Monthly mortgage payment question?

[Anonymous]

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@Revelate wrote:

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More likely tied together.

Income - mandatory spend = consumer discretionary spend = potential profit!

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Which is exactly why I feel "total expenses" makes far more sense than "monthly rent/mortgage payment" as "total expenses" equates far closer to what you just said, "mandatory spend" than just one sliver of the "mandatory spend" pie.

[Revelate]

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@Anonymous wrote:

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@Revelate wrote:

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More likely tied together.

Income - mandatory spend = consumer discretionary spend = potential profit!

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Which is exactly why I feel "total expenses" makes far more sense than "monthly rent/mortgage payment" as "total expenses" equates far closer to what you just said, "mandatory spend" than just one sliver of the "mandatory spend" pie.

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There really isn't that much.  Some baseline utilities which can be easily calculated from available data, automobile and insurance which also have likely frighteningly consistent statistics when taken in aggregate, and then some sort of food either grocery or restaurant and of course the obligatory taxes (which are also easily known down to the street address you live on) and that's sort of it.

There's no real magic secret to the algorithm, I think if everyone did a real budget on this forum and then ranked things by priority, we'd probably come pretty close to each other and funny enough I don't think we'd be outliers at all on that front with the typical consumer.

The lenders aren't dumb, and there's a fudge factor anyway when we're talking market acquisition and therefore underwriting guidelines.  Close enough for horseshoes and hand grenades so to speak.

[Anonymous]

So what's the point of asking rent/mortgage payment then if everything is so easily calculated and everyone is so similar?  What purpose does it serve?  If you can ask the question about the whole pie, why ask about simply once piece of it?  I say either don't ask the question at all or ask the question that is most meaningful.  "Rent/mortgage payment" is not the most meaningful question that could be asked.

I could have two huge car payments per month for expensive cars and proportionately expensive insurance to go along with them.  These expenses combined could easily be 1X-2X a monthly rent/mortgage payment.  I agree that the basics like groceries and such are fairly constant, but even utilities can vary greatly.  With rent often they are included.  With a mortgage one can pay another $100-$150/mo in electric and $100-$150/mo for oil depending on where you live.  People can have basic cable service that's 1/3 of the cost of the Rolls Royce package that gets every premium channel and bundle package out there.  $50/mo for a phone or $200/mo for some obnoxious plan.  School loans verses no school loans.  There are a million examples.  If your argument is that lenders have their ways to figure these things out or guesstimate them on their own, what's the purpose then of even asking rent/mortgage payment?  Who cares. 

[iced]

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@Anonymous wrote:

So what's the point of asking rent/mortgage payment then if everything is so easily calculated and everyone is so similar?  What purpose does it serve?  If you can ask the question about the whole pie, why ask about simply once piece of it?  I say either don't ask the question at all or ask the question that is most meaningful.  "Rent/mortgage payment" is not the most meaningful question that could be asked.

I could have two huge car payments per month for expensive cars and proportionately expensive insurance to go along with them.  These expenses combined could easily be 1X-2X a monthly rent/mortgage payment.  I agree that the basics like groceries and such are fairly constant, but even utilities can vary greatly.  With rent often they are included.  With a mortgage one can pay another $100-$150/mo in electric and $100-$150/mo for oil depending on where you live.  People can have basic cable service that's 1/3 of the cost of the Rolls Royce package that gets every premium channel and bundle package out there.  $50/mo for a phone or $200/mo for some obnoxious plan.  School loans verses no school loans.  There are a million examples.  If your argument is that lenders have their ways to figure these things out or guesstimate them on their own, what's the purpose then of even asking rent/mortgage payment?  Who cares. 

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The other items - car, cable and phone, groceries, and the like - can be reduced and/or adjusted in a dire enough circumstance. Can't pay your CC bills and go to collection? Cut your cable, ditch your car, lose your insurance, and eat ramen noodles. Banks rarely care about what you think you can afford - it's what they think you can afford, and in those cases they think you can afford to give them all of your money that's left after taxes and housing.

It's easy enough to defeat though - just inflate your housing payment to include everything else and it sends the subtle message that your other expenses are also not available for them to rub their hands together about.

[Anonymous]

iced,

Thanks for the reply.  I appreciate that perspective and it offers some solid insight.

I think most people if they were in the situation you described rather than cut back their expenses (significantly anyway) would probably do what a large portion of people do in that situation and just go from paying off their credit cards or mostly paying them off and just meet the minimum payment monthly.  There are people that opt to pay the minimum monthly payment for years when if they actually ditched a bill or two (like cable, for example) they could pay down and off their debt with that money over time.