Author Topic: $600k mortgage  (Read 17213 times)

JoyBlogette

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$600k mortgage
« on: July 30, 2014, 10:41:41 AM »
I just found out that one of my friends has a $600,000 mortgage (not house, mortgage).  I don't know if I hid my shock very well.  They are currently planning a renovation to convert a bedroom into an office and add a walk-out to the back yard.  Eek.

frugalecon

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Re: $600k mortgage
« Reply #1 on: July 30, 2014, 11:23:47 AM »
That is one of those numbers that is helpful to analyze in the context of other information. Income? Median home price in your area?

In the DC area, where I live, a number like that is not that unusual.

greenmimama

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Re: $600k mortgage
« Reply #2 on: July 30, 2014, 11:45:35 AM »
That isn't very much in parts of Canada!

golden1

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Re: $600k mortgage
« Reply #3 on: July 30, 2014, 11:47:30 AM »
That is pretty standard in a lot of MA suburbs.   My friend had a mortgage that high, but household income was >200K so they could easily afford it and paid it off aggressively.  I know it is hard to imagine if you don't live in a high COL area. 

strider3700

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Re: $600k mortgage
« Reply #4 on: July 30, 2014, 12:27:09 PM »
In Vancouver $600k gets you a home that is a tear down and it'll be in a questionable area. The average home price is near $1,000,000 again.   The Median family income for the city in 2012 was $71,140

Now some fun with numbers
at a 3% interest rate fixed for 5 years (available at the moment)   the payments are $2840/month for 25 years    which is $34080/year  which is 48% of the gross median income

property taxes on a house just shy of 1,000,000 which is the average are $4890  or 7% of income.   so for a box that you won't be kicked out of you need to spent 55% of the gross income.   

According to an online tax calculator an individual making $71k would pay $14848 in income taxes yearly.    lets split it and say it's 35k and 36k dual income to get the best tax rate.  Thats 4851+5052 or $9903 yearly.

This means the net income is  $61237.    The mortgage is 56% of net and property taxes are 8%.   64% gone.   

Now some guesses based on my house which is average in size,in the same climate and a typical 4 person household.     Utilities for my house work out to roughly $1850 last year  that's heating, electricity and water.  thats 3% of net

House insurance on my place which is worth 1/3 of the vancouver average was $1200 last year and is mandated as a condition of the mortgage.  2% more gone.

At this point I think we have all of the costs basically covered to have a home in Vancouver.

$19217  of $1601 is left over.  You now "need" a car.  but most families have 2.  You need clothing, and some people like to eat.     It's possible even in an expensive town like vancouver but there is a very good reason the savings rate in BC is negative and has been for a few years now.   All of this completely ignores child care costs.  My youngest goes to daycare 4 days a week for the mornings.  That is $300/month.  Full time is $700.    I'm told this is cheap for the area.  And all this is after having made a 40% down payment to get our 600k mortgage. The vast majority of owners aren't putting down 40%.

The scariest thing is interest rates.  3% is basically the lowest it can go.   You get the occasional little offer to 2.7 but that's not worth planning around.   Instead lets do the numbers on the average which is 4.62% from 2006-2012 
 This works out to $3361/month or $40332/year which is 66% of net.   79% of net is now gone to housing and you have  $12965 remaining or $1080/month.  Possible as a mustachian but the average joe?   

The historical posted rate from 1973 to 2010 averages 9.26%  My parents were over joyed that in 25 years of payments they never once went over 10%.  They also never got below 7%.    At 9.26% the payment is $5071/month or 60852/year.   Which is 99% of the take home.   

The interest rate hit just shy of 22% in 1981....

So the way I see it is at the historical average  The person is screwed mustachian levels of frugal or not.   At the 6 year average mustachians would be struggling to get by and would be forced to dump any vehicles and savings for be effectively zero.  The average person is screwed.   At current rates the average person can get by if they're smart with their money and nothing ever goes wrong. Realistically they're one broken furnace or new roof away from screwed.

When interest rates correct it  should be a bloodbath

sources and liberties taken
all numbers rounded to nearest dollar
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm
http://www.vancouversun.com/news/property-taxes.html
http://www.ey.com/ca/en/services/tax/tax-calculators-2014-personal-tax
http://www.ratehub.ca/5-year-fixed-mortgage-rate-history

dragoncar

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Re: $600k mortgage
« Reply #5 on: July 30, 2014, 01:26:32 PM »
I will soon have a mortgage in this range :-(  The numbers still work, though, so it's not a total face punch.  Could have gotten something cheaper and retired a couple years earlier, or moved out of (or to another) area and retired now.  Priorities.

all that stuff

Scary analysis
« Last Edit: July 30, 2014, 01:28:53 PM by dragoncar »

gillstone

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Re: $600k mortgage
« Reply #6 on: July 30, 2014, 01:33:59 PM »
I saw a friend and his wife purchase a house literally 3 times the size of ours with 5 bedrooms, an office, 2 living rooms, a sitting room and a den for them and their 2 children.  Now they are having to cut back and are debating if they need to cut the 300/mo country club membership or the 200/mo personal trainer.  I've recently gotten a lot of practice in holding my tongue.

JoyBlogette

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Re: $600k mortgage
« Reply #7 on: July 30, 2014, 01:57:02 PM »
They live in a ritzy suburb of Toronto.  Their house is probably worth about $650k.  I think they put 5% down.  The crazy part to me is that they are contemplating a completely unnecessary reno that will cost $50-$100k, add very little value compared to cost to their house price AND they have a HUGE mortgage.  They have high incomes probably over $200k combined. 

Maybe it's just my perspective.  We live nearby in a house of similar value (maybe worth slightly more) and we have a $250k mortgage.  $600k just shocked me so much.

JoyBlogette

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Re: $600k mortgage
« Reply #8 on: July 30, 2014, 02:04:54 PM »
[...]

Don't people save up for a down-payment any more?  I feel old.

dragoncar

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Re: $600k mortgage
« Reply #9 on: July 30, 2014, 02:10:49 PM »
They live in a ritzy suburb of Toronto.  Their house is probably worth about $650k.  I think they put 5% down.  The crazy part to me is that they are contemplating a completely unnecessary reno that will cost $50-$100k, add very little value compared to cost to their house price AND they have a HUGE mortgage.  They have high incomes probably over $200k combined. 

Maybe it's just my perspective.  We live nearby in a house of similar value (maybe worth slightly more) and we have a $250k mortgage.  $600k just shocked me so much.

Mortgage payoff has been a fairly hot topic around here, but interesting it's only 5%.  Is there no penalty in Canadia for high LTV?

What does a ritzy neighborhood look like up there, out of curiosity?

HairyUpperLip

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Re: $600k mortgage
« Reply #10 on: July 30, 2014, 02:29:11 PM »
Hmm, as a regular visitor to GTA I don't think $600k is that crazy. It depends on which suburb, but I've got several family members living in houses that are from $750k-1M in price range and it's not that they are mega mansions, but rather just good sizes in prime locations.

Similar houses in my area, Atlanta, would only be like $250-300k.

Bigote

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Re: $600k mortgage
« Reply #11 on: July 30, 2014, 03:05:14 PM »
I had a 680k mortgage once, but I paid it off in a little over 4 years.  :)

Goldielocks

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Re: $600k mortgage
« Reply #12 on: July 30, 2014, 03:22:19 PM »
In Vancouver $600k gets you a home that is a tear down and it'll be in a questionable area. The average home price is near $1,000,000 again.   The Median family income for the city in 2012 was $71,140....

I moved back to vancouver area 6 years ago, and this is a great picture of what is happening...

Ever feel like you are living in your own personal horror film?

The exceptions to the noted above
-- median family income is $71,140, as noted, which includes retirees and DINKS.
--plus.. median family income with 2 income earners and kids living at home is right around $110,000 (for all of BC), this is likely higher in vancouver proper, where the $1 million homes are... which is also why Vancouver proper tends to have a lower % of families, or a higher % of secondary suites compared to outlying areas.

Even so, in the outlying areas, $110,000 in family income and a $650k home is "doable" but still hard for non MMM.

True MMM's in Vancouver should be looking at 3 bdrm co-op townhouses (government assisted capital), with "market rents" around $1750/month.  I only just discovered them in this forum as being available to just about anyone with the right size family, and thought WOW, it really is possible to be MMM in vancouver... wish I knew about it before purchasing a home...

Lastly,  home insurance -- Square One ---   after reviewing and researching for a couple of years, this site again recommended Square One, and I was able to cut 25% off my home insurance, mostly by insuring the stuff I cared about replacing only.


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Re: $600k mortgage
« Reply #13 on: July 30, 2014, 03:39:11 PM »
Where I live in NJ, $600k is considered about average for a house.  I got my house for much, much less than that in a great neighborhood with all amenities within bicycle-riding distance and it blew my friends' minds.  If you look long enough and you are patient, you can find great deals on houses even in tough markets.  In my case, we found very motivated sellers and we gave them a fair value right after the housing crash and right before the housing recovery.

FIRE_HELP!

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Re: $600k mortgage
« Reply #14 on: July 30, 2014, 06:35:23 PM »
In Vancouver $600k gets you a home that is a tear down and it'll be in a questionable area. The average home price is near $1,000,000 again.   The Median family income for the city in 2012 was $71,140....

I moved back to vancouver area 6 years ago, and this is a great picture of what is happening...

Ever feel like you are living in your own personal horror film?

The exceptions to the noted above
-- median family income is $71,140, as noted, which includes retirees and DINKS.
--plus.. median family income with 2 income earners and kids living at home is right around $110,000 (for all of BC), this is likely higher in vancouver proper, where the $1 million homes are... which is also why Vancouver proper tends to have a lower % of families, or a higher % of secondary suites compared to outlying areas.

Even so, in the outlying areas, $110,000 in family income and a $650k home is "doable" but still hard for non MMM.

True MMM's in Vancouver should be looking at 3 bdrm co-op townhouses (government assisted capital), with "market rents" around $1750/month.  I only just discovered them in this forum as being available to just about anyone with the right size family, and thought WOW, it really is possible to be MMM in vancouver... wish I knew about it before purchasing a home...

Lastly,  home insurance -- Square One ---   after reviewing and researching for a couple of years, this site again recommended Square One, and I was able to cut 25% off my home insurance, mostly by insuring the stuff I cared about replacing only.

sounds like a major correction in the Vancouver housing market is coming

Goldielocks

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Re: $600k mortgage
« Reply #15 on: July 30, 2014, 07:54:35 PM »
In Vancouver $600k gets you a home that is a tear down and it'll be in a questionable area. The average home price is near $1,000,000 again.   The Median family income for the city in 2012 was $71,140....

I moved back to vancouver area 6 years ago, and this is a great picture of what is happening...

Ever feel like you are living in your own personal horror film?

The exceptions to the noted above
-- median family income is $71,140, as noted, which includes retirees and DINKS.
--plus.. median family income with 2 income earners and kids living at home is right around $110,000 (for all of BC), this is likely higher in vancouver proper, where the $1 million homes are... which is also why Vancouver proper tends to have a lower % of families, or a higher % of secondary suites compared to outlying areas.

Even so, in the outlying areas, $110,000 in family income and a $650k home is "doable" but still hard for non MMM.

True MMM's in Vancouver should be looking at 3 bdrm co-op townhouses (government assisted capital), with "market rents" around $1750/month.  I only just discovered them in this forum as being available to just about anyone with the right size family, and thought WOW, it really is possible to be MMM in vancouver... wish I knew about it before purchasing a home...

Lastly,  home insurance -- Square One ---   after reviewing and researching for a couple of years, this site again recommended Square One, and I was able to cut 25% off my home insurance, mostly by insuring the stuff I cared about replacing only.

sounds like a major correction in the Vancouver housing market is coming

Maybe, but a huge number of home buyers are not income dependent here. Retired, second home, investment property, foreign buyer,  it keeps the market up. Many families are renting or living in condos so small decreases in price are also buoyed by people who have not bought in to a detached house yet too.

JoyBlogette

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Re: $600k mortgage
« Reply #16 on: July 30, 2014, 08:17:48 PM »
What does a ritzy neighborhood look like up there, out of curiosity?

Search "Oakville Ontario Homes" in Google Images

JoyBlogette

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Re: $600k mortgage
« Reply #17 on: July 30, 2014, 08:19:01 PM »
I had a 680k mortgage once, but I paid it off in a little over 4 years.  :)

Wow!  Way to go!

The Hamster

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Re: $600k mortgage
« Reply #18 on: July 30, 2014, 10:47:58 PM »
A $600K+ mortgage is also very common in Australian cities and that's for a pretty ordinary type house in an average suburb not even near the beach.

MsRichLife

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Re: $600k mortgage
« Reply #19 on: July 30, 2014, 11:48:31 PM »
A $600K+ mortgage is also very common in Australian cities and that's for a pretty ordinary type house in an average suburb not even near the beach.

Yep. A $600K in our suburb gets you a nice apartment, or a house that needs serious work or a knockdown.

strider3700

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Re: $600k mortgage
« Reply #20 on: July 31, 2014, 12:13:36 AM »
Mortgage payoff has been a fairly hot topic around here, but interesting it's only 5%.  Is there no penalty in Canadia for high LTV?

There is.  I Believe it applies to any mortgage for over 75% of the homes value.  I don't know how much it is as I've never had it.   

BlueHouse

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Re: $600k mortgage
« Reply #21 on: July 31, 2014, 05:16:18 AM »
My mortgage exceeded that. I bought a house larger than I needed in a high COL city. 
My alternative would have been buying a smaller place that is 100+years older, a condo with higher monthly pay when fees are included! or living in an area that is not walkable. House is appreciating in value and I'm happy.  I make decent money but it's sort of risky /dependent on contract.  I can afford it. But the monthly amount scares me because it's just so much higher than I ever thought I'd owe.
I spend a lot of time thinking about what I'll do if (when) I lose the contract. I'm stashing money now to have enough to pay it off in a lump sum in roughly 8 years if everything stays the course. If it doesn't, I have enough cash to pay expenses for 1.5 years. (Down from 2 years worth after face punches from the MMM community for letting cash sit idle).

Jack

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Re: $600k mortgage
« Reply #22 on: July 31, 2014, 08:58:43 AM »
In Atlanta, $600K gets you a huge mansion in the suburbs, two "normal" houses in a gentrifying in-town neighborhood (e.g. Kirkwood), one "normal" house in an already-finished-gentrifying in-town neighborhood (e.g. Virginia Highland), or maybe a tear-down in an in-town neighborhood with large lots suitable for mansions (e.g. Buckhead).

totoro

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Re: $600k mortgage
« Reply #23 on: July 31, 2014, 11:47:32 AM »
In Vancouver $600k gets you a home that is a tear down and it'll be in a questionable area. The average home price is near $1,000,000 again.   The Median family income for the city in 2012 was $71,140

Now some fun with numbers
at a 3% interest rate fixed for 5 years (available at the moment)   the payments are $2840/month for 25 years    which is $34080/year  which is 48% of the gross median income

property taxes on a house just shy of 1,000,000 which is the average are $4890  or 7% of income.   so for a box that you won't be kicked out of you need to spent 55% of the gross income.   

According to an online tax calculator an individual making $71k would pay $14848 in income taxes yearly.    lets split it and say it's 35k and 36k dual income to get the best tax rate.  Thats 4851+5052 or $9903 yearly.

This means the net income is  $61237.    The mortgage is 56% of net and property taxes are 8%.   64% gone.   

Now some guesses based on my house which is average in size,in the same climate and a typical 4 person household.     Utilities for my house work out to roughly $1850 last year  that's heating, electricity and water.  thats 3% of net

House insurance on my place which is worth 1/3 of the vancouver average was $1200 last year and is mandated as a condition of the mortgage.  2% more gone.

At this point I think we have all of the costs basically covered to have a home in Vancouver.

$19217  of $1601 is left over.  You now "need" a car.  but most families have 2.  You need clothing, and some people like to eat.     It's possible even in an expensive town like vancouver but there is a very good reason the savings rate in BC is negative and has been for a few years now.   All of this completely ignores child care costs.  My youngest goes to daycare 4 days a week for the mornings.  That is $300/month.  Full time is $700.    I'm told this is cheap for the area.  And all this is after having made a 40% down payment to get our 600k mortgage. The vast majority of owners aren't putting down 40%.

The scariest thing is interest rates.  3% is basically the lowest it can go.   You get the occasional little offer to 2.7 but that's not worth planning around.   Instead lets do the numbers on the average which is 4.62% from 2006-2012 
 This works out to $3361/month or $40332/year which is 66% of net.   79% of net is now gone to housing and you have  $12965 remaining or $1080/month.  Possible as a mustachian but the average joe?   

The historical posted rate from 1973 to 2010 averages 9.26%  My parents were over joyed that in 25 years of payments they never once went over 10%.  They also never got below 7%.    At 9.26% the payment is $5071/month or 60852/year.   Which is 99% of the take home.   

The interest rate hit just shy of 22% in 1981....

So the way I see it is at the historical average  The person is screwed mustachian levels of frugal or not.   At the 6 year average mustachians would be struggling to get by and would be forced to dump any vehicles and savings for be effectively zero.  The average person is screwed.   At current rates the average person can get by if they're smart with their money and nothing ever goes wrong. Realistically they're one broken furnace or new roof away from screwed.

When interest rates correct it  should be a bloodbath

sources and liberties taken
all numbers rounded to nearest dollar
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm
http://www.vancouversun.com/news/property-taxes.html
http://www.ey.com/ca/en/services/tax/tax-calculators-2014-personal-tax
http://www.ratehub.ca/5-year-fixed-mortgage-rate-history

If your family income is $71,000 you are not going to qualify for a $600,000 mortgage in Canada.  Your entire set of numbers is moot.  The maximum you will qualify for is $219,000.  You would need an income of approx. $140,000 a year plus 5% down plus no other debt to qualify for such a mortgage.

I have no idea why you went through those calculations as mortgage debt ratios are set by banks and CMHC already and your scenario is not financeable.

totoro

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Re: $600k mortgage
« Reply #24 on: July 31, 2014, 11:54:15 AM »
House prices in most major cities in Canada are high and interest rates are low.  Appreciation has been brisk in many places but has slowed, and in Victoria has stalled.

Many people have made a whole whack of money over the past ten years on appreciation of financed homes.  For a 5% deposit of $25,000 their $500,000 home may now be worth $1 000 000.   

In future we won't see the same appreciation, but I'm not convinced there will be a crash either.  There are lots of ways to mitigate risk such as a rental suite or longer term mortgages.  My best guess is flat unless interest rates rise which does not seem likely at this point. 

In my view a $600,000 mortgage is not a problem.  Failing to manage and plan for the risk is a problem.

dragoncar

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Re: $600k mortgage
« Reply #25 on: July 31, 2014, 12:03:19 PM »
House prices in most major cities in Canada are high and interest rates are low.  Appreciation has been brisk in many places but has slowed, and in Victoria has stalled.

Many people have made a whole whack of money over the past ten years on appreciation of financed homes.  For a 5% deposit of $25,000 their $500,000 home may now be worth $1 000 000.   

In future we won't see the same appreciation, but I'm not convinced there will be a crash either.  There are lots of ways to mitigate risk such as a rental suite or longer term mortgages.  My best guess is flat unless interest rates rise which does not seem likely at this point. 

In my view a $600,000 mortgage is not a problem.  Failing to manage and plan for the risk is a problem.

This is similar to what I see/predict in the SF bay area (possibly excluding particularly hot sub-markets)

strider3700

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Re: $600k mortgage
« Reply #26 on: July 31, 2014, 01:20:44 PM »
I'd agree with flat  but I expect interest rates to climb,  Probably a  couple of percent in 5 years.    The bank of Canada doesn't have any real control over the fixed mortgage rates.  Those are set by the bond rates and bond rates are controlled by the markets.   If things go well in the US and they are then the fed will stop stimulus spending.  this means they're buying less bonds.  That means the price of bonds will drop as their are fewer buyers. To entice buyers those bonds will have to increase in yield.  Yield increases equals fixed mortgage rate increases.  The only thing the BOC could do would be to replace the fed in buying massive amounts of bonds to keep yields low. This won't happen as the fed has been buying something near 80 billion worth of bonds monthly and the BOC can't do that.

So The only way that the rates don't increase is if the Fed doesn't stop buying and that's entirely based off of the US economy.  The numbers from the US lately are good to great depending on the report.  I'd be very surprised if the Fed is buying anything next year.

totoro

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Re: $600k mortgage
« Reply #27 on: July 31, 2014, 03:39:35 PM »
Maybe. I don't know if what you are saying about interest rates is correct or not. Many experts have predicted an increase would happen long ago.  Cmhc rule changes have made borrowing more difficult and we have had stricter lending criteria than the us.  I expect if rates are a bit higher in a couple of years prices may fall a bit. Hard to say if equity pay down and appreciation might balance that out.  I have a ten year fixed at 3.69 so I won't be impacted by rate hikes - and rental income fully covers expenses for our triplex.  Many people have substantial equity. No one has a crystal ball - you just need to look at Garth's consistently wrong hyperbolic crash predictions to know that.

Spartana

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Re: $600k mortgage
« Reply #28 on: July 31, 2014, 04:06:50 PM »
I just did a search to see what median price single family homes were in my area (Orange County, Calif). The lowest was $475K, the highest was $5.8 million, the median was $635K (due to there being more houses in the $500 - $800K range then the higher or lower ends). Income levels here are higher then other places though. I'm selling my (paid off) house this year to first travel and then move somewhere cheaper. Nice to see prices rising so much again (for us sellers) but no where near the peak of 2006.

kite

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Re: $600k mortgage
« Reply #29 on: July 31, 2014, 04:30:12 PM »
Where I live in NJ, $600k is considered about average for a house.  I got my house for much, much less than that in a great neighborhood with all amenities within bicycle-riding distance and it blew my friends' minds.  If you look long enough and you are patient, you can find great deals on houses even in tough markets.  In my case, we found very motivated sellers and we gave them a fair value right after the housing crash and right before the housing recovery.

A Jersey Girl here,  and that is exactly right.  However,  the property taxes in NJ on that price home make it an absurdly expensive price for a place to live.   I don't see that my generation has had enough children who'll one day buy all these $600k monstrosities, especially when it means signing up for a $20k+ annual tax bill. 

totoro

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Re: $600k mortgage
« Reply #30 on: July 31, 2014, 04:39:20 PM »
Where I live in NJ, $600k is considered about average for a house.  I got my house for much, much less than that in a great neighborhood with all amenities within bicycle-riding distance and it blew my friends' minds.  If you look long enough and you are patient, you can find great deals on houses even in tough markets.  In my case, we found very motivated sellers and we gave them a fair value right after the housing crash and right before the housing recovery.

A Jersey Girl here,  and that is exactly right.  However,  the property taxes in NJ on that price home make it an absurdly expensive price for a place to live.   I don't see that my generation has had enough children who'll one day buy all these $600k monstrosities, especially when it means signing up for a $20k+ annual tax bill.

That tax bill is ridiculous.  It would be a reason for me to relocate as it is a cost which will only increase over time and make retirement more difficult unless you have offsetting rental income.  Our tax bill for an $800,000 home is $4000 after home-owner rebate.

I agree you can always find a deal if you put effort into it.  Sometimes you will need to be willing to do some work.

Spartana

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Re: $600k mortgage
« Reply #31 on: July 31, 2014, 04:46:35 PM »
Where I live in NJ, $600k is considered about average for a house.  I got my house for much, much less than that in a great neighborhood with all amenities within bicycle-riding distance and it blew my friends' minds.  If you look long enough and you are patient, you can find great deals on houses even in tough markets.  In my case, we found very motivated sellers and we gave them a fair value right after the housing crash and right before the housing recovery.

A Jersey Girl here,  and that is exactly right.  However,  the property taxes in NJ on that price home make it an absurdly expensive price for a place to live.   I don't see that my generation has had enough children who'll one day buy all these $600k monstrosities, especially when it means signing up for a $20k+ annual tax bill.
Yeah I don't know how people can afford prop taxes in many states - and they always seem to rise like crazy too. That is probably the only good thing about Cali real estate - property taxes. 1% of the purchase price and they can't increase by more than 2%/year.  Of course at the median home prices in the $600K range then it's still going to be expensive ($6000/year to start) but better then NJ, NY, MA or a whole host of other places. But for people who bought their homes years ago, many have prop taxes less than $1000/year. And if a person isn't dependent on a job, then you can find low cost housing in many more rural places.

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Re: $600k mortgage
« Reply #32 on: July 31, 2014, 04:58:00 PM »
Where I live in NJ, $600k is considered about average for a house.  I got my house for much, much less than that in a great neighborhood with all amenities within bicycle-riding distance and it blew my friends' minds.  If you look long enough and you are patient, you can find great deals on houses even in tough markets.  In my case, we found very motivated sellers and we gave them a fair value right after the housing crash and right before the housing recovery.

A Jersey Girl here,  and that is exactly right.  However,  the property taxes in NJ on that price home make it an absurdly expensive price for a place to live.   I don't see that my generation has had enough children who'll one day buy all these $600k monstrosities, especially when it means signing up for a $20k+ annual tax bill.

That tax bill is ridiculous.  It would be a reason for me to relocate as it is a cost which will only increase over time and make retirement more difficult unless you have offsetting rental income.  Our tax bill for an $800,000 home is $4000 after home-owner rebate.

I agree you can always find a deal if you put effort into it.  Sometimes you will need to be willing to do some work.
The first house I bought in SoCal was my Mom's. Because parents (and grandparents) can transfer their property tax basis (rate) if they sell their home to their kids I was able to get my Mom's property tax rate - $300/year! That was in 1996 (she had bought it decades before for $16K and I bought it from her for $120K - FMV at that time). Over the years the houses value increased to over $500K yet my prop taxes went up very little. Think I was paying around $400 - $500/year when I sold it.  Would have been able to transfer that same rate to any new place I bought (if I stayed in my county) once I was 55 regardless of how much the house I bought cost. As long as it was the same, or less, then what I sold my place for I could transfer that rate. So if I sold my place for $500K and bought a place for $500K my taxes would remain $400 - $500/year and could only increase by 2% a year. Should have kept the place for that reason alone. Have considered staying in Calif for the prop tax rates alone but moving to a less expensive area. I hear too many horror stories of older people who have been in their homes for years having to sell because of crazy high prop taxes.
« Last Edit: July 31, 2014, 05:01:05 PM by Spartana »

clarkfan1979

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Re: $600k mortgage
« Reply #33 on: December 07, 2014, 02:12:49 PM »


I hear too many horror stories of older people who have been in their homes for years having to sell because of crazy high prop taxes.
[/quote]

Not really a horror story but my parents had to move because  of property taxes in Lake County, IL (Northwest Suburbs of Chicago). It was a little sad because my dad really liked the house and spent 20 years customizing it for himself. He bought a 2 level home on a lake for 150K in 1987. I don't know what the taxes were when he bought. He probably put 50K-100K into the house over the course of 20 years doing all the work himself.

His taxes hit $12,000/year in 2006 and could no longer afford to live there. He sold for 450K in 2007 which was still close the peak of the market. He now lives in Florida in a house that is probably close to 450K and the taxes are around $3,000/year. Even if there is crazy appreciation, taxes cannot go up more than 3% a year if it is your primary residence in Florida (Florida Homestead). 

I also live in Florida. My house is probably worth about 160K today and my property taxes are $1,075. Other houses are probably close to 1% but we both bought fixer uppers which helps on the tax bill a little.

MoneyCat

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Re: $600k mortgage
« Reply #34 on: December 07, 2014, 02:49:52 PM »
$600,000 will get you a nice-sized house in a decent suburb in New Jersey.  It's not all that strange to hear about someone with a mortgage that size.  I, of course, pay nowhere near that much because I got a small house with a small amount of property.

shallow pockets

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Re: $600k mortgage
« Reply #35 on: December 07, 2014, 09:48:29 PM »
$600k on my street gets you 8-9 1920/30's 3br/2bd/basement/attic/2car colonials.
So pretty much the whole side of a street from Stop sign to Stop sign haha... 

That's Cleveland for you. Crazy how the hipster will pay $240k+ for a 2br/1bad condo less than 5miles from my house, just because they are closer to the "hot dining/coffee spots".

600K would probably buy both sides of the block where my house is.

eyePod

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Re: $600k mortgage
« Reply #36 on: December 08, 2014, 07:41:20 AM »
Where I live in NJ, $600k is considered about average for a house.  I got my house for much, much less than that in a great neighborhood with all amenities within bicycle-riding distance and it blew my friends' minds.  If you look long enough and you are patient, you can find great deals on houses even in tough markets.  In my case, we found very motivated sellers and we gave them a fair value right after the housing crash and right before the housing recovery.

A Jersey Girl here,  and that is exactly right.  However,  the property taxes in NJ on that price home make it an absurdly expensive price for a place to live.   I don't see that my generation has had enough children who'll one day buy all these $600k monstrosities, especially when it means signing up for a $20k+ annual tax bill.

JESUS! Mine is 3500 including HOA, granted it's a townhome, but STILL.

NoraLenderbee

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Re: $600k mortgage
« Reply #37 on: December 08, 2014, 05:31:12 PM »
$600k on my street gets you 8-9 1920/30's 3br/2bd/basement/attic/2car colonials.
So pretty much the whole side of a street from Stop sign to Stop sign haha... 

That's Cleveland for you. Crazy how the hipster will pay $240k+ for a 2br/1bad condo less than 5miles from my house, just because they are closer to the "hot dining/coffee spots".

Cleveland has hipsters??!!??

mm1970

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Re: $600k mortgage
« Reply #38 on: December 08, 2014, 05:32:48 PM »
Yup, in 2004 ours was a little over that.  Coastal So Cal.

swiper

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Re: $600k mortgage
« Reply #39 on: December 08, 2014, 06:31:24 PM »
$600k on my street gets you 8-9 1920/30's 3br/2bd/basement/attic/2car colonials.
So pretty much the whole side of a street from Stop sign to Stop sign haha... 

That's Cleveland for you. Crazy how the hipster will pay $240k+ for a 2br/1bad condo less than 5miles from my house, just because they are closer to the "hot dining/coffee spots".

Cleveland has hipsters??!!??

Cleveland town never gets old: http://youtu.be/oZzgAjjuqZM

more serious: http://youtu.be/KpWS4_YtkUg
« Last Edit: December 08, 2014, 06:49:18 PM by swiper »

Fallenour

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Re: $600k mortgage
« Reply #40 on: December 12, 2014, 08:56:48 PM »
For those who live in Australia, what does um...345k annual income get you for a house?

And what are your down payment options? Mortgage terms?

MB1443

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Re: $600k mortgage
« Reply #41 on: December 13, 2014, 08:37:12 AM »
In Atlanta, $600K gets you a huge mansion in the suburbs, two "normal" houses in a gentrifying in-town neighborhood (e.g. Kirkwood), one "normal" house in an already-finished-gentrifying in-town neighborhood (e.g. Virginia Highland), or maybe a tear-down in an in-town neighborhood with large lots suitable for mansions (e.g. Buckhead).

Wow.  I am from Atlanta and couldn't agree more. 

MB1443

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Re: $600k mortgage
« Reply #42 on: December 13, 2014, 08:40:35 AM »
Yes that is a normal mortgage in DC.  There seems to be a lot of money here, more than I expected, and lots of cash purchases as well.  Now our mortgage is a little under 600 but we earn around 320-360k depending on the year.  If we bought something in the 400s we would be in a condo with an HOA.  Instead we have a basement we could turn into an au pair suite, a yard, garage and we can still walk places.

BlueMR2

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Re: $600k mortgage
« Reply #43 on: December 13, 2014, 08:43:13 AM »
Joy I think you'd be shocked at the mortgage value on a ton of homes.  Now, if you're in a rural part of a midwest state that's a lot, but no matter where you are it probably isn't the largest mortgage within 10 miles.

I could buy 6 houses on my nice midwest suburban street for that much.  :-)  If I go into the actual, urban, city itself, geez, I could buy a whole block.  Houses in the city itself have gone for as little as $5,000 and $20k is not at all uncommon.

Once you guys make your money, you need to move to the midwest.  You'll be able to live like kings...