Afford $1.8M on 300K?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Lol at paying $2M to live in Fairfax.

We are a boutique builder in fairfax....new homes on 1/2 acre lots in close in Fairfax sell for min $2.2m...approx
4000sq ft top two floors, with 1200 sq ft finished basement. Lots cost anywhere from $650K to $750K.

Well, by all means charge whatever people will pay, but you can grab a larger new construction house up in north Arlington for that price. If OP is just looking for a basic 4,000 square foot house in Fairfax, you can do a LOT better than 1.8m. But whatever, the underlying question is just a personal calculation of risk tolerance and spending priorities.

I know the DC/Arlington/Bethesda crowds will find this mind boggling, but there are MANY of us living in NoVa who do not want to live in Arlington, Alexandria or close-in suburbs. They're unappealing, cramped and riddled with crime. We like the space, schools, and peace in the farther out burbs. I live in FFX and the $2.2M number for the new construction homes here sounds right. It's not something that I want to spend for ANY house, but new construction across the board is overpriced. And yes, we could get a house in Arlington or DC but do not want to live in or near the city.

https://www.zillow.com/homedetails/4057-Doveville-Ln-Fairfax-VA-22032/51837519_zpid/
https://www.zillow.com/homedetails/9224-Okla-Dr-Fairfax-VA-22031/51837703_zpid/
https://www.zillow.com/homedetails/8600-Hillside-Pl-Fairfax-VA-22031/51838621_zpid/

Arlington, Alexandria, and the other close-in NoVa suburbs (which I think would include McLean and Falls Church) are “riddled with crime”? Seriously???? Especially compared to the “farther out burbs” - you know, like Fairfax, Chantilly, Herndon, Sterling, Centreville, etc. - that this person apparently thinks have LESS crime? Smh.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Lol at paying $2M to live in Fairfax.

We are a boutique builder in fairfax....new homes on 1/2 acre lots in close in Fairfax sell for min $2.2m...approx
4000sq ft top two floors, with 1200 sq ft finished basement. Lots cost anywhere from $650K to $750K.

Well, by all means charge whatever people will pay, but you can grab a larger new construction house up in north Arlington for that price. If OP is just looking for a basic 4,000 square foot house in Fairfax, you can do a LOT better than 1.8m. But whatever, the underlying question is just a personal calculation of risk tolerance and spending priorities.

I know the DC/Arlington/Bethesda crowds will find this mind boggling, but there are MANY of us living in NoVa who do not want to live in Arlington, Alexandria or close-in suburbs. They're unappealing, cramped and riddled with crime. We like the space, schools, and peace in the farther out burbs. I live in FFX and the $2.2M number for the new construction homes here sounds right. It's not something that I want to spend for ANY house, but new construction across the board is overpriced. And yes, we could get a house in Arlington or DC but do not want to live in or near the city.

https://www.zillow.com/homedetails/4057-Doveville-Ln-Fairfax-VA-22032/51837519_zpid/
https://www.zillow.com/homedetails/9224-Okla-Dr-Fairfax-VA-22031/51837703_zpid/
https://www.zillow.com/homedetails/8600-Hillside-Pl-Fairfax-VA-22031/51838621_zpid/

Arlington, Alexandria, and the other close-in NoVa suburbs (which I think would include McLean and Falls Church) are “riddled with crime”? Seriously???? Especially compared to the “farther out burbs” - you know, like Fairfax, Chantilly, Herndon, Sterling, Centreville, etc. - that this person apparently thinks have LESS crime? Smh.

First time I've ever seen someone claim that Fairfax is lower crime than Arlington. PP is nuts.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Lol at paying $2M to live in Fairfax.

We are a boutique builder in fairfax....new homes on 1/2 acre lots in close in Fairfax sell for min $2.2m...approx
4000sq ft top two floors, with 1200 sq ft finished basement. Lots cost anywhere from $650K to $750K.

Well, by all means charge whatever people will pay, but you can grab a larger new construction house up in north Arlington for that price. If OP is just looking for a basic 4,000 square foot house in Fairfax, you can do a LOT better than 1.8m. But whatever, the underlying question is just a personal calculation of risk tolerance and spending priorities.

I know the DC/Arlington/Bethesda crowds will find this mind boggling, but there are MANY of us living in NoVa who do not want to live in Arlington, Alexandria or close-in suburbs. They're unappealing, cramped and riddled with crime. We like the space, schools, and peace in the farther out burbs. I live in FFX and the $2.2M number for the new construction homes here sounds right. It's not something that I want to spend for ANY house, but new construction across the board is overpriced. And yes, we could get a house in Arlington or DC but do not want to live in or near the city.

https://www.zillow.com/homedetails/4057-Doveville-Ln-Fairfax-VA-22032/51837519_zpid/
https://www.zillow.com/homedetails/9224-Okla-Dr-Fairfax-VA-22031/51837703_zpid/
https://www.zillow.com/homedetails/8600-Hillside-Pl-Fairfax-VA-22031/51838621_zpid/

Arlington, Alexandria, and the other close-in NoVa suburbs (which I think would include McLean and Falls Church) are “riddled with crime”? Seriously???? Especially compared to the “farther out burbs” - you know, like Fairfax, Chantilly, Herndon, Sterling, Centreville, etc. - that this person apparently thinks have LESS crime? Smh.

First time I've ever seen someone claim that Fairfax is lower crime than Arlington. PP is nuts.

Huh?? Arlington does have a higher crime rate per person (including violent and property) than Fairfax. Have you not been to Columbia Pike? Pentagon City?

[Anonymous]

https://www.neighborhoodscout.com/va/arlington/crime

https://www.neighborhoodscout.com/va/fairfax/crime

[Anonymous]

Anonymous wrote:

Anonymous wrote:
20% down and investing the rest would be financially astute.

20% down and putting the rest in a savings account because you don't invest outside of retirement and don't want to invest in a bear market -- which is what you said you've been doing -- is idiotic. The money you have earning 1% a year is losing value every day due to inflation. You're not even beating the rate on your mortgage, and then you're setting yourself up to have no spare cash flow every month. Unless you enjoy stress there's no upside.

Op here. I didn't want to get into internet arguments with posters that resort to name calling, but I'd like to clarify that our alternative to the $1.8M home is something other than a 1% savings savings account. Currently, we are putting our excess cash into 1% savings because of the market downturn (and this investment strategy has beaten the sp500 by 20% YTD!) but are trying to figure out what to do with it in the future - buy a bigger house or buy investment property or buy into a bear market (or buy pumpkins - who knows). That's why we're soliciting advice from DCUM.

Thanks to those who are providing sage advice on the increase in expected cost of home ownership for a $1.8M home. We are definitely thinking about whether a $6K PITI is "doable" (or if pumpkin investing is the best path forward). I'm still not understanding why people are thinking that that a $1.5- $2M neighborhood would be full of multi-millionaires (unless those multi-millionaires hide their lamborghinis in the garage and rather show off their $50K cars in the driveway.) Unless these posters are not from NOVA?

Because people don’t like being strapped for cash/house poor. And people in NoVA tend to not be as splashy with cars in my experience perhaps partially because of the car tax.

[Anonymous]

Anonymous wrote:Lol at paying $2M to live in Fairfax.

my thoughts exactly

[Anonymous]

Do you have daycare payments? Need to save for college? That’s a huge payment on a 300k hhi. We have a similar income and our house was 1.1m and I don’t feel like we are saving a ton.

[Anonymous]

Hell no.

[Anonymous]

Eh, it may be possible.
When we were at 300k range we bought at 1.2 and were freaked out. We had 2 kids in daycare for 24k a year (12k each).

It was tight for couple of years. Kids in school and incomes over 400k now no worries.

[Anonymous]

Anonymous wrote:Eh, it may be possible.
When we were at 300k range we bought at 1.2 and were freaked out. We had 2 kids in daycare for 24k a year (12k each).

It was tight for couple of years. Kids in school and incomes over 400k now no worries.

We think 1.2 is doable for 300k HHI but OP wants 1.8~ lol

[Anonymous]

Anonymous wrote:Eh, it may be possible.
When we were at 300k range we bought at 1.2 and were freaked out. We had 2 kids in daycare for 24k a year (12k each).

It was tight for couple of years. Kids in school and incomes over 400k now no worries.

12k each for daycare? How long ago was this? Twenty years?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I haven’t followed the entire thread, but has OP indicated how much savings they have? One option is to make a large down payment to make the monthly payments affordable. Our HHI is $225k and we will probably buy at $1.5 million but we have very substantial savings due to being frugal, investing wisely, and having no kids. So we will put at least 50% down and still have plenty of investments and savings left (at least seven figures left). I guess based on the comments here we will be viewed as the poors in our new neighborhood when we buy but who cares.

Op here - I haven't said much about my savings because I didn't think it was relevant to the conversation - I would say my finances are similar to yours. Probably around $1M in fairly liquid assets. Others on this thread have opined that smaller mortgage are better, and i still don't understand why. In your case, you are paying down 50% in order reduce monthly payments. Can I ask why you don't consider downing 20% and separately investing the other $450K (~ 1.5M * .3)? If a bank is willing to lend me an extra $450K for tax advantaged and (relatively) low interest rates, why wouldn't I do that? Or do you imagine that you can't find investment opportunities that garner greater than 3.5 (or 4 or 4.5%) ROI? If no such opportunity arises, I don't see why you couldn't use the $450K to reduce your mortgage principal later on. If the monthly payment @ a 20% DP becomes too large, you also could use the $450K to recast the mortgage to lower the monthly payments later on.

I'm asking because (as others on this thread have surmised), I'm financially illiterate and I'd like to crowd-source some ideas.

Thanks in advance

You raise a good point, and I have thought about this. I have used some calculators, and I think the max mortgage we will qualify for is about $900K. But you're right, I think it does make sense to get the biggest mortgage possible if you have substantial savings, knowing that you can fall back on those savings if needed. So maybe our down payment would be $600K (with that $900K mortgage) instead of $750K. If we qualified for a bigger mortgage, I think we'd be fine going for it, and investing anything we don't have to put into the house.

At the end of the day, I think you personally know what works for you, but I don't agree with all the posters acting like you need to be making $1 million to afford a $1.8 million house. I have no qualms about doing $1.5 million on a $225K income, but I know my spending habits and savings rate. I do everything I want to do in life -- good vacations, play lots of sports, have lots of hobbies -- but I don't blow through tons of money to do it. I think that's where there can be big differences -- I have friends who make way more than I do but spend so much on cars, staying at hotels like the Four Seasons, eating at the fanciest restaurants, buying all their groceries at Whole Foods, buying pricey sports tickets, etc. Those types of things don't interest me, but I have nothing against people who spend their money that way. We all have different priorities, and so when some posters write that they can only afford an $750K house on a $300K salary, then perhaps they've simply chosen to prioritize spending their discretionary funds in different ways. If you're careful with your money -- and it sounds like you are -- I could easily see how that $1.8 million house is doable.

[Anonymous]

I'm the PP who said to go to an independent financial planner - I'm not Lori, and didn't realize that mentioning her wasn't allowed here.

Anyway - I stand by my comments: life gets WAY more $$ once your kids are older, and you should talk to a planner, not DCUM!

[Anonymous]

Someone explain the math to me how OP is having $6k leftover on her current budget.

By my rough math, $300k is about $13k/month take home after maxing 2 401k’s, HSA, and 529s, and taxes. Take out $3500 for her current PITI, gets her to $9500. For her to save $6k/month she is only spending $3500/month. This includes all utilities, internet and cellphones. Home maintenance, food, dining out, kids activities, gifts, travel, and saving for buying cars with cash since OP says she doesn’t have car payments.

It’s just not adding up to me. We make a similar income and don’t live a fancy life and have at best a couple thousand left over, not $6k! I’d love to know the secret because I’m not seeing it.

[Anonymous]

Anonymous wrote:Someone explain the math to me how OP is having $6k leftover on her current budget.

By my rough math, $300k is about $13k/month take home after maxing 2 401k’s, HSA, and 529s, and taxes. Take out $3500 for her current PITI, gets her to $9500. For her to save $6k/month she is only spending $3500/month. This includes all utilities, internet and cellphones. Home maintenance, food, dining out, kids activities, gifts, travel, and saving for buying cars with cash since OP says she doesn’t have car payments.

It’s just not adding up to me. We make a similar income and don’t live a fancy life and have at best a couple thousand left over, not $6k! I’d love to know the secret because I’m not seeing it.

I'm not saying the OP's budget is easy, but $3,500/month for all recurring expenses after mortgage doesn't sound impossible if they're relatively frugal. That's $40,000/year. Enough for $2,000/month in groceries, $1,000/month in utilities/internet/etc and $500/month for saving. Maybe they don't travel or dine out much (hard with kids anyway).