Another how much PITI can we afford post
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Anonymous
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Home purchase planning for a married couple and parents of two young kids. What PITI if we might have to stretch? Is $4k too far?
-Age: early 40s -Two kids, kindergarten and 3rd grade. -Gross income $250k (may go to $270k pending a possible promotion within two years, then don't expect more than routine annual increases). -Assets: $400k equity in our home (but really that goes down to $350kish for a down payment after all the selling fees and such) -Savings: $65k anticipated by the time we are ready to purchase. -No student loans or current car debt (but anticipate new car needed in a couple years and will most likely need to finance) -$20k and $10k in 529s for each kid, respectively (aiming to pay for at least 2 years of state school) -$350k in 401ks. Yes, behind in our early 40s; anticipate continuing to max this for the next 23 years. DH isn't sure he wants to retire though, he hates sitting around. DC area and it seems that still puts us at $800k-$900k for an hour commute and with mortgage rates, and restricted inventory, seems where we're looking, the $800k listings are going into bidding wars and selling for $900k+. Unwilling to look at rowhouses after dealing with every problem in the book living in one. Single family homes only (can be small), just don't want to be attached to neighbors anymore and want a small yard. This potentially means PITI around $4k unless mortgage rates drop substantially. We could buy a cheaper house and don't mind things being a bit of date or just need to replace some carpet and repaint. However, generally the cheaper houses do need some work, so then if we have to drop our down payment to afford the home updates, the PITI is the same in the end. So, $4K PITI. Can we? Should we? |
Arlingtonian703
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You can get an idea of what other people are doing here: https://www.dcurbanmom.com/jforum/posts/list/1037872.page
On its face $4,000 is only 19.2% of your gross income. The rule of thumb is to keep it less than 28% so you're good there. A really good answer would look at your net income and spending habits. That's one reason I like having a budget. I think some people equate budgeting with pinching pennies but I find the financial history invaluable. In a case like this you could look back at your historical expenses and see pretty quickly whether the $4,000 fits into your existing spending and, if not, where you could make changes to fit it in. |
Anonymous
| I'm more worried about your college savings. Only 9 more years and you have no where close to enough. What about a condo apartment? Not everyone needs a single family home. |
Anonymous
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I know this isn't what you want to hear, but you should reconsider row houses or townhouses near parks. Detached houses have problems too, and if you stretch your budget on the house you will have a difficult time with maintenance and repairs.
Given your low savings (relative to age and income, obviously this is not meant to be a dig) I would look for an attached unit with shorter commute so you have a bit more breathing room, better quality of life, and can save more aggressively. |
Anonymous
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I would, but getting the house I want is a high priority for me.
You need to look at your month to month budget and see where you'd need to cut for the PITI. We have an income of less than yours ($210k), and have a PITI of $4k and we've so happy with our decision. We also spend $5k on a nanny every month. That means, besides that, we live on $3k a month for EVERYTHING else. We basically have a great house, a nanny, and besides that live like we make $60k a year - no restaurants, vacations are a trip to grandmas, thrift store clothes, tight grocery budget. You have to decide what's important to you. Once you're over $150k, you've got a lot of options, and there's a lot you can do with your money. But you can't do it all, you've got to make some tough choices. |
Anonymous
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OP here. Here's why I don't want to be attached anymore. Living in a rowhouse we dealt with:
-A hoarding neighbor with a cockroach infestation that infiltrated our walls. It was only made better by.... -Neighbor home catching fire causing soot damage that traveled into multiple adjacent rowhouses. Displaced for nearly a year due to this, though on the plus side, not a cockroach since we moved back in. -Smoke that infiltrated brick walls and nothing would make it better; running an air purifier nonstop when I had a newborn Also just sick of hearing loud noises at all hours, still with the wafting smoke, and on and on. I also freaking love gardening and I want to garden the sh*t out of a backyard that's bigger than a rowhouse plot. So SFH only. For college savings... I own about a quarter of my mom's house (she died) and informed my siblings I want my quarter, so at some point I'll get it. They are going to rent the house, but I don't want the share as it's in another state. Probably $80k when all is said and done, and I will add this to the kids college fund. |
Anonymous
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We have similar stats as u with higher income $300k, more in our 3 kids 529s and retirement. Our PITI is $2500 and I can’t imagine doing more than that. We’re in PG county and our house is worth $600k (a little over $200k that what we purchase for). I have a 40 min metro commute to my DC office that I rarely go to.
Our kids go to private school, albeit more affordable Christian school, and do extracurriculars and we vacation every year. Why would you spend that much when u can get what u need with less? Maybe expand the area where you’re looking? |
Anonymous
Editing to add that we do have SFH with a nice sized yard and pretty much walking distance to school and metro and everything else we need. |
Anonymous
How is the commute to Alexandria from PG though? That's where DH works |
Anonymous
Less than an hour from mid-north PG, less if coming from south PG. I know this bc we have friends in Alexandria. You should drive it and check it out. Look into neighborhoods closer to the DC border, e.g., college park and south of that. |
Anonymous
I think you can afford it. What about Fairfax or Burke? There's houses in the 700-800 range there and lots of land with them--1970s suburban style houses generally but with larger plots and older trees than average. I know someone who just bought a SFH there for under 800k. |
Anonymous
Thanks... I don't think a Christian school works for my family though. Also, if we have to pay for private for two kids, what's the difference vs just paying probably the same or less for a mortgage in a place with good public schools (ie 20k a year for tuition vs 20k a year for mortgage that becomes an asset in terms of equity)? I guess I'm not sure that's necessarily putting us on better financial ground? |
Anonymous
Thanks! That's actually an area we're looking, but seeing the homes sell for way over listing. So list for 800s, sell for 900s. I guess I'm trying to anticipate a competitive real estate environment where we need to bid up and need to know how far we can max. |
Anonymous
It’s not. You might get money back when you sell a house but you will never see money for school again. |
Anonymous
Oh, u don’t have to put your kids in private school, we’ve just always planned to wherever we lived. My point was we could afford to bc our PITI is low. None of our neighborhood friends (most with the same stats as us) have their kids in private school. But also consider whether you can guarantee that your public schools is the best fit for your children. That’s not always the case, and it’s always good to have extra funds for either private school or to pay for other resources and services that ur kids might end up needing. |