I make $175,000 p/ year (150k base w/ 25k bonus). How much home should I purchase?
I usually make 75% to 100% of my bonus. I have no credit card debt. My other monthly debt payments are as follows:
School Loans – 200
Car Loan – 570 (12 months left on a 2005 Durango)
Car Lease – 200
I max out my 401k, I put $ 200 p/ month into my daughters college fund, and I put 500 p/ month into IRA.
I am looking at going to 3k p/ month which is is 24% of my gross salary (I used 12,500 which doesn’t include by bonus, I am considering that gravy). I have been paying 1800 p/ month for my current mortgage for 8 years so going to 3k scares me (I am extremely conservative and adverse to risk).
I should also add that I have 100,000 to put down. I have a 30k emergency fund, and about 10k more in my savings/checking.
According to the Federal Reserve Bank’s website:
“As the nation’s central bank, the Federal Reserve has the authority and financial resources to act as “lender of last resort” by extending credit to depository institutions or to other entities in unusual circumstances involving a national or regional emergency, where failure to obtain credit would have a severe adverse impact on the economy.”
Although the Fed has always had this power, they have never used it before-even during the Great Depression.
This weekend, the Fed met for an unprecedented Sunday meeting to make an emergency rate cut.
They also took the unprecedented action of serving as the Lender of Last Resort to bail out Bear Stearns by funding JP Morgan with loans “secured” with ready-to-default subprime mortgages.
Does the Fed’s definition of its duties mean that the bankruptcy of Bear Stearns is a National Emergency that would have had severe adverse impact on the economy had the Fed not bailed them out?