a 15yr fixed, or even a 30 yr fixed, and take up less and less of your income each year, can actually go up and send you to foreclosure.

And to think that the lenders allowed people to qualify for the loans that will put them there.

Remember the S&L crisis in the early 1990's? This next one will be much worse. Look for banks to go down, pension funds, hedge funds.

OT, I know, but all related to people's greed in getting the biggest house the lender will let them have.

Looking at increases in small numbers is very deceiving.
A 45% increase sounds huge. But when you read the article it turns out to be 1 in 936, or 0.1%. That means the previous rate was around 0.05%. Pretty small numbers.

At one pint Arlington, VA had a 1200% increase in tuberculosis. There was 1 case, then 13 cases the following year (immigrants

Calling chicken little. Calling chicken little.

Our monthly payment is about $1380, and includes PIT, but not mortgage insurance (we have > 50% equity).

The tide is definitely changing.
Live within your means and try to eliminate debt.

-jasper

OTOH, we have no car loans, no credit card balances, and the value of our house has tripled in 8 years. When we bought it, we put down $32,000. If we sold it now, we'd clear $300,000.

Life has gotten crazy, hasn't it?

NO debts other than the mortgage.

[[The above is what I wrote first - when I saw it, I had to laugh, and figured I'd leave it as it was. I really meant, of course, "Good" as the first word.]]

Not to be nosey, but did it involve living in a minimal house, even a fixer-upper, in the early years (I gather you're no spring chicken), involving a small mortgage, that would, of course, take a *lot* less time to pay off?

Leaving you with a lot more equity in hand in earlier years.

o j

I did some work on the house, but it probably didn't add much to the value compared to the market appreciation. I was making substantially more money at the time so it was actually less house than we could have bought. I wanted to downscale expenses so that I could leave the corporate world and go to work for a non-profit and do some good in the world. Your typo was actually on the mark, as I was working for Goofy (and Mickey) at the time.

And I'm not that old. I"m more of a late summer chicken (I'm 48). And I have a four year old and a six year old, so they keep me active.

Unlike many people buying in our situation, we were able to put down a full 20%. Our loan is an interest-only ARM, but we try to pay off more than just the payment requirement each month, so that some does actually into the principle. I think it's likely that once our 5 year ARM lock is up, we'll be moving onto another house, possibly in the midwest, where our dollars will stretch farther.

This is a very nice 2350 sf ranch house in a high end community - the value is maybe 350,000-375,000 (that's also the midwest factor! - I can never return to New England from the looks of things). We owe 68K.

DH and I are 50 & 52 and this is our 4th home since our first in 1984. We have always had shorter term mortgages - except for the first one at 14%! - and always prepaid additional principal. Rolled all equity, and then some, into each resale/purchase and never took out equity loans.

Oh, and always borrowed way less than a bank said we could afford.

And I hear you on those taxes. We are at almost $25 for each thousand the property is assessed at. So a basic house at $200,000 is over $415 a month. Just for taxes. Taxes go on forever, mortgage or no mortgage. And they keep rising - another reassessment will happen this spring!

No wonder people flee to Florida after retirement. I was thinking Tennessee looked good too.

For the U.S. residents in this forum the Canadian system is a bit different from what you are used to.
For example Canadians don’t get to write off mortgage interest on their income taxes.
Ian

Doesn't make a lot of sense does it?

... all of a sudden, I don't feel so bad to be now paying $450./mo. on an old 2-br. farmhouse - even if the well is polluted with e. coli and I have to haul water for drinking and cooking.

Though, as Ian in B.C. says, mortgage interest up here isn't deductible, when Canadians sell their home that has been owner-occupied throughout their tenure ... there's no capital gains tax.

Ian, may I suggest that you pay off your mortgage sooner, if it is practicable?

In case of disability, extended unemployment, etc. no monthly mortgage liability would make one less issue to worry about.

Some extra payments come directly off of the principal, really important, especially in the early years of a mortgage, which is then reduced annually by only a small amount by the monthly payments, as there is so large a principal amount owing on which that interest must be paid.

Those extra payments, made as the mortgage contract allows, even though small, can bring the date at which one becomes mortgage-free down a number of years.

Worth doing, if possible, say many wise financial advisors.

ole joyful

I can’t recommend that for everybody but it works for me.
Ian

yeah, I was once paying over $6000 a year in RE taxes. I since moved to a slightly cheaper house with a lower tax base (at least for now!).

I would love this. Our property taxes this year should be at least $15,000.

--Nate

You have to understand your income will normally rise, and unlike rent which increases/year your mortgage will not if I hope you got the 30 year fixed. When you look back in another 10-15 years, and you're making $3,000/week you'll laugh telling people you only need to pay $1,300 for your mortgage while those starting out in 10-15 years need to pay $4,000/month.

I see it already, my income has way outpaced my mortgage payments and it would cost me more to rent now than I'm paying in mortgage, taxes, and insurance. That will happen to you in several years but those first five years or so is really tough. You'll thank yourself when/if you survive them that you didn't give in.

Lots of assumptions there ... "Dad" pretty much had the benefit of knowing that his job would be there for as long as he wanted it. That is no longer a sure thing. Companies outsource work, they lop off unprofitable lines of business, they merge jobs out of existence, unions capitulate on pay and benefits to keep jobs (ask the pilots at Northwest Airlines how much their salary has gone up lately), pension plans go under, Social Security will either cease to exist/be greatly reduced/impose means tests, ... IMHO, it's a risk to assume that your salary will continue to go up, up, up. For people who may have to borrow as much as possible just to buy something decent in some markets, that's a gamble. And, for them, an ARM might be the difference between a little breathing room on bills and not buying a house.

I remember when the commercials started on TV for debt consolidation companies. All those people whose monthly bills had been lowered, and "had money left over to buy this pool!"

And months later, some one wrote to Ann Landers and was shocked! SHOCKED! to find out those debt consolidation companies put a lien on one's home, and if the owner failed to make the payments on time, he or she could lose the house. And people ought to be made aware of this, she thought.

I wonder what it would cost to live like folks did in the "good ol' days." One b&w TV, one or two phones (black desk rotary dial), no computer or cable or satelite, and what was the square foot area of living space in a typical 1960s house?

That mentality is flawed at best. I suppose it depends on what you do for a living and your time horizon though.

I feel very bad for you if you t live in Upstate NY. and have that mentality.

Also, to buy to your borrowing max is nothing short of financial suicide.

To expect that home prices in general will always increase is another flawed view. I can prove much to the contrary.

Many financial planners will tell you that a home is not an investment - it is a lifestyle decision.

Well it comes in as more than a few pennies. When you have a large income and make good returns on investments, taxes eat into a huge portion of that come April 15. Being able to deduct the mortgage interest adds up to quite a bit of $$$$. Now, that's not to say that you should do it FOR that reason, but it sure makes it nice.

Lots of assumptions there ... "Dad" pretty much had the benefit of knowing that his job would be there for as long as he wanted it.

Were you people around during the Good Old Days? My Dad was usually layed off in winter for months without work each year, along with the other carpenters, along with the mill-writers, along with the masons, along with the sewer pipe installers, along with the back-hoe operators, etc. You wanted a job you wouldn't be layed off, you need a city job. My Dad threw his back out a couple times a year and couldn't work for weeks. My Dad had to borrow money from his father to make it through some winters. My Dad usually worked overtime in summer, if he threw his back out in summer my eldest brother had to contribute some of his profits of his paper route so the family could eat. The plant that everyone worked in closed back then. For Salary positions and plant work, plants in my area when it was slow, would shut down for a week or every other week. Then, the people worked 3 weeks on, 1 week off or every other week and be at the unemployment office. I guess I'm the only one who remembers the "good old days" of long lines at the unemployment office and plants that would run for a couple weeks/month and the battle between the unions fighting and standing up for their workers who were starving and barely able to make a living.

You don't have that today. I don't think people had it good, nor easy, nor lived under the shrowed that there would be no problem getting a new job. We had one b&w TV, which in todays money would cost like $3,500 and why no one had two and if it broke you sent it to a repair shop as you couldn't afford another. But, I still stand that if you're married and as a couple get over the first 5-10 years making your mortgage payments, you can probably get a job at McDonalds and be able to afford your mortgage from then on. Had you mortgaged a decade ago in my area, you'd be paying $704.24/month for your mortgage, taxes, and insurance today which back then was very difficult, but today a couple working for minimum wage can with sacrifice afford that.

If the point is, that the standard of living was much lower then, but the quality of life much higher that I agree with. But, I do not agree there was work to be found around every corner and no problem losing your job there are 100 others just waiting. Everyone got paid crap back then, and laid off all the time. I think you're talking more about recent years, like 5-10 years back. Now, we're heading back to how I remember my childhood. As a child I never knew if my father was going to be laid off, never knowing if he'd throw his back out, never knowing if we were going to be okay. Sure sounds very similar to what people are saying about today.

There were a lot of things about the "good ol' days" which weren't so good. But there are plenty of dangers in the workplace now which were not so prevalent back then. I hold by my statement that no one can count on their income or the market value of their house going up all the time. Planning on that is risky, if not downright foolish.

As for the appreciation of housing, it is area dependant. I know not all areas of the country have had historical increases in house prices.
My parents bought their house a little over 30 years ago for around 60K its worth over 600K now.

I'm relatively sure that my house is going to be worth much more than what I paid in 30 years.

Granted, I feel very overextended, but in all truth, I am not, I could have borrowed more. I am making my payments, and sooner or later, I will get ahead, have money in the bank, etc... End of the day, I have to live somewhere and if you don't feel extended buying your first house, you're in the minority.

Our mortgage payment was $200/mo.. We owned the lot on which we built our home. Between us we had a decent amount of cash. We also had incredible depth of expertise in building trades in our families. We "rolled the dice". We basically spent every dime we had in savings to get the house up. We moved into a home that was framed, sheathed, wired, plumbed/heated, and sheetrocked. We have done every single bit of the "finish" work ourselves. Suffice it to say that I've touched every inch of the walls in this house AT LEAST once.

We had enough "capital" to dictate the terms of the loan we took. Equity is KING, never kid yourselves about that fact. The greater your EQUITY, the more you will be able to negoiate the terms of the loan you seek. The more money you PUT DOWN the better your chances of striking a "deal" with the bank that will be easily affordable to YOU. CASH TALKS!

We "rolled the dice" and it turned out we bought in when the market bottomed out. We were LUCKY. But we were also smart... we KNEW we would be able to come up the monthly "nut" no matter what. We KNEW the payment would be "easy" and we were willing to put a lot of savings on the line to back it up.

Know who you are, know what you're willing to "pony up" and what you're willing to suffer to make it "work". You have to have CASH to put down before you'll ever be able to "run with the big dogs". These newfangled, interest only for so long vehicles are complete and utter, BULLSH!T... they lure in the ignorant and utterly rape them over time.

Cash talks, s--t walks. Get used to it, it's how the system works.

The danger of being overextended is much more immediate. Living in the Motor City vicinity, we have witnessed an industry and a way of life disappear. It is not just old dinosaur industries that are at risk. In 1998 I was laid off from a master-degreed social work position where I earned about $45K. I had been so proud to be hired to work in a hospital. Those in my graduating class who scored jobs in hospitals were paid the most. Well, things changed and hospitals saw social workers as a place to cut costs. Our jobs were either not done, or were added to the chores of nurses. Consequently, there were no jobs for me in the well-paying end of my profession. The first year after my layoff, I probably earned $15,000 at the new job. The second, maybe $20k, the third, maybe $26k. Then the insurance companies started lowering the amount they paid outpatient mental health and substance abuse counselors (I had retooled to fit a new area of my profession) and my income fell again. I am now a contract worker for the county and am back to that nice $45K number again (but eight years later). I know not to rely on this job continuing. Every paycheck is a gift and I do not live my life expecting this to continue. My income is still mostly "extra" for our family.

We are trying to sell the house we moved out of last November. I think it is worth about $165K, but we are asking $159,900 because housing prices here are falling. How does the long-term escallation of housing prices affect me? Well, I guess I can say it got me my new house at about $8K less than I would have paid a year ot two ago.

Had we been living just within our means instead of way below our means in 1998, we would have been in trouble. As it was, we had $20K saved up to re-side the house. In 1999, we were able to do that project.

Even though we can easily afford the three mortgages we have now (we got a HELOC on house 1 to put a downpayment on house 2), DH is having a hard time sleeping. The credit card bill has a balance and we need to pay the feds a few thousand in two weeks. Thanks to that great county consulting job, the money is there for the taxes, and will come for the credit card. But living like this, knowing that neither of us can decrease our pay and get us through this easily, is very hard on DH's nerves!

Middle management people are being laid off.

The middle class is being eroded.

If we think that we'll be earning double in 15 years what we're earning now - we're dreaming in technicolour.

Many workers have seen minimal or even no raises during the past ten years.

Many people who have maxed out their credit in order to buy that big house, and taken out a mortgage at adjustable rate (now when interest rates are low) may well find themselves over a barrel when the rate rises.

Or they suffer a layoff - and may be unable to find employment for, say, six months.

Many families who have overextended their credit like that are about two paycheques from being foreclosed on.

Thus - on the street.

With their furniture.

How they can sleep nights is beyond me.

And if they succumb to temptation - run up big bills on credit cards, with regular cards charging 15 - 18% interest, and store-issued cards 25 - 28% annual rate ...

... they're just digging the hole deeper.

I always want a cushion.

Like driving - I like to leave some room between me and the vehicle ahead, especially if it's a transport truck, with those air brakes that help him/her stop *quickly*.

Someone is always coming up in the other lane and pulling in ahead of me, stealing my cushion.

I drop back some: tailgating a transport truck - notice how easily a low-profile car will slide a long way under one of them, shearing off everything above the engine? ... is a very probable short route to grisly death.

Same with lacking a cushion, financially.

It's essential to still be alive financially if you don't have a paycheque for 3 months - 6 months even better, in this uncertain employment environment.

End of rant.

Hope you're all having a great weekend.

I just cashed two of my pension cheques for this month, the other will be deposited today (or Monday).

Thanks for having kids in college, guys - they'll be paying my pension in a few years.

ole joyful

P.S. I figure to live to 100.

o j

Starting out, my wife and I worked hard, and lived on one paycheck to save a down payment on our first home in 1991. Nothing fancy, but good neighborhood, 1400 sq ft, 3BR, 2Bath.

Fast forward 15 years. I'm in my 3rd home. The house cost much less than the banks say I can afford. I have a wife and 2 kids. One kid going to college in a few years. My wife hasn't worked in over 6 years and likely won't return to the work force.
Thankfully, I'm not over extended.
I don't loose sleep over the mortgage, or bills in general. I consider myself blessed. Hope this helps someone.
-jasper

I am obviously much more extended than most people here, however, I'm living in a different climate than most of the people here. People talk about selling their house for $165K. In my area, you could buy a 1 br 30 year old apartment in an undesirable area for that.

For me to buy a house I have to extend myself. Maybe in the areas you folks live in, homeownership is easy. Maybe there is a downsized version of a house that is soo much easier to afford. In my area, to own a 1000 sq ft house requires a serious amount of money and streaching for an above average couple in their mid 20s.
So even though I would love to have half my paycheck in the bank at the end of the month as a safety net, or 6 months salary in the bank, its not really an option.

As far as income escallating "living in technicolor" If you earn an average raise of 5% per year you will have doubled your income in 15 years. Some industries that may not be possible, but for many it is possible and probable especially with promotions.

I'm the first to say we had "10 fingers" because of an inherited lot. We had cash because we BOTH worked hard, were smart with our money... we lived in communal situations for MANY years! I vividly recall writing the check for my cut of the rent, knowing a friend was paying a mortgage and wondering when the hell "room-mate time" would end, lol. Every week I banked money, paid down student loans, and counted pennies. All that time I felt like a total loser, unable to "afford" my own place... not paying attention to the money in the bank... until it was time to address CDs..

I think one's living situation is a very personal thing. But I offer this caveat: live with a room mate with whom you don't share a bed! split the rent, split the utilities, live lean, and BANK the extra. It's amazing how quickly it will add up or how quickly your reduced living expenses will allow you pay down what seems to be a staggering amount of debt. It all has to be paid, but there are ways to CONTROL the rate of repayment. Too many people miss this entirely.

3 of my very best friends are career "waitstaff". One never went to college. But SHE now owns 3 very nice rentals, free and clear; in a very "fashionable" community. She has always had a "room-mate" that was compatible with her child. She has always paid very strict attention to the "bottom line" and has worked to maintain/upgrade her properties scrupulously. She has tenants who are long term, reliable and helpful with respect to maintenance aspects. She is a very smart businesswoman! She routinely waits on people whose net worth pales in comparison, and who would likely never guess she owns 3 properties FREE AND CLEAR. Why? she is smart with her money and her talent. she is also kind, fair, and decent to her tenants... that's why they don't leave every year.

Chrisk., never make the assumption that "we're" in the minority!

We are going to be buying a house for 570k and have a new mortgage of 2050 with $500 in taxes and insurance, so 2550. This is scaring me!

I'm really afraid of the new payment, but we manage to save over a thousand a month now, so that should cover the payment.

We will be down to saving only $400.00 a month (matched by company) in a 401k.

All of our wealth will be tied up in this house...so hopefully we don't crash too hard!

It is just scary to owe that much every month if there is ever a disaster or something.

However, in my area, the cheapest houses are $450k (1300 sq foot older rambler). So, that is what it costs to be a home owner.

Is this $1K AFTER you pay your non mortgage-related bills, or before? That is cutting it too tight (for me). New home, new expensive, new maintenance, new utility bills...I would want a much larger cushion. If you are scared now, wait till you get in and have to deal with the reality of it. Maybe stay where you are more comfortable?

present home have 75% equity
new home 50%+-
amazing the differences in home prices and property taxes across this wonderful country :)

I was feeling insane for my 2800!!

Congratulations on what must have been one sweet raise or promotion! I gotta get me one of those!

Right now we only have to pay monthly payment of $650 loan each month and real estate taxes of $100 per month (based on land value only). We've been putting aside $1200 per month for the mortgage payment and real estate taxes based on what we expect monthly payments to be once we move in. The extra money is building up an "emergency fund".

We will be moving in to an unfinished house (no flooring or trim and a functional but unfinished kitchen) but will have lots of equity in the house. Once the house is assessed and we find out the amount of real estate tax we will then decide whether to get another loan to finish more of the house now or wait and do it over time. Because our income in not high we really need to keep the PITI payments to about 25% of our income.

C

C:
Are you talkin million dollar property?

My brother pays $8,500 in property tax on a $280,000 condo so maybe we should consider ourselves lucky!

C

Home just sold:
$1900/mo. including taxes ($1300/yr)

Home being built:
$2400/mo. including taxes (estimated $3300/yr)

Mortgage was 103K at 5.25% for 15 years, for PI of 829.60 per month. Taxes are, maybe, $1,200 per year, so another $100 per month. (Gotta love Alabama, ain't no lower taxes nowhere). Insurance is about $150 per month (older home with high replacement cost value vs. appraisal value). Total payment (escrowed) is about $1,100.

This equates to about 20% of our take-home pay. And the take home is after health/disability insurance and 6% to 401K.

I was contemplating a move to another state a year or so ago and was shocked to realize how much LESS home I could buy because of the much higher property/school tax burden. It's amazing what the taxes are in other states.

Current home (selling at the end of the year)
PITI - $860mo

Future home (should start building soon)
PITI - $3300mo

That must be some house to have a payment like that in Texas. I keep threatening to move there because you get so much house for your money.

The house is 3450sf with a 270sf work shop on a 1 acre lot, total cost will be around $380k.

I think Texas is just about the cheapest place to own a home in the US. So y'all come on down, I got me a house to sell!

Some inquirers would ask, "What are they worth"?

My reply, often with a chuckle: "I don't know what they're worth - but we sell them for $1,895.00".

Some are saying that houses in many parts of the U.S. are substantially overpriced, using the term "bubble" sometimes.

For the sake of many who are taking on large debt to finance them - I hope they're wrong. That's what my heart says - but my mind doesn't fully agree.

I hope that you and your family have a great (and safe) weekend.

ole joyful

We're in the same boat. I think out tax this year will top $17K or higher.

*and* they are all adjustable to boot!! No fixed.

You get a lower payment ($526 vs $600 on 100k at 6%), but all it would take is an upward adjustment of about 1 1/2 % for the payment to be equivalent to a 30 year fixed. Think that might happen sometime in the next 50 years?

-*and* unlike a 30 fixed, the rate can go up even more!!

-*and* after 10 years payments, you still owe 95.7% of the original amount!

-*and* you get to pay for a whole extra 20 years past a 30 year term!

Maybe a borrower should rethink buying right now if this is the only way to qualify for a mortgage...

I harbor no envy for people who earn more money than I do. We have everything we need and we live comfortably; my take on THEIR payments? if they're comfortable with them, then why would I care a fig how much they pay?

;)

I think it is more curious amazement than envy or jealousy. The PITA range is fascinating - and not necessarily correlated with income. Lenders say I could "afford" way more mortgage, but I choose less house and lower debt. I don't feel envy or judge those who make other choices.

People are different. Makes things interesting is all.

We sold our home with a 175K mortgage when DH lost his job last January. DH's income was not considered in the financing on the new house, and the figure was 20% of my gross/32% of my take-home -- outside my comfort zone, but we couldn't find a suitable house for less than the 129K we paid for this one. This is not a desireable negighborhood for most. It is an historic neighborhood we hope is "on the way back" but you'll not catch many folks with children moving here because of the abysmal schools. But the house is a 1925 Mediterranean style with hardwoods, a tile roof and buckets of charm, and it suits us well.

Now that DH is working again, the payment is about 12% of gross/20% of take-home (after 6% to 401K). The mortgage is our only debt. And here lies the difference. Many people would take the increased income as a sign to upgrade in home. I don't know if it's fear of being overextended, a desire to have a paid-for house by the time DH retires, or just my general orneriness and refusal to follow the pack, but I'm not budging. We should have the 15-year note paid off in 8-9 years.

I think at some point people will have to return to the second- and third-tier cities and more rural areas, as the major cities become simply unaffordable. I'm sure there are many Los Angelenos or New Yorkers who would cringe at the thought of living in Alabama or Tennessee, but it's simply a matter of priorities.

House is small yet comfortable, and I'm very comforted knowing there is no mortgage, CC or car payments.

Frugal Sue

I managed to get a 5.75% interest rate on $115kish. So the PI is around $680 and the taxes over $4k yearly and the insurance about $900. We've never had a claim, so the insurance is a cheap as it gets. The governer just approved a tax cut, we'll see if we get the average $600 decrease he is trumpeting.

This is a very long & informative thread. Sorry I cannot address anyone in peticular.

I am one of those who financed 100% mortgage.

I have been living with a SO for 20 years now. I have rented all my life. And Hated it!

Never know from day to day if the owner is selling house and once sold you have 30 days notice to move.

Knowing that ANY day you can receive a rent incease notice in your mail.

The last rental (which we rented for eight years) was the worst out of 30 years of renting - but then that's a long story.

We were paying $800.00/month for a tiny one bedroom house, and I KNEW the rent was going to increase again - because we had plumbing problem - one and only toilet backed up.

Hubby tried to fix - ran the snake, etc. We called Plumbers out (at our expense). They tried. This kept going on for a few months.

(It was so bad that I either had to place a certain bucket btwn pot rim and seat to go potty, OR, I even had to go WAY out back of our deep lot by a tree! It was bad!)

Finally Landlord had it fixed correctly, but called to tell us that he "HAD TO SPEND $2000.00" to fix it!

The problem was NOT female related products going down the toilet, but a very old house, and the plumbing was not up to date and narrow - or something like that. But nothing WE did!

I could not believe landlord relayed this info to us! I KNEW a rent increase was in the making! - AGAIN! (He didn't even offer to re-imburse us for the $$$ WE put out! - I know, but that's another story also!)

Plus, the place was infested inside and OUTSIDE with daddy longleg spiders! (Never DID get rid of those suckers!)

Told Hubby, I have $5000.00 if you want to look to buy a house, as I'm fed up. He said Okay. (OH! HE also had a tiny bit of money!)

NOW, it was FINALLY "escape" time- lol!

I started looking up houses on internet. (This was around April/May 2003)

Prices were going up to the tune of $10,000 per WEEK!
My MAX was $125,000.00.

We looked at several houses fast as we could - (NOT GOOD looking FAST, but had to act fast due to limited time we had to look and prices rising that quickly)

We finally realzed we were going to have to move further out - not something I wanted, but, If we can gain freedom from landlords, OK!

We settled for a house in a good area for $134,000 - ABOVE my limit! (But anything else was little tiny things & in bad & secluded areas.)

Nothing fancy at all - carpet and tile "newer", but totally don't match. 2 BR 1-3/4 BA, approx 1560 sqft on just less than 1/2 acre. Acoustic ("cottage cheese") ceilings, colored porcelain kitchen sink, as well as the two toilets/bathtub/sinks....TOTALLY OUTDATED. No curb appeal, no fancy anything inside or outside!

BUT, it's ours! NO LANDLORDS!

I feel we got screwed - as the person handling our loan application just "sat on it" for a couple of months, we ended up with a higher interest rate than we should have gotten had she done her job properly!

I found out later that she "supposedly" sat on it on purpose - waiting to see if rates would go back DOWN! ...Well, that's the excuse "I" heard.

I blew my lid!!! I KNEW rates weren't going down, and I'm just the "little guy"! It's not "bad", but we could have gotten better if she did her job in timely fashion. It was one of those situations - a friend who has a relative who has a company...

I was so irate and ready to back out of the whole mess. "Hubby" almost backed out also.

But then my brain kicked in again - if we back out, we have to start ALL over, and prices are going up $10,000 week avg - so let's just do it NOW, lest we miss out all together!

(Obvously, I will not use nor recommend THESE people again!)

So, even tho we had maybe $10,000 between us to spend to buy the house, MOST of it went to termite inspection, closing costs, etc. Then, we had to put out all the $$$ to rent a truck and move...
...and replace the bedroom carpets (they stunk from pet smells), etc.

We did an 80/20. One reason: We didn't have 20% to put down above the $$$ already spent on closing costs, etc., and the OTHER reason was to avoid paying PMI!!!

PMI is $$$ spent that does NOT go towards your house payment.

Anyway - THAT is why WE financed 100% to buy a house...most likely "above our means" at the time.

On the other hand, if we stayed in that rental, our rent would have increased again at least once (probably more like 2 or 3 times by now). OR, who knows - the owners had kids, and we were near a College - so there was also possibility we could have been booted out so one of the kids could move in - or they sell or???

So even tho we financed our house 100%, and even tho we are stretched to the max, we would be in the same boat - if not worse - today as renters.

To sum it up - we were maxed out as renters, and we are maxed out as homeowners. What's the difference? Our house (last I checked a few months ago) is worth about $300,000 now - but I like to be conservative...I say worth $260,000 minimum.

BTW - I have a niece who lives in an apartment complex just within 2 miles from us - 3 BD 2 BA, a little smaller than our house, and paying $1300.00/month! Not fancy either...

Now that I forgot the topic - (sorry - it's either just ME or the meds I'm on...)

I believe it had something to do with people "over extending" themselves? lol! I've been over extended all my life - so I'm used to it.

We borrowed 119,000 to pay back over 30 years at 6.125%.
(Used 20K from sale of previous home to refinish floors on 1st, install carpeting 2nd fl, insulate entire home and put in Anderson doors/windows.)

We pay 1150/mo. for principal, interest, and property taxes (over 400/mo - highest in state of OH = great public school system).

Homeowners insurance is almost 50/mo

Electric bill less than 100, natural gas budgeted at 145, water & sewer around 75, land line/cell/ DSL comes out to 100/mo

Me + DH + three kids early years of schooling

1 teacher's salary income (brings home $4400. each month)

We walk to work, walk to school, use 1 visa (earns gas) that is paid off in full each month, only shop with a list in hand, pay to emergency fund - savings for retirement - college FIRST, don't buy something if we don't need it or love it or don't have cash in the bank for it, keep things simple (kids need very little 'stuff' really), and attend free events for family fun.

Examine budget (with family) monthly and assets/liabilities (with financial planner?) annually.

$ 1423 total per month

House is worth about $550k, mortgage balance is about $118k.

Seems about average to me, based on what everyone else has posted here. Interesting.

Anyhow, I pay about $1100 a month. As if that tells you anything besides that my income is somewhat more than $1100...

I will add that this house and price is an anomaly in this area. Normal prices are minimum $280K, and those are being torn down for homes $700K and up. Of course these homes are larger, 3000sf and more. What I'm saying is that I got an inexpensive, solid house that I can afford in a really great area. My tradeoffs were a small home with no basement and no garage, but I know I can still afford this house on a pretty minimal salary if needed. Even if I landed a fabulous high paying job, I would not buy a big home with a big mortgage. Too many other things I'd rather spend my money on, and also those fabulous high paying jobs can disappear in an instant.

So right about people.

Not only that people underestimate how much some people actually earn in our society which really fuels the housing prices.... Many of the average professional jobs, ie engineers, accountants, experinced nurses make near or above 6 figure incomes in my city. With two incomes, they are making 200k to 400k.

Many of the sales people, real estate, medical, financial products etc. that are successful are making upwards of 1/4 of mil or more easily. The people that are dealing in financial matters, ie top brokers, money managers, in big firms are making 1/2 to 1 mil easily. There is alot of wealth floating around in our society.

There is also a tremendous amount of passing on of the wealth. Lots of people are buying houses with the help of their parents in my community. The parents will give them money for down payment. Wealth generally begets wealth.

This makes it very difficult for those that are in the true middle America.

Our home is nothing fancy: 50 years old 3 bed, 3 bath, 2300sf ranch style. Most stuff is original, i.e. bath, kitchen, floor, windows, etc. I saved some money from our previous house sale to finance the remodeling of this one. So far I have spent 300k on it. My DH is going to do the landscaping himself because there is no money left for that.

I think it's worth it to live in this great climate, very nice neighborhood. We have a 3/4 acre lot next to a creek and surrounded by redwoods and oak trees. We can walk to our pretty little downtown. Live is quiet and sweet here, yet we are only minutes away from San Francisco. Even we spend a lot of our income on the house but we enjoy it every day.

I think 2-income families have become the norm these days. Otherwise we can not afford decent living.

Mine is 40 years old on a wooded lot, 4 bedrooms, 3.5 bathrooms 2400 sq ft.
We paid off the mortgage as soon as we could (tax break be damned!) and pay $2000 property tax annually.

I purchased my house a couple years ago at a time I was paying $625 in rent and had to pay for my mortage, taxes, insurance of $1100/month. That was hard. Today, it's around $1150/month and had I still been renting I'd have to pay $850 but my income has increased. Ask your parents how much their mortgage payment is. My parents mortgage payment was $35/month a fews years ago. My brother who purchased a house 8 years ago, his mortgage, taxes, and insurance is $700/month. So, everyone struggles at first, but the sooner you start the better.

One important item is, how easily it will be to improve the houses efficiency and that it is as small as you can live comfortably. If there's a 50's ranch for $200k and a victorian that's 3-4x the size for the same price, go for the ranch. You will never be able to get ahead with the victorian. Think how much it'll cost to heat 1,300 sq ft ranch with normal sized ceilings, probably $3k/year then how much it'll cost to heat 3 floor victorian with a lot more leaks and oversized rooms. Then, how much it'll cost you to replace all the normal sized windows in a ranch with high efficiency ones, vs how much in a victorian to replace 4x more oversized windows. Unless victorians are your style of living and your life there's a reason they sell so cheap. Live in as small a house as you can and as big a property. It'll save you in price, save in heating, save in taxes, save in improvements, and let you have money left over to either make it exactly how you like, take trips, or save for retirement.

My house value is about $800k to $900k. The median house in the area is around $450k to 500k. The average house, I would estimate around $600k to $700k.

We are a two income family because we both have really great careers/professions that we love and are well compensated. We also have extremely flexible part time situation. We are both happier working, and the kids are very well taken care of. We work mostly because of our work satisfaction not because we have to.

I'll take using a step stool over hanging out a third story window any day.

Without knowing your budget or your financial position, though, there isn't much concrete advice we can offer you.

I've been paying an extra $700 each month since day 1, which has now been 18 months. If I can keep it up, I should be paid off in about 6 years total instead of 15. Or I could do a lump-sum payoff at some point, which is what I did on my first house.

I've never considered mortgage interest deduction to be a key point. It's a deduction against taxable income, not against tax due, so there's never a 100% benefit.

I felt the same way when I bought my first house and realized that if I doubled my P&I payments, I could pay it off in 5 years! A month or so of that was quite enough.