Hardway Finance Part 3

Hardway Finance Part 3

In the first two parts of this series, I described the process where I had buckled down to do what it took to get a mortgage for a house, then went out and did it.

The good parts-
No realtor fees.
Bank negotiated the price down for me.
It was $64/sq.ft. For a brand new, fully furnished house.

But wait a second.  If you recall from part two, and just above, the bank negotiated the price down to the maximum amount that they felt that I could afford.  They based that on my 2009 income, which was nearly the maximum it could possibly be.  I remember this being a bit of a red flag for me, but that the broker assured me that it wouldn’t be a problem long-term because my salary would go up every year.  I’d grow into it.  At one point I remember joking with my friends at work that I had more overtime hours than I had regular time hours.  They used to post everyone’s numbers, and if a certain amount of overtime participation was required but not fulfilled, they started at the bottom of that list mandating people.  I was at the top.

From my understanding, the maximum amount allowed is 25% of your average monthly gross for the mortgage itself.  Tacked onto that would be the monthly pull for taxes and insurance.  In my case, I also had mortgage insurance since I put the least amount possible down.  I had more money, but they refused to take it.

What it meant was that if I didn’t do any overtime, my monthly payment all in was roughly 75% of my take home pay without overtime.  Add on top of that monthly utilities which were thankfully extremely low for a house that size.  So, if there was no overtime, I was cool as long as I didn’t have to buy any food or gas that month.

Of course, now I was all in on overtime, with no real choice in the matter.  I figured out that I needed at the very least to work every Saturday in order to make everything work.  I had to make it work.