How Much Is Your Mortgage Payment?
June 21st, 2011 at 4:56:20 AM
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We got the house we live in now, in 1984. Paid off the mortgage in 1997. The monthly payment when it was paid off was a whopping $620 a month. I'm constantly hearing of people these days who have payments of $1800 a month, $2200 a month, or higher, and these are average middle class people. I choke when I hear this, are they insane? How do they sleep at night, knowing if either of them lose their jobs, they're toast? And apparently, $2200 is cheap, there are lots of people paying over $3000 a month for properties that are under water. We've lost so much value on this property since 2008, we've decided to never sell it, its our 'default' house. Just leave it to the children, let them fight over it. If your mortgage payment is eating up 50% of your take home pay, something is wrong with your lifestyle..
"It's not called gambling if the math is on your side."
June 21st, 2011 at 7:43:08 AM
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I would question your sample. It is too small to be credible. I think the people you are hearing from earn more than the average American, or have made some bad decisions. The median mortgage payment in the USA in 2005 was $1,295 per month, according to the US Census Bureau.
Anyway, here's the math:
1984 was 27 years ago. $620 in 1984 equates to $1,300 in 2011 dollars when you factor in increases in CPI (inflation).
However, an even better measure would be to compare using the GDP per capita increases from 1984 to 2011. This is a better indication when we want to compare how the price of something compares through time with wage increases considered. $620 in 1984 would equate to $1,760 in todays dollars.
So, as you can see, mortgage prices aren't that far off from what they were in 1984, especially when we consider the cost as a percent of the average wage. In other words, the percent of salary that the mortgage costs for the average American is roughly the same or even perhaps slightly lower than what it was in 1984.
Anyway, here's the math:
1984 was 27 years ago. $620 in 1984 equates to $1,300 in 2011 dollars when you factor in increases in CPI (inflation).
However, an even better measure would be to compare using the GDP per capita increases from 1984 to 2011. This is a better indication when we want to compare how the price of something compares through time with wage increases considered. $620 in 1984 would equate to $1,760 in todays dollars.
So, as you can see, mortgage prices aren't that far off from what they were in 1984, especially when we consider the cost as a percent of the average wage. In other words, the percent of salary that the mortgage costs for the average American is roughly the same or even perhaps slightly lower than what it was in 1984.
June 21st, 2011 at 7:44:11 AM
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George Will said on some tv program the other day that if housing prices drop another 10%, then 33% of American homes will be underwater with their mortgages
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
June 21st, 2011 at 7:46:39 AM
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I should add that while I don't think mortgage prices today are less affordable than in 1984, what has gotten significantly worse in the USA (and Canada, for that matter) is credit card debt. I don't have the exact figures, but the average amount of credit card debt has skyrocketed since 1984. That eats into income, leaving less to pay the mortgage.
June 21st, 2011 at 7:59:50 AM
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Quote: EvenBobWe got the house we live in now, in 1984. Paid off the mortgage in 1997. The monthly payment when it was paid off was a whopping $620 a month.
I got my house in 2002 and my mortgage is less than that ($560). That's the one advantage of living in Michigan.
June 21st, 2011 at 9:36:53 AM
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$2300 a month, up to $3300 a month by the time you add taxes and insurance.
June 21st, 2011 at 9:45:55 AM
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I dunno, somewhere around $700 with the taxes included. If it weren't for my wife I'd rent. We have like a year left on it, put over 50% down. I'm not much of a handyman or homeowner. My idea of cutting the grass is, "Here's $20. Cut the grass for me."
A falling knife has no handle.
June 21st, 2011 at 10:01:53 AM
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I pay about 20% of my gross income as a mortgage payment (~28% net). Property taxes, insurance and strata fees push that to around 34% of net income, which is bit higher than I'd like, but it's less than the 40% of net that I've seen floated as the upper limit (29% of gross is the recommendation I can find on a quick search).
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
June 21st, 2011 at 11:54:17 AM
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Here in Phoenix, as in many other places, the housing market took a huge hit. I bought a condo at the height of the market. Appraised at $145k, and I got it for $115k. Quite a deal, huh? Now the estimated value is around $18k. The mortgage payment on that is $1000 a month, on a 30-year fixed loan.
I gave up on it, and found myself a house. 2 1/2 times bigger, and my mortgage payment is $550 a month, on a 15-year fixed loan, although I pay more than that each month. I'm waiting for the condo to get foreclosed on. And, yes, I'm happy to be contributing to the continuing decline of the housing market.
I gave up on it, and found myself a house. 2 1/2 times bigger, and my mortgage payment is $550 a month, on a 15-year fixed loan, although I pay more than that each month. I'm waiting for the condo to get foreclosed on. And, yes, I'm happy to be contributing to the continuing decline of the housing market.
June 21st, 2011 at 4:54:42 PM
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Quote: konceptumAppraised at $145k, and I got it for $115k. Quite a deal, huh? Now the estimated value is around $18k. .
Is this a typo? Its now worth $18,000?
"It's not called gambling if the math is on your side."
June 21st, 2011 at 5:07:58 PM
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Quote: EvenBobIf your mortgage payment is eating up 50% of your take home pay, something is wrong with your lifestyle..
A bigger suprise to me was always what people will accept as a car payment. People making mid $20s would not blink at $400-450 a month. Perhaps the recent recession will get people to think before they buy. My hope is that we do not bail out all these "underwater" mortgages. People seem to fail to realize the balance of the loan is seperate from what the collateral is worth as it is.
All animals are equal, but some are more equal than others
June 21st, 2011 at 5:44:09 PM
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People pay 50K for a car that someday will be worth nothing, and it doesn't seem to bother them. As soon as they drive it home, its usually worth less than what they owe on it. Buying real estate for 50K, and it goes down in value, people freak out. It will never be worth nothing, far from it. We own our house and we're never going to sell it, what do I care what the value is.
"It's not called gambling if the math is on your side."
June 22nd, 2011 at 12:59:28 AM
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Quote: EvenBobIs this a typo? Its now worth $18,000?
Not a typo. The 2012 tax assessment came in at $23,500. However, a short sale realtor told me that I could expect to receive around $16-$18k for it, based upon existing sales data. Essentially, it's commonly believed that only an investor would be interested in the condo.
Of all the condos that sold in that complex, only the ones that were purchased in cash are still held by the original owners. All the condos that were financed with a mortgage have either already been short sold, or are currently in short sale proceedings or foreclosure proceedings. In other words, none of those that were financed are having payments made on them on those original mortgages. Also, all of the people, including the ones that paid in cash, have stopped making their HOA payments.
June 22nd, 2011 at 3:23:01 AM
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Quote: konceptumNot a typo. The 2012 tax assessment came in at $23,500. However, a short sale realtor told me that I could expect to receive around $16-$18k for it,
Good god. I know a guy who bought a condo in FL for 160K and they're now selling for 40K, but 150 to 18? Thats worse than the Depression.
"It's not called gambling if the math is on your side."
June 22nd, 2011 at 7:43:47 AM
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The short sale realtor gave me that estimate several months ago. The complex was surrounded by a golf course. The golf course subsequently went out of business, and the property sold to developers. Nothing happened for a long time, so the complex was just surrounded by dirt fields and giant holes where the water hazards used to be. Then, earlier this year, Circle K bought the land directly in front of my unit. It took them a few months to get it built, but now there is a Circle K directly outside the front door of my unit. I measured it once, and the property line is 13 feet from my front door.
I would hazard to guess that this would make the property worth even less than the realtor's estimate. However, at the same time, for an investor, making only $18k for a unit that they could probably rent for $700 a month isn't a bad idea. And if you were a retired person and just needed someone place to cheap to live, that would work for you as well.
Besides the property dropping in value, the biggest annoyance to me was the loss of the golf course. My unit faced out toward one of the water hazards that was always populated by ducks. I used to be able to come home and sit on my front porch and feed the ducks. It was very relaxing.
I would hazard to guess that this would make the property worth even less than the realtor's estimate. However, at the same time, for an investor, making only $18k for a unit that they could probably rent for $700 a month isn't a bad idea. And if you were a retired person and just needed someone place to cheap to live, that would work for you as well.
Besides the property dropping in value, the biggest annoyance to me was the loss of the golf course. My unit faced out toward one of the water hazards that was always populated by ducks. I used to be able to come home and sit on my front porch and feed the ducks. It was very relaxing.
June 22nd, 2011 at 7:46:13 AM
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For kicks, I went back to look at the tax evaluations. I know that even though the property was appraised at 145k when I bought it, that it was never really worth that much. So, as a more fair basis of things, here's the tax assessments:
2007 -- 100,500
2008 -- 95,500
2009 -- 91,500
2010 -- 72,000
2011 -- 31,000
2012 -- 23,500
Not that tax assessments are 100% accurate, but here you can see that even the county figures it to be worth 25% of what it used to be.
2007 -- 100,500
2008 -- 95,500
2009 -- 91,500
2010 -- 72,000
2011 -- 31,000
2012 -- 23,500
Not that tax assessments are 100% accurate, but here you can see that even the county figures it to be worth 25% of what it used to be.
June 22nd, 2011 at 9:10:27 AM
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Wow, that is crazy. Where in Phx. do you live? AZ is a clusterfuck of land use.Quote: konceptumThe short sale realtor gave me that estimate several months ago. The complex was surrounded by a golf course. The golf course subsequently went out of business, and the property sold to developers. Nothing happened for a long time, so the complex was just surrounded by dirt fields and giant holes where the water hazards used to be. Then, earlier this year, Circle K bought the land directly in front of my unit. It took them a few months to get it built, but now there is a Circle K directly outside the front door of my unit. I measured it once, and the property line is 13 feet from my front door.
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
June 22nd, 2011 at 9:42:06 AM
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Quote: teddysWow, that is crazy. Where in Phx. do you live? AZ is a clusterfuck of land use.
I no longer live there (as mentioned, I now own a house), but the condo complex is near 19th Ave and Northern. If you're familiar with the area, drive west on Northern from 19th ave. Before you get to the freeway, you'll see the new Circle K on the north side of the street. Look just past the Circle K, and you'll see the condo complex. If you look carefully, you'll see that one of the doors is a lighter brown than the others around it. That's my American Dream (TM).
One of my complaints about how the land is being used in Phoenix is the creation of "in-fills". I know of a lady that owned a house near the center of Phoenix, in a nice neighborhood. Being an older neighborhood, there's no HOA, which of course is usually desirable. When the housing market was skyrocketing, people were selling off their homes to cash in on the money. Developers were buying the houses, which are on large lots, tearing down the houses, and replacing them with 2 or 3 smaller homes. This worked for a while, and then when the housing market went back down, a lot of this got thrown out the window.
As a result, her old (she doesn't live there anymore) neighborhood looks, at least in my opinion, awful. You still have some of the old concrete block homes that have been there seemingly forever. But next to them you'll have 2 or 3 of these modern tiny houses with no yards. Or, even worse, the start of the construction of these modern tiny houses.
June 23rd, 2011 at 3:06:41 PM
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Mine's mid $700's. When I bought it, even as a then-daily-smoker and self proclaimed pothead, I was smart enough to save more than $20k for downpayment and bought within my means. I likewise can't believe some of the payments my friends are on the hook for, paying low $100k's and financing the whole amount. Crazy. As care free as I was back then, I kind of looked at saving a big downpayment as one of those things you must absolutely do in life, otherwise you'll pay for that mistake for a damn long time. Admittedly, I did it so I'd have money for toys and vacations, but as it turned out I took a longish hiatus from work to be there for the birth of my son, and then had a huge disaster of vehicular malfunction that cost me tons and ended up not living the life of toys and vacations. But, I surely wasn't ever in dire straights from those expenses like I would have been with a $1,200 mortgage. We just refinanced and cut 13 years of the mortgage, and it only increased the payments about $10. All's good here.
The opinions of this moderator are for entertainment purposes only.
June 23rd, 2011 at 3:37:07 PM
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Quote: konceptumAnd, yes, I'm happy to be contributing to the continuing decline of the housing market.
That is messed up, I feel bad that you took a bath on the property but it is VERY lame that you (and many others) are happy to stick the bank with the shortfall. I assume you are able to make the payments regardless of the value. If it had tripled in value would you have shared the profit with them?
when man determined to destroy himself he picked the was of shall and finding only why smashed it into because."
— E.E. Cummings
June 23rd, 2011 at 4:48:08 PM
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Quote: konceptum
2007 -- 100,500
2008 -- 95,500
2009 -- 91,500
2010 -- 72,000
2011 -- 31,000
2012 -- 23,500
.
A perfect example of how supply and demand sets the prices for everything. People with money made a fortune in the Depression buying up cheap property and things like estate jewelry.
"It's not called gambling if the math is on your side."
June 23rd, 2011 at 6:05:42 PM
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Quote: Scotty71That is messed up, I feel bad that you took a bath on the property but it is VERY lame that you (and many others) are happy to stick the bank with the shortfall. I assume you are able to make the payments regardless of the value. If it had tripled in value would you have shared the profit with them?
And therein lies the "Moral Hazard" argument against bailouts.
June 23rd, 2011 at 6:07:03 PM
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Bought my house in 2001 for $180k. Put $20k down, financing the rest on an adjustable mortgage that keeps dropping. It's now at 3.25%, so I doubt it'll get any lower. Our total monthly payment is about $1050 now.
Of course I'm lucky, as St. Louis is pretty cheap for housing compared to a lot of other places.
Of course I'm lucky, as St. Louis is pretty cheap for housing compared to a lot of other places.
"Bite my Glorious Golden Ass!" - Bender Bending Rodriguez
June 24th, 2011 at 1:36:59 AM
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Quote: Scotty71That is messed up, I feel bad that you took a bath on the property but it is VERY lame that you (and many others) are happy to stick the bank with the shortfall. I assume you are able to make the payments regardless of the value. If it had tripled in value would you have shared the profit with them?
The bank should have priced this risk into the interest rate. That's their job. If they failed to do so properly they should lose the money and potentially go bankrupt. That's capitalism.
June 24th, 2011 at 5:17:29 AM
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Quote: rJz$2300 a month, up to $3300 a month by the time you add taxes and insurance.
Don't forget interest
June 24th, 2011 at 5:18:38 AM
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Quote: Toes14Bought my house in 2001 for $180k. Put $20k down, financing the rest on an adjustable mortgage that keeps dropping. It's now at 3.25%, so I doubt it'll get any lower. Our total monthly payment is about $1050 now.
Of course I'm lucky, as St. Louis is pretty cheap for housing compared to a lot of other places.
Some would say you are unlucky to be living in St. Louis
June 24th, 2011 at 4:43:45 PM
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Quote: crazyiamThe bank should have priced this risk into the interest rate. That's their job. If they failed to do so properly they should lose the money and potentially go bankrupt. That's capitalism.
I get the capitalism and risk aspect. There is a good chance it is fannie mae or freddi mac owned debt which means that US the taxpayer eats the loss in the end, not the bank.
He/She is suckling at your teet now...enjoy!
when man determined to destroy himself he picked the was of shall and finding only why smashed it into because."
— E.E. Cummings
June 24th, 2011 at 6:08:35 PM
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Quote: JIMMYFOCKERSome would say you are unlucky to be living in St. Louis
Please elaborate . . .
"Bite my Glorious Golden Ass!" - Bender Bending Rodriguez
June 24th, 2011 at 11:44:56 PM
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Quote: Scotty71I get the capitalism and risk aspect. There is a good chance it is fannie mae or freddi mac owned debt which means that US the taxpayer eats the loss in the end, not the bank.
He/She is suckling at your teet now...enjoy!
Way to ignore my point! I was talking about how it was not the homeowners fault for defaulting. Bank bailouts are a different issue I don't want to get into here. The homeowner skipping out on his loan is something that banks need to price in and should not be vilified. People should be able to walk away like businesses do from bad loans all the time.
June 25th, 2011 at 12:35:13 AM
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Quote: Scotty71That is messed up, I feel bad that you took a bath on the property but it is VERY lame that you (and many others) are happy to stick the bank with the shortfall.
Yet its fine that banks routinely unload 'bad paper' on unsuspecting investors? Isn't that what got us into this mess to begin with?
"It's not called gambling if the math is on your side."
June 25th, 2011 at 8:03:16 AM
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"A Culture of Complacency and Entitlement"
http://notyourdaddy.wordpress.com/2010/08/19/a-culture-of-complacency-and-entitlement/
This article really says it all.
http://notyourdaddy.wordpress.com/2010/08/19/a-culture-of-complacency-and-entitlement/
This article really says it all.
June 25th, 2011 at 8:28:24 AM
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.....
June 25th, 2011 at 8:46:21 AM
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Why is it ok to leave your house if it took a 70% dive in value? From where does this sense of entitlement come? Why does the mortgage holder believe that it's the responsibility of everyone else to pay their mortgage when they no longer feel like paying?
June 25th, 2011 at 8:50:19 AM
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Quote: KeyserWhy is it ok to leave your house if it took a 70% dive in value? From where does this sense of entitlement come?
Why is it not OK for people to do what any sensible business would do? Which is either declare bankruptcy or give up an asset worth less than the loan against it?
June 25th, 2011 at 8:51:14 AM
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Quote: KeyserWhy is it ok to leave your house if it took a 70% dive in value? From where does this sense of entitlement come? Why does the mortgage holder believe that it's the responsibility of everyone else to pay their mortgage when they no longer feel like paying?
Also, it doesn't become everyone's responsibility, just the banks.
June 25th, 2011 at 8:54:49 AM
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Quote: CrazyiamAlso, it doesn't become everyone's responsibility, just the banks.
Sorry, but when you stick it to the bank, keep in mind that you're sticking it to everyone else.
June 25th, 2011 at 8:57:51 AM
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Quote: KeyserSorry, but when you stick it to the bank, keep in mind that you're sticking it to everyone else.
I fail to see how that is true in most cases. If the bank goes bankrupt maybe it hits other people. If not it hits the people who invested in the bank that made a poor decision or got unlucky with a bad loan. That's the risk inherent in capitalism.
June 25th, 2011 at 10:26:41 AM
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.....
June 25th, 2011 at 11:15:47 AM
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Other solutions:
http://en.wikipedia.org/wiki/Debtors%27_prison
Quote:Under the early Roman Republic, a person could pledge himself as a collateral for a loan, in a type of contract called Nexum. If he failed to pay, he was liable to become his creditor's slave.
http://en.wikipedia.org/wiki/Debtors%27_prison
There's no secret. Just know what you're talking about before you open your mouth.
June 28th, 2011 at 6:09:00 PM
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just learning to post. :)
You know what they say, nothing ventured... nothing ventured - Vicki (Jen Tilly in Let It Ride)
June 28th, 2011 at 6:11:20 PM
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Quote: Scotty71That is messed up, I feel bad that you took a bath on the property but it is VERY lame that you (and many others) are happy to stick the bank with the shortfall. I assume you are able to make the payments regardless of the value. If it had tripled in value would you have shared the profit with them?
With all due respect, I wholeheartedly disagree. I live in Phoenix also. What has happened here is a product of greed for sure, but to say the greed was initiated and fed by consumers who simply walked away from properties and left banks in an awful situation is wrong, in my opinion. Entering into a contract with a bank is a no different than any other business deal. Both parties have risk, both parties have potential reward and both parties have necessary due diligence that should lead them to accept or reject said deal. The banks, by way of greed, are just as guilty (probably more) for letting a person who earns 40K a year buy six houses or one house that is well beyond his means. In our state, foreclosure is actually a form of loan satisfaction and while it seems "lame" to some, it is a business decision and when faced with the prospect of NEVER in your lifetime recovering from the loss of property value and when you can walk across the street and buy a bigger, nicer house for far less money than your last property (before your foreclosure finals) even wonderful people choose this. Add to it the banks' unwillingness to work with people, adjust mortgages and their unwavering support from our government that makes their hardships less so, and it really makes a lot of sense. The American Dream was fine. Banks turned it into the American Wet Dream and it got messy. I bought the house in which I live, in 1993, but it will be a cold day in hell when I shed a tear for a bank.
You know what they say, nothing ventured... nothing ventured - Vicki (Jen Tilly in Let It Ride)
June 28th, 2011 at 6:26:56 PM
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I'm so jealous. The nephew of my wifes who just got married last year bought bought the huge farm house my wife grew up in last week. Its on a nice piece of country property and was built in 1900, with oak floors and oak door casings, has a dining room and living room and a parlor with an oak pocket door. One bedroom downstairs and 3 upstairs, a walk in attic that could be converted to another bedroom. They were asking 150K for the last year (it was valued at 225K before the crash) and the kid nephew got it for 80K. It has a brand new roof and vinyl siding. What a fricking deal.
For those that don't know what pocket doors look like:
For those that don't know what pocket doors look like:
"It's not called gambling if the math is on your side."
June 28th, 2011 at 7:12:52 PM
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The door frame there looks like it needs some work. The trim doesn't quite line up correctly.
June 28th, 2011 at 7:29:45 PM
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Quote: KeyserThe door frame there looks like it needs some work. The trim doesn't quite line up correctly.
Who cares, its a generic photo from Google on 'pocket doors'.
"It's not called gambling if the math is on your side."
June 29th, 2011 at 1:24:10 AM
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Quote: EvenBobPeople pay 50K for a car that someday will be worth nothing, and it doesn't seem to bother them. As soon as they drive it home, its usually worth less than what they owe on it. Buying real estate for 50K, and it goes down in value, people freak out.
Well, strictly speaking, a home is also worth less than you owe on it at the moment of purchase.
But the difference is there. The real estate boom has built a sense of entitlement into the public; people have come to not only expect a home to keep increasing their net worth, but to see it as its primary function. However, this can't work in the long run - the added value has to come from somewhere, and a building doesn't produce tangible goods or services by just being there. If the average family had 6-8 kids, or if the borders were wide open, there could be the value of scarcity, but that isn't the case either.
Resist ANFO Boston PRISM Stormfront IRA Freedom CIA Obama
June 29th, 2011 at 7:43:23 AM
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Quote: EvenBobWho cares, its a generic photo from Google on 'pocket doors'.
Pocket doors are cool, but they limit the ability to place electrical switches and sockets next to the door. Probably why they've fallen out of favor. We have one in our master bath, but our neighbors who have the same design wanted an outlet next to the left-hand sink on the vanity for the husband's electric shaver and had to scrap the pocket door to get it.
If I told you what my mortgage payments were, you'd cry. And we bought short sales, foreclosures, and new construction. At least our home that we actually live in is a 15-year mortgage and almost paid up, so if something extremely bad happened we could let the investment properties go and not be homeless. But I'm not the type to walk away from a commitment.
Each of us is entitled to his own opinion, but not to his own facts.
Preparing for a fight about your bad decision is not as smart as making a good decision.
June 29th, 2011 at 9:43:48 AM
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Quote: P90
But the difference is there. The real estate boom has built a sense of entitlement into the public; people have come to not only expect a home to keep increasing their net worth, but to see it as its primary function.
This a relatively new phenom. If you bought a house in 1910, and sold it in 1940, you could expect to only get what you paid for it, plus whatever inflation had occurred in 30 years. It wasn't until after WWII and the explosion of a new middle class that there became a housing demand and it kept going for the next 60 years. It was a market that was hugely over inflated and just waiting to go bust. Nothing has any value on its own, something is only worth what the public is willing to pay for it on a certain day. This is a concept most people can't grasp.
"It's not called gambling if the math is on your side."
March 17th, 2022 at 9:51:38 AM
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How can I get a mortgage with bad credit?
March 17th, 2022 at 10:36:06 AM
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I would suggest improving your credit and getting more money.
May the cards fall in your favor.
March 17th, 2022 at 11:52:00 AM
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Quote: david63How can I get a mortgage with bad credit?
link to original post
Why would you want one?
The difference between fiction and reality is that fiction is supposed to make sense.
