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Aja Shroll

How Much Home Can You Afford? Living by Grandma's Rule.

11-04-09
Aja Shroll

I am learning more everyday that my grandma is a very wise woman. I remember when I fist moved out on my own her telling me, "Your rent and household bills should not be more than 1 weeks pay." I did the math, and thought to myself, "I can't find a place cheap enough to live on one weeks pay." So, I threw her advice out the window, and my apartment and bills were about two weeks pay. I suppose I was able to survive because grandma had bought my car and was still paying my insurance. Even with all her help, it didn't take long to figure out that I was living above my means. I graduated college with credit card debt, but thankfully good ol' grandma put me through college so I was student loan free. It took me a couple of years, but eventually I got all of my credit cards paid off and have not gone down that path again. It did take me almost ten years though to learn that the advice grandma gave, is advice to live by.

Now that I am a REALTOR® I am always reminded of and counseling other on living within their means and sticking to grandma's rule. One weeks pay would be approximately 25% of your gross income. Remember gross income is the amount of money you make before taxes and deductions are taken. Most lenders will say your monthly mortgage and household bills should be approximately 28% of your gross income. All lenders formulas vary slightly, but this is a good rule of thumb. To determine your monthly gross income, take all your regular monies that can be documented (undocumented sources cannot be included) this includes, your regular pay check, and unearned souces such has alimony, child support, and income producing assets such as real estate, stocks and bonds and even lottery payments.

Once you determine your monthly income, it's time to calculate your monthly debt (yikes!). Include monthly debt obligations such as credit cards, installment payments, child support, alimony, and any other personal debt you may owe. Debt that will be paid off within six months does not have to be included. Your total monthly housing expenses, including taxes and insurance, and monthly debt expenses should not be in excess of 36% of your total gross income. If it is, your loan may not be approved or you may need to speak with your lender about all options available to you. There are definitely options out there if you don't fit these guidelines, but you will live most comfortably if you do. A larger down payment is a good way to buy a more expensive home and keep your monthly mortgage payment to a minimum. Don't forget those pesky closing cost that are anywhere from 2-6% of your sales price.

I know it's difficult to live within our means. It's something I struggle with constantly. The neighbors house is always a little nicer, and my best friends clothes I always envy. I truly believe we'll all be happier and achieve greater success if we continue to live by grandma's rule. Set goals for yourself to do better within your career and when you can afford it, that one weeks pay will buy you a nicer home than you're living in today. But, for today, let's live within grandma's rule.

Aja Shroll

REALTOR®, GRI

ajashroll@gmail.com

214.669.2547

Wynnewood North, Oak Cliff, TX

03-23-09
Aja Shroll

Wynnewood North, Oak Cliff, TX

For my first blog, I think it's appropriate to start with my own neighborhood in Oak Cliff, Wynnewood North. When my husband and I first moved into Wynnewood our plan was to remodel our house in the two years we'd planned on keeping it and sell. After living in Wynnewood for a year and a half now, we can't see ourselves moving. There is another house in the neighborhood that should it come available I would like to consider purchasing, but unless I become the next Donald Trump of real estate, and can really move up in housing, we're staying right here in Wynnewood.

I love my neighborhood so much that I decided I should do something to help our wonderful community and I am on the Board as Social Director for 2009. My position is all telling of one of my favorite things about Wynnewood North...we are a tight knit community with many opportunities to know your neighbors through social gatherings. I am already planning our first event of the year, the Spring Fling (neighborhood garage sell followed by a bbq), which is followed a couple weeks later with the Spring Wander.

Wynnewood is a ranch home community mostly built in the 1950's. This is an area where a house has either been completely remodeled, or it's just waiting to be sold to be remodeled. Many residents try and keep with the original style of the house with some well kept, vintage bathrooms. The yards are immaculately kept and we even have a Callaway Nursery sponsored, "Yard of the Month." We also have 12 cameras that are installed on the outside of houses which continuously monitor activity in the neighborhood.

If you are looking for a home in Oak Cliff in the price range of the high $100k to the high $300k, I'd seriously suggest you check out Wynnewood North. You can almost always find a house to buy that needs to be remodeled or if that's not your cup of tea, many have already done daunting task for you!