Nursing salary and buying a home?

Nurses General Nursing

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I start school for my BSN in the Summer of 2015 after I have my second child. I'm not picking nursing for the salary, I've always had a passion for nurses and what they do and couldn't see myself doing anything else with my life!

BUT I'm a planner, dreamer, and have big goals and like to know what I'll be able to expect after I become a nurse. So is it any way possible to have a $400,000, maybe even $500,000 home on a nurses salary? I want a new styled home that I'll be happy to live many many years in so I don't mind it being one of my biggest investments and I don't want to wait late in life for it since my kids will already be growing older by the time I start house searching! So having my house (and student loans) as one of my first financial priorities (we don't need brand new expensive cars) would I be able to afford to pay a $500,000 30 year mortgage?

I know she's in Canada, that's why I said "we" (as in we in the US) call that an ARM and why I said on page 2 that "In the US" interest rates can only increase if you have an ARM.

For the most part, I like how Canada does things better than how the US does but I do not think I would like this.

What exactly is ARM and why would you have to get one? If it changes my interest rate then I would surely do my best to stay away from it.

So basically nurses cannot dream big...

Specializes in Critical Care, ED, Cath lab, CTPAC,Trauma.
I do not contribute to a 401K. The government does not require that everyone contribute to a 401K, but they say that an employer can essentially require its employees to participate as long as they give them the option to opt out:

IRS Approves Mandatory 401(k) Contributions, if Appropriate Notice is Provided to Plan Participants - FindLaw

When I worked in the hospital, they did this. We all got a letter in the mail saying "Beginning this year, all employees will be automatically enrolled in our 403B plan and 2% deducted from your check every pay period unless you opt out." In order to do that, you had to make an account with Fidelity and go and change your employee contribution to 0. No one has tried to make me do anything at my current job.

Thank you I knew about the opt out by they had an excuse as to why there was no real choice. I know that there are certain states that allow this although the actual law has not been tested in court. It has something to do with other plans available for retirement. Thanks Kel I have some research to do.
Specializes in Critical Care, ED, Cath lab, CTPAC,Trauma.
What exactly is ARM and why would you have to get one? If it changes my interest rate then I would surely do my best to stay away from it.
People want more house than they can afford. The mortgage broker tells them here is how you can buy the house of your DREAMS. People don't read the fine print.

This is the crux of the housing crisis in the US. Many people got duped by these loans with deceptive loan practices. These people were told that they could own a house that was way out of their price point by taking these loans. They ended up in way over their heads being under water. They were unable to afford the payment when it matured and unable to qualify for refinancing as they did not have enough capital income for traditional loan. Now they had little to no equity. A huge house payment and no money or equity.

Specializes in Critical Care, ED, Cath lab, CTPAC,Trauma.
So basically nurses cannot dream big...

It's ok to dream big. I dream everyday about winning the lottery..however I don't buy a mansion on the hopes that I will be the winner. It is the responsible thing to do to be realistic and not get in over your head. People are not told the truth by lenders or real estate brokers most of the time.

If someone still chooses to take the dive...that is their business. In this current economy it is wise to be cautions and not get in over your head.

Praemonitus praemunitus or forewarned is forearmed

Specializes in Pedi.
What exactly is ARM and why would you have to get one? If it changes my interest rate then I would surely do my best to stay away from it.

An ARM is an adjustable rate mortgage. Sometimes lenders will give you a bigger loan if you go for an ARM but it's much riskier for the homebuyer. They also typically have lower rates than the rates for a 30 year fixed loan so they seem appealing to misinformed buyers. So if you get, say, a 10/1 ARM your rate is fixed for the first 10 years but then adjusts every year after that for the remainder of the mortgage (30 years total). In the 10/1 ARM my lender offers, the interest rate can change up to 2% with each adjustment. So you may get an ARM loan with an interest rate of 3.5%... then in 10 years, your interest rate is 5.5% and it continues increasing annually. In the long run, you may end up paying more.

Specializes in Med/Surg, Float Pool, MICU, CTICU.

This is a really good informative thread. Even though I'm not ready to buy a home yet, this information is great advice to keep in mind!!!!

Specializes in Critical Care.

I agree that you can qualify for a house 3-4 times your salary if you have excellent credit and don't have car payments, credit card debt and student loan debt, plus you need a significant down payment. You're not going to be able to afford a half million house on a nurses salary! I think you're dreaming! Plus they start people off lower in the south and you are not going to be making $65,000 off the bat which is the median salary for nurses, unless you are willing to work loads of overtime and then you'll never get to see your family or spend time enjoying your house! Most people don't start off getting a expensive dream home, instead they get a small starter home and use the home appreciation to be able to buy up, but that is assuming home prices will rise. When income is stagnant and many people are saddled with student loan debt it is hard for the housing market to recover because of a lack of demand due to a lack of income.

Specializes in None yet..

Well, that's one way of looking at it. However, if you look at the big picture - lifetime earnings and expenses - paying a huge amount of interest just to get that deduction may not be so smart. Paying tens of thousands of dollars in interest over the life of the loan may outweigh the benefits of thousands of dollars of deductions.

Then there's the risk factor. What will happen if you or your spouse are injured or lose jobs? What would be more important, disposable income or a deduction?

Fortunately, there are other ways to get a tax deduction. Some of them help you to meet goals for retirement, medical costs that come with age and sending children to college.

Talk to several financial advisors and make sure they disclose how they are paid. There's a tendency to recommend what you have to sell.

I'm like the other posters. I'm risk averse and I don't like to pay interest. People have given you good points to consider. Ultimately, it all depends on your goals and values.

Specializes in Critical Care.
An ARM is an adjustable rate mortgage. Sometimes lenders will give you a bigger loan if you go for an ARM but it's much riskier for the homebuyer. They also typically have lower rates than the rates for a 30 year fixed loan so they seem appealing to misinformed buyers. So if you get, say, a 10/1 ARM your rate is fixed for the first 10 years but then adjusts every year after that for the remainder of the mortgage (30 years total). In the 10/1 ARM my lender offers, the interest rate can change up to 2% with each adjustment. So you may get an ARM loan with an interest rate of 3.5%... then in 10 years, your interest rate is 5.5% and it continues increasing annually. In the long run, you may end up paying more.

I had a nurse friend who wanted to buy a house, but was told her credit was bad and she needed to fix that and pay off some debts, credit cards, student loans and car payment. But she was not content to wait and found a broker that helped her buy a house with an adjustable mortgage, a really bad mortgage, it was fixed at 8% for only the first two years, when rates were around 5%. When you take on an adjustable rate mortgage the early years are supposed to be a teaser rates say 3% and then the hope is that you will be able to refi to a fixed rate mortgage. There is no guarantee you will be able to refi, plus it can cost thousands in fees every time you refi!

So she went ahead, bought the house, never got her credit fixed, decided to trade in her car with an upside down car loan and low and behold when the rate started rising she couldn't afford the loan, couldn't refi because of her credit and debt load and this great broker told her to sell her house. She didn't want to sell her house, plus home values had depreciated. She struggled to get her lender to do a govt refi (HARP) and all. It eventually went thru, but the truth is she couldn't afford the home and still ended up paying an above market interest rate.

Another coworker with bad credit with home fever found a home where the seller kept her on his loan, but she got antsy and wanted a home equity loan to buy a car and fix the place up. She took one of the many offers in her mail box and ended up with a subprime mortgage too. Then rates started rising and she had trouble making ends meet. Luckily she was steered to a community loan program and finally was able to get a decent mortgage and get out of the mess, but not before she had overspent by thousands.

You don't want to take one of the offers in the mailbox, but you need to shop around and be careful, there are crooks everywhere waiting to take advantage of you by getting you to refi with high fees and high rates and adjustable rate mortgages are dangerous and really easy to miss the fine print. I would advise people to stick to fixed rate mortgages and even consider having a lawyer involved in the process, esp if you are contemplating an adjustable rate! Also I'm leary of brokers, while they are pitched as great and have more access to many different lenders, they are prone to throwing you under the bus, by steering you to higher rate mortgage programs and they get a cut for this. This is not well known, but they have an incentive to place you in a higher interest rate than you would qualify for.

I suggest you stick to a reputable credit union, it is non profit, rates are usually better than banks, but they are more strict and have high standards. Do your homework before you buy. See if your hospital offers home buying assistance, mine used to offer down payment assistance, while this program has ended, they still provide access to a home counselor thru a non profit agency. I made use of this and the counselor guided me thru the process from going over my credit report, making a budget and timeline and ensuring I got a good, fixed rate mortgage. She even caught a problem with my homeowners insurance that I would not have noticed and saved me a bundle there! Also there is a website from Nehemiah Corp that offers online lessons on the home buying process and also may offer down payment assistance. It is worth looking into. Read books about the home buying process, esp if you are a first time buyer. There are many good ones you can find at the library, I'm sorry I don't remember the names of the books I used. Elyse Glink is one of the authors with books about home buying, but there are many other good books. For warned is for armed!

If you have bad credit you will be stuck in a bad mortgage with high interest rates, if you can get a loan at all. My friend's second car loan was at 12% and rates were much lower, I want to say 5% at the time. I even know of someone with car loan 18% + and a poor lady with a refi home mortgage where the rates went over 20%, this when rates were less than 5%. The poor lady spent all her savings trying to keep up with the mortgage and in the end lost her house. I wouldn't believe rates could ever be that high if she hadn't told us herself of the troubles she was going thru! Because of the experiences of these people, I wouldn't touch an adjustable rate mortgage with a ten foot pole. It is just too easy for them to screw you over with all the legalize. Also I've read of some private student loans with an 18% interest rate!

It really costs to have bad credit. You will find all your hard earned money going to the lenders when they gouge you for everything from credit cards, cars, homes and insurance! If you proceed anyway you will be throwing away your hard earned money that you need for yourself. With stagnant wages we need to keep every bit of money we can. There is almost no reason to take out an adjustable rate mortgage as interest rates are as low as they have ever been and there is no place for them to go but up!

Oh man, I WISH that was the way it worked. My house was 275k. Divide that by 360 and the payment is 763 a month!!! In reality my mortgage payment comes in just around $2100 a month (FHA insurance was just increased a year ago to 300 a month, plus taxes which for me is about another 375 a month), but even the principle ends up being almost double what you 'estimate'.

That 500,000 house is not going to cost anywhere near 500 after 30 years of interest. At a 5% interest rate it would cost you almost double what the loan is worth, it will only be worse when interest rates rise.

Mortgage Calculator - Free from Bankrate.com

Use this website as it gives you a much better idea of what your payment will be, just keep in mind the taxes and FHA insurance

(that cost me around 600-700 a month) are not included in the calculations.

where are you living now?Have you considered the cost of day care for two?Your husband should explore options on how to make more than $25k a year.

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