Quote of the Day

Well you’re doing a lot better than most homeowners 11217. Most working class homeowners with kids are generally 1-2 months away from foreclosure at any given time (ie if work stopped today they would only have enough in savings to last 1-2 months). I know some who I have worked with in the past (I used to be a realtor but now am not although I do stay involved and hold an active license) who had decent jobs, but were literally living paycheck to paycheck and if work stopped today, not only would they not have next months mortgage, but they wouldn’t have enough money to pay their utilities or buy food by next week. Sad but true, especially here where incidentals are becoming so high – literally by the day now with all this talk of no rebates, high property taxes, higher income taxes, higher MTA charges, higher food costs, utilities through the roof, etc. If I were you 11217, I would make sure to hang onto that nest egg for the next year or two. Resist the urge for those new granite countertops and private school tuition. Even with a newly signed contract and raise, all jobs are expendable if a company is suddenly faced with their credit frozen or customer base evaporates overnight. God help us all! (and I’m not at all religious)!

“11217, how many months away from foreclosure would you be in you lost your job tomorrow?”

I have about 2-3 years worth of savings in the bank, not including my retirement account. Since I bought a co-op, they insisted that I proved to have at least a year’s worth of mortgage payments in savings after my downpayment.

In the last year I have not only been re-signed to a 3 year contract with work, but also given a 20% raise in the last couple months.

In the real estate and finance world its 36% of your GROSS monthly income with all debts (excluding utilities, food, normal spending, etc) included. The rule of thumb is 28% of your gross for mortgage, and 36% of gross total DTI (debt to income level) to get a conventional loan approval – the “old standard” which is not surprisingly the “new standard”. So assuming you have zero other debt, banks will typically allow up to 36% for a mortgage. They will reduce that percentage amount if you have other debts (student loans, car loans, furniture loans, credit cards, etc) by however much that is so that your total long-term debt isn’t over 36%.

bkny — I know how many jobs have been lost and suspect how many more will be lost. I know my own isn’t completely safe. These are grim times, and, while I’m not happy about it, I do support efforts to bail out people who have found themselves unable to pay their mortgage provided they are willing and reasonably able to pay a refinanced mortgage.

Putnamdenizen — I haven’t lived in a rent stabilized place for over 5 years, although I’m not sure living in one would completely invalidate my having an opinion on the housing crisis, since rising housing costs trap people in those crappy places. Rent control/stabilization is a different topic, but, despite having lived in such a place, I’m not a big fan of the way those policies work.

Funny story: I didn’t know the place was rent stabilized when I moved it. I got it through a broker, paid the fee and everything. All I knew was it was a crappy apartment in a crappy neighborhood but it was the only placed I’d seen that was less than 60% of my monthly net income so I took it. I didn’t realize it was stabilized until I read my renewal notice a year later. Oh, and my upstairs neighbor was a male prostitute.

11217 — Yes, the thought of trying to stay in the city while renting (and not having a rent stabilized place) is frightening. I expect to buy (in or out of the city) within the next few years. Although, having just found out how much daycare costs in Brooklyn (yikes!), uh, I may have to wait til my kid is old enough for school before I can afford a mortgage!