Friday, October 20, 2006

Housing Payments Calculator

This page at CNN Money allows you to calculate the total monthly cost of purchasing a home. You input the cost of the home, interest rate, down payment and taxes, and it calculates the monthly payment you can expect.

It is important to know how much you will have to pay monthly, as that is easier to figure out how it will impact your lifestyle. Most people cannot think of how much they spend over a year, but they can break it down monthly. (Perhaps because we pay bills monthly?)

CNN says we should spend a maxmum of 28% of our income on housing costs, and a max of 36% on debt. They also recommend that you find a home to purcahse that is 2.5 times your annual income. Unfortunetly I think for many of us that is wishful thinking. Here in DC I'd say most of my friends (recently graduated) make about $40,000 per year. Therefore the home they "should" look at would cost $100,000. I haven't seen anything at that price within 50 miles of DC since I moved here.

Are lower income people destined to rent? I suspect that over the next 5 years most of these same people will be making closer to $60,000. That puts their home price at only $150k, still rediculously low this area. Any ideas? I'm a little stunned as well since the average American household makes about $65k per year.

1 comment:

xevi said...

nice seeing your blog. you are such a business man now. look, i will give you a small hint of real estate prices in Spain. As El País, the most read newspaper in Spain said today:

>>La escalada inmobiliaria remite, y por primera vez en cinco años los precios crecen por debajo del 10%. <<
Translation: The raise on real estate slows down, and for the first time in 5 years the increment in the cost of housing is lower than 10%.

>>Desde 1998, inicio del boom, los precios han tenido un alza acumulada del 150%, a pesar de que se han construido más viviendas que nunca (entre 500.000 y 800.000 anuales) <<
Since 1998, when the "boom" began, the prices had an increment of 150% in total (note: what cost 100, now costs 250), even though more houses than ever have been constructed (between 500.000 and 800.000 every year)

Last, but not least, as El Mundo said:
>>la financiación de la compra absorberá una media del 47,5% del salario familiar en 2005 en el caso de que el crédito hipotecario se contrate por 20 años<<
47.5 % of family income will be used in 2005 to pay housing loans.

this is hell!!!