How can people with 35k year jobs buy houses that are 300k?

Let's say the husband and wife both work jobs earning 35k to 40k each. Just how are they buying a house that is 300k and paying for all of lifes other expenses as well like car, food, clothes, insurance etc. How are you doing it. Me and my wife can put the figures together. Are people spending every last dollar they have and using credit cards for everything. Whats the story?

How can people with 35k year jobs buy houses that are 300k?
its bad business and the sub prime lending did alot of these folks in.





Figure a 300,000 home loan is about a 3,000/month payment, add taxes and insurance in escrow and PIM insurance and your talking 3,500 a month.





so take your guys salary at 35k and 40k respectively and 75,000/12=6250/month/3,500payment= 56 percent of your monthly income. WAY too much.





thats no food, lights, cable, etc etc...
Reply:There are some mortgage co. out there now that are offering 50 years mortgages.
Reply:People like that are living well beyond their means. They are borrowing and using credit a lot. Many have two mortgages on their homes. What would happen if one or both spouses loses their jobs? Then their world wound be falling apart. This is a good sign of "wanting it a now" regardless if they can properly afford to have it.
Reply:The answer is that the sub prime mortgage "melt down" is the result that your math is correct and the people that gave out those loans and those that got those loans wasn't.
Reply:My husband makes around 35K and we were approved to buy a $250,000 home. We bought a $147,500 home and we had excellent credit, got a good interest rate and have very inexpensive home insurance and we're living paycheck to paycheck paying our mortgage. One car is paid off and we have a low payment on the other one and we live fairly frugally and have no daycare expenses. Your income is double ours, and a 300k house is more than double what ours cost. The house is probably quite a bit larger so more expensive to heat and cool so higher electric bills. If you have two car payments, plus daycare on top of that, along with all your other bills, you're looking at spending yourself into a hole or having some considerable credit card debt.
Reply:They have either saved a substantial amount of money for a down payment on the home, or they are drowning in debt. $80k in combined income puts a 100% financed 300k mortgage at the maximum threshhold allowed by banks. They use a debt to income ratio that usually allows for no more then 30-33% of your gross income for a mortgage.





If you assume a 100% financing situation, plus car loans, plus other expenses, they are probably leveraged to the max...
Reply:Creditors figure your eligibility on a debt-to-earnings ratio. I forget the exact number....maybe 10 percent. If you make 10 percent or more of what the house is worth, they will extend you credit to buy the house. Existing debt is also considered.