What’s going on you guys musa hussein your favorite realtor and in today’s video we’re gonna go over exactly how much house you can afford now contrary to the typical realtor or mortgage agent i’m not gonna tell you the span up here at the top of your budget rather i really believe in living within your means and making sure that you’re in a situation we are in our

House port and the reason i vouch for this so much is because as a realtor i really value providing the information that i would want to hear if i was a customer so without any further delay we’ll jump right into it so as you guys can see here there’s a bit of an especially i prepared for you and basically with a spreadsheet it’s pretty cool you just punch in the

Numbers that what happens is it will automatically tell you exactly what the cost will be and how much you should actually expect to spend every month what that housing and whether or not you can actually afford it obviously if you want a copy of this feel free to follow me on instagram and send me a dm with spreadsheet somewhere in the message and i’d be more than

Happy to send it over to you now when it comes to buying a house the general guideline is that your total cost of housing as a homeowner between you know your utilities taxes monthly payments all that should be no more than 30% of your total net income so let’s say for example you’re making $10,000 a month net income your total cost of housing should be no more

Than $3,000 all in so just to give you guys an example let’s say you’re looking at a home for about $500,000 right you’re a down payment with a calculator would automatically be 20% now obviously there’s some lenders out there who offer 5% 10% but the thing is when you do with anything less than 20% what tends to happen is not only will you be charged obviously

You know the principal and the interest but you get a third expense on top of that which is known as mortgage insurance so whenever you have less than a 20% down payment mortgage insurance is something that’s going to be tacked on to your bill which can eat into your margins a little bit um it’s not the worst thing to have the but if you can avoid it it’s better

That you do but obviously if you’re going to be renting anyways that it might more financial sense for you to just buy 5% down but we’ll make that in another video anyways so with the 20% down payment you’re looking at a total load of about 400,000 dollars with a four hundred thousand dollar loan had a three percent interest rate over let’s say a twenty five

Year period your monthly payments are gonna be one thousand eight hundred and ninety six dollars and eighty five cents so over the twenty five years your total payments are about five hundred and sixty nine thousand dollars right and out of that we can see that our interest which is gonna be the equivalent of our total payments less our loan amount is $169,000 so

You know we have a monthly payment over here of one thousand five hundred dollars let’s call it which isn’t bad right but when you’re buying a home there’s obviously a lot more costs associated with the home on top of your mortgage so in addition to paying almost $1,900 a month for your mortgage you also have to worry about things like property tax so depending on

Where you’re at a $500,000 property might cost you about two hundred and fifty dollars per month in taxes for your property in addition you probably have property insurance as well for about one hundred and fifty your utilities probably be about three hundred dollars a month depending on the size of the home and obviously your personal usage will call three hundred

To make it simple so we can see our total monthly cost with everything all in is about two thousand five hundred and ninety six dollars and 85 cents now that doesn’t seem like a bad amount right but let’s look at our income now and see what income you should be making to realistically afford something like this so if we go over here to the right we can see that we

Have all the income calculators so in this case let’s say in this example you know it’s uh it’s a it’s a husband and wife they’re each making about $50,000 so the first income earner or the husband is making fifty thousand dollars per year and that’s going to be gross second income in an earner so the wife or husband or whatever the case may be is making $50,000

As well and then that gives them a total of a hundred thousand-plus on the side they have some extra income so maybe they have like a bonus at work for christmas or you know some certain holidays or let’s say they have a little side household so it might be do like uber driving on the side or some other kind of side hustle right so their total income here their

Total gross income is one hundred and five thousand dollars annually and that seems pretty good right but we need to keep in mind that when we’re calculating the total cost of housing versus your income you want to apply it against your net income because it doesn’t matter how much you’re grossing if you’re only netting a certain amount because your net income is

The money that you actually see in your bank whereas the gross is this imaginary number almost in a sense right so your total that income assuming a twenty five percent tax rate would be about seventy eight thousand seven hundred fifty dollars right leaving you with a monthly net income of just over six thousand five hundred so if we go down here we can see that

When we compare the mortgage to the income we’re at a pretty good amount we’re at about twenty nine percent and as you guys remember earlier i mentioned that you should be spending no more than about thirty percent on your total housing cost right and we look at the mortgage it’s not that bad but if we look at the total housing costs down here well really you know

Property tax insurance and utilities that number goes up a little bit and we can see that it’s actually forty percent now of our total income and gone towards housing so if you look at the after income if you look at your income after spending all the money on housing your six thousand five hundred dollar income is now just under four thousand so let’s say you

Know you’re just like a couple so it’s you and your wife are you and your husband or whatever you’re only spending so much money obviously as to individuals because after the cost of your gas you know car insurance your monthly payments to your car phone bills groceries dining out all that you’re not really left with that much money right but it’s not bad it’s

Definitely but let’s say now you’re someone with like a dog or a cat or you have kids that’s where this amount becomes a little bit alarming because when you’re spending 40 percent of your income and there’s more than two people in the house then you put yourself in a situation where you might really have to be cutting back on a lot of expenses and lowering the

Overall quality of your life so you might not be able to go on vacations you know you can’t eat out just a lot of other situations or you might go and that just trying to keep up with your typical of lifestyle before you even bought that house right so we can see here that these people because they’re spending 40 percent of their income on housing their house poor

They can’t afford this house right now so now let’s paint a second picture so let’s say instead of you know making $50,000 per year or let’s say the first spouse is still making that 50 grand per year right but the second spouse is you got promoted at work or they had an investment or something that took off so they’re making a little bit more money every year so

Now instead of making $50,000 a year they’re actually making let’s say $80,000 a year and we’ll keep that same extra income from her or whatever the side hustle is of about $5,000 extra per year so we can see that their total gross income jumps to 135 now leaving them with a total net income of a hundred and one thousand or monthly eight thousand four hundred and

Thirty-eight dollars so again we can come down here and we can see that the mortgage to income ratio isn’t that bad because now it’s only twenty two percent and the total housing cost although it’s a little bit over 30% it’s a lot closer to that mark now right it’s only 31 percent of their total income so although i said 30 percent is like the number that you want

To be under ideally 31 percent isn’t gonna kill you obviously it’s nowhere near as high as 40 percent but in this case they could potentially afford that house let’s say for example even if the first spouse you know makes an extra five thousand i work then that same number will change cuz let’s say they’re making $55,000 now per year and we can see they’re exactly

At that thirty percent mark they’re at that sweet spot now and they could actually for that home in this situation and you know after their monthly expenses of housing they stopped about $6,000 per month in disposable income so that can go towards you know their grocery bills cars children pets vacations investments there’s a lot more opportunity and space now to

Play with money versus this four thousand here which when you calculate all those other expenses really doesn’t leave you with that much money all right so just remind you guys again if you guys do on the spreadsheet feel free to follow me on instagram using the link below and i’d be more than happy to share it with you just send me a little dm sayin spreadsheet

Or something like that and i’ll send it over to you pretty quickly um as always feel free to like comment and subscribe and i’ll see you guys next time thanks

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