Another can we afford this post, HHI $325k
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Anonymous
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I know we can but risk averse spouse is nervous so curious what others think.
HHI $325k split evenly 2 working parents, 1 child House price $1.3M, down payment $450k, PITI ~$6500 No other debt |
Anonymous
| Okay. Age? Retirement? Savings? |
Anonymous
| Sounds insane to me but go for it. |
Anonymous
Mid 30s, $1M retirement, $400k liquid savings/investments |
Anonymous
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How secure are your jobs? If one person loses their job, how does it look if you cut your HHI in half?
Also, what are your expenses compared to what you bring home? I'm not saying you can't afford it, but I would look at this on a more granular level. This could be why your spouse is not 100% sure. Do the numbers to show him/her that you have enough extra each month to up your payments. |
Anonymous
What’s the plan if one or both lose your jobs? College? |
Anonymous
College was heavily frontloaded, so while we currently contribute quite a bit we could pull back and still be fine. Re losing jobs - both are relatively secure but if we lost them we have enough savings to ride things out for a while. |
Anonymous
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It’s a little tight for me but we’re aggressive savers. You have to do what you have to do in a HCOL area. We have friends who bought around this range / HHI and are fine. It’s aligned with any standard mortgage affordability advice too.
A lot of the DCUM crowd either bought before the COVID house price spike or refinanced during it at 2.5% so you always get skewed responses here that are like “We spend 1% of our HHI on housing” and it’s like we get it Karen, you refinanced during COVID and live in a 1960s N Arlington rambler where the entire value is in the land. I’ve found the Reddit HENRY forum more helpful for questions like this - younger crowd that’s in similar circumstances, many also with young kids. |
Anonymous
| Should be fine but it’s too tight for a lot of people who want maximum peace of mind. We make the same and live in a 600k TH bought in the low 400’s. $1950 PITI |
Anonymous
Left after you make the down payment? So basically the house is $850k? Whats your net take home after contributing to retirement? Is this like 50% of your net take home so the rent will be paid with 1 check from both of you and you each have another check left to cover bills? Sounds tight but doable if no other large expenses |
Anonymous
| Are you facing daycare costs and the prospect of 1.5 more children? |
Anonymous
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$325,000 after Fed, State, and Payroll Taxes is likely around $250,000 take home. Assuming you are contributing fully to 401(k) and Roth IRAs, that's $64,000 a year to savings, which is a good target at just about 20%. That leaves $186,000 for spending, or $15,500 a month.
I don't know what kind of loan you are looking at or the home insurance/HOA/Property Tax fees, but using your number of $6,500, you'd be putting 42% of your take-home pay to your PITI. Using a general metric that fixed costs should not be more than 60% of your take-home pay, that would leave only $2,800 for other fixed costs like car payments, gas, daycare, groceries, out of pocket medical, pets, insurance, home maintenance, and all utilities - electric, gas, phone, water, sewer. That's very tight, probably impossible. So your fixed costs would be high compared to your take home pay. That would put stress on your ability to do other savings like college and brokerage accounts, plus limit vacation fund, entertainment, eating out, clothing, gifts, and other discretionary purchasing. It just depends what kind of life you want to live. If you think you will love this house and it's worth putting a huge chunk of your earnings to it every month, I think you will manage. If your income grows, even better, and things will loosen up. But I do think it will feel tight. You'll probably have to save less than 20% to retirement and take smaller vacations. Run some numbers yourself. See if that's the life you want. |
Anonymous
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Why not write take home and total monthly cost of the home. If $15k is the take home and housing ends up being $8k (PITI, utilities, taxes, HOA?), does it still look good?
I'd save aggressively for a year and reconsider. Nobody is buying homes any time soon. |
Anonymous
| What type of loan are you looking at and can you negotiate the price down to $1.1 or $1.2 then what’s the PITI? |
Anonymous
Yea, I was about to say something about a 1.3m house, then I remembered that my house is now worth 1.1 and it’s nothing special. Assuming you’re sure you’d be happy with the public schools in the area and not feel the need to pay for private, it sounds do-able. |