Income NEEDED For Millennials and Gen Z To QUALIFY For A 450k House With A 6% Rate
Summary
TLDRThis video script discusses the financial implications of a $450,000 mortgage with a 6% interest rate. It calculates that a 10% down payment and closing costs amount to $60,000 upfront. Monthly payments, including taxes and insurance, would be around $3,200. To qualify for such a loan, one needs a salary of about $100,000 with no existing debt, or $130,000 if they have $1,000 in monthly debt obligations. The speaker advises earning $150,000 to $175,000 annually to comfortably afford the house without becoming 'house poor.'
Takeaways
- π Purchasing a $450,000 house requires a 10% down payment of $45,000 plus closing costs of about $15,000, totaling $60,000 upfront.
- π With mortgage rates at 6%, the monthly cost for a $450,000 mortgage, including principal, interest, property taxes, homeowner's insurance, and private mortgage insurance, is approximately $3,200.
- πΌ To qualify for this loan, you should ideally earn around $100,000 annually with no existing debt.
- π If you have additional monthly payments like student loans, credit cards, or a car payment totaling about $1,000, you would need a salary of around $130,000 to qualify.
- π‘ It's recommended to earn between $150,000 to $175,000 annually to comfortably afford a $450,000 house at 6% interest rate, avoiding 'house poor' situations.
- π Mortgage rates are expected to decrease soon, potentially reaching 6%, which would affect the monthly mortgage cost.
- π¦ The calculation assumes a combined cost for property taxes, homeowner's insurance, and private mortgage insurance of $200 per month.
- π The script emphasizes the importance of not only qualifying for a loan but also ensuring that the house remains a pleasure rather than a financial burden.
- πΌ The script suggests that even if one qualifies for a loan based on income, it's crucial to consider the overall financial health and other monthly obligations.
- π‘ The discussion highlights the total cost of homeownership beyond just the mortgage payment, including taxes and insurance, which are essential for a realistic assessment of affordability.
Q & A
What is the current mortgage rate mentioned in the script?
-The current mortgage rate mentioned in the script is 6.2%, with an expectation that it might soon hit 6%.
How much is the down payment for a $450,000 house if you put down 10%?
-The down payment for a $450,000 house when putting down 10% would be $45,000.
What are the estimated closing costs for the house mentioned in the script?
-The estimated closing costs for the house are about $15,000.
How much cash is required upfront to buy the house as described in the script?
-The total cash required upfront, including the down payment and closing costs, is $60,000.
What would be the monthly cost of a $450,000 mortgage at a 6% interest rate?
-At a 6% interest rate, the monthly cost of a $450,000 mortgage would be approximately $3,200, including principal, interest, property taxes, homeowner's insurance, and private mortgage insurance.
What is the minimum annual salary required to qualify for the loan without any other debt?
-To qualify for the loan without any other debt, one would need to earn about $100,000 annually.
If you have existing monthly payments like student loans or credit cards totaling $1,000, what salary is recommended to qualify for the loan?
-If you have existing monthly payments totaling $1,000, you would need an annual salary of about $130,000 to qualify for the loan.
What is the recommended annual salary to comfortably afford a $450,000 house at the current mortgage rate?
-The script recommends earning about $150,000 to $175,000 a year to afford a $450,000 house at the current mortgage rate without being 'house poor'.
What does 'house poor' mean in the context of the script?
-In the context of the script, 'house poor' refers to a situation where a significant portion of one's income is consumed by housing costs, leaving little for other expenses or savings.
Why is it important to consider more than just qualifying for the loan when buying a house?
-It is important to consider more than just qualifying for the loan because it ensures that you can comfortably afford the house without overextending your budget, which can lead to financial strain and a reduced quality of life.
Outlines
π Mortgage Cost Calculation for a $450,000 Home
This paragraph discusses the financial implications of purchasing a $450,000 home with a 10% down payment and closing costs of $15,000, totaling $60,000 upfront. With mortgage rates at 6.2% and potentially dropping to 6%, the monthly cost is estimated to be around $3,200, including principal, interest, property taxes, homeowner's insurance, and private mortgage insurance. To qualify for such a loan with no existing debt, an annual income of approximately $100,000 is suggested. However, if additional monthly debts like student loans, credit cards, or car payments exist, totaling about $1,000, a higher income of around $130,000 is recommended. The speaker advises earning between $150,000 to $175,000 annually to ensure the home remains a pleasure rather than a financial burden.
Mindmap
Keywords
π‘Mortgage
π‘Mortgage Rates
π‘Down Payment
π‘Closing Costs
π‘Interest Rate
π‘Principal
π‘Property Taxes
π‘Homeowner's Insurance
π‘Private Mortgage Insurance (PMI)
π‘Qualification
π‘Debt-to-Income Ratio
π‘House Poor
Highlights
A $450,000 mortgage with a 6.2% interest rate could cost around $3,200 per month.
A 10% down payment on a $450,000 house is $45,000.
Closing costs are estimated to be around $15,000.
Total cash needed upfront is $60,000 for a $450,000 house.
At a 6% interest rate, monthly payments could be approximately $3,200.
Monthly costs include principal, interest, property taxes, homeowner's insurance, and private mortgage insurance.
A salary of around $100,000 is needed to qualify for the loan with no existing debt.
If you have existing monthly payments of $1,000, a salary of $130,000 is recommended to qualify.
It's advised to earn between $150,000 to $175,000 annually to avoid being 'house poor'.
Mortgage rates are expected to drop to 6% soon.
The house should be a pleasure, not a financial burden.
The cost of the mortgage includes various fees and insurances.
The calculation assumes a 6% interest rate for the mortgage.
The down payment reduces the amount needed for the mortgage.
Closing costs are an additional expense on top of the down payment.
The monthly payment estimate includes all housing-related expenses.
Qualifying for the loan depends on existing debt and income level.
Higher salaries are recommended for a comfortable mortgage experience.
Transcripts
how much will a
$450,000 mortgage cost you monthly once
they cut rates mortgage rates today are
at 6.2% it looks like we're going to hit
6% very soon so let's run the numbers so
let's say you're going to buy a $450,000
house and you're going to put down 10%
that's $45,000 and you have closing
costs for about 15,000 so that's $60,000
cash to get your foot in the door and at
a 6% interest rate if we see 6% and you
get prepared for that it will be about
$3,200 a month that's your principal
interest property taxes homeowner
insurance and your private mortgage
insurance all wrapped into $200 you
would need to earn about $100,000 to
qualify for this loan and have zero debt
now if you do have a student loan or
credit card or a car payment that equals
about a th000 a month or all three equal
about a th000 a month then you would
need about
$130,000 in a salary to qualify for this
loan however even though you can qualify
at those two numbers I would recommend
for a 450 house at this rate that you
earn about $150 to
$175,000 a year so that you're not house
poor and this house can be a pleasure
not a prison
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