Our mortgage is nearly half our income & we have buyer’s remorse
A HOMEOWNER has sought financial guidance after their monthly mortgage ballooned to nearly half their income.
In a YouTube video, a caller said she and her husband had buyer’s remorse a year after purchasing their home.
Rosalie, a homeowner in San Antonio, Texas, explained that she and her husband purchased a home in 2023.
However, the payments became stressful for the couple. She called money experts on The Ramsey Show for financial guidance.
“I just feel like it’s way too much money,” she said.
“I’m in a little bit of remorse here.”
The buyer said she made $100,000 in equity from her previous home sale.
The couple used the money to pay off the rest of their student loans and some car payments.
Rosalie said the only debt the couple carried was their monthly mortgage.
Banks approved their application for a $500,000 mortgage on the home.
However, the debt’s interest rate was 6%. The couple also signed an agreement that locked them into the payments for 30 years.
Rosalie, a teacher, and her husband, a vehicle body shop mechanic, were paying 40% of their $10,000 monthly income to their home.
She also said the couple has two children.
They spend $150 a week on childcare.
Jade Warshaw, one of the show’s hosts, suggested to viewers that couples try to keep their mortgage rates around 15 to 25% of their monthly income.
“Remember guys, anybody listening: advocate for yourself because they want you to spend, spend, spend,” Warshaw recommended when buyers speak to bankers.
“They get paid off that. Just stick to your guns.”
Escrow and mortgage increases explained
What’s an escrow? Why did my mortgage payment go up?
Escrow accounts are set up to help homeowners cover insurance, property taxes, or other home-related expenses.
If you have an escrow, part of your monthly mortgage payment goes towards the account.
The escrow management company then uses the money in the escrow account to pay for taxes and insurance when those payments come due.
Essentially, the escrow bundles these other charges with your monthly principal payments, making them easier to manage. This is meant to make homeowners less likely to default on their payments.
If the government’s annual valuation of your home determines that your property taxes will go up, the escrow payments can spike as well, meaning that even those with fixed mortgage payments can find themselves forking over more cash every month.
MORTGAGE SOLUTION
The show’s hosts suggested the home buyers look into other ways to make more money.
They said their financial freedom would be tied to their monthly income.
First, they explored selling the home but worried about the impact of a capital gains tax on the house’s increased value.
Then, the hosts said the couple should look for ways to increase their income.
Rosalie warmed to the idea of her husband working weekends, even though he already works 40 hours a week.
Lastly, they talked about selling the family truck.
However, Warshaw warned the truck could be useful if the couple decides to sell the home.
The U.S. Sun reports on other mortgage stories – this owner said her monthly bill increased by $400.
Also, another owner said they felt stuck after a massive increase.
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