7K Mortgage on a HHI of 500k

[Anonymous]

You can technically afford it but as someone with the same income and a mortgage around 5, I would try to save more before you buy.

[Anonymous]

You’re fine.

We bought 1.2 with an interest rate of 4.5% 10 years ago with 10% down. We made 350k at the time and really stretched for the house. But we knew we had room for career growth and hoped to be a 500k eventually, which we are now.

Our payments, all in, was around 6400 I believe.

[Anonymous]

Seems low.

[Anonymous]

Anonymous wrote:Seems low.

what "seems low"?

[Anonymous]

We are very similar to this. HHI 550-600k .. Early 30s and putting a offer on a 1.525M house. 20% down and our PITI will be about 6,250-6,900 (depending how the loan type we select).

We don’t have kids at the moment so the cost isn’t that crazy for us. Our current mortgage is about 4K all in. We feel good with a 2.7k increase as we are
Still young in our careers and our incomes will grow.

I am still nervous and think I’m being silly but I do know we’ll be fine. My DH is a financial advisor so I have to trust him. We save so much now as it is.

[Anonymous]

I think you’re fine as long as you prioritize saving and cut back on some luxuries.

The housing market has changed and young couples will need to spend a higher % of their income on housing. It is what it is, unfortunately.

You don’t want to settle for a home over $500-$1000/mo if you can afford it.

[Anonymous]

I wouldn’t be buying anything right now! Only reason I’d buy would be if I had to relocate for a job. I’d wait this one out.

[Anonymous]

Does that include insurance and taxes?

[Anonymous]

Anonymous wrote:I wouldn’t be buying anything right now! Only reason I’d buy would be if I had to relocate for a job. I’d wait this one out.

So what do you recommend people do? Wait for a “crash” that may never happen? Same mindset of not investing money. Who cares if the price declines in the short term, you’ll never time it right, so just buy and play the long game.

[Anonymous]

Anonymous wrote:Does that include insurance and taxes?

I think the assumption is yes based upon the purchase price mentioned

[Anonymous]

I posted my simple rules elsewhere...

1) Have the cash to put 20% down
2) Mortgage must be no more than 2.5x HHI
3) Save/invest 20% of your gross HHI every year

Nobody can predict the future, and all available evidence shows that trying to time the market (RE, stocks, etc) usually results in a loss. But if you can follow these three rules, you'll be in solid shape to weather whatever financial storms come your way.

On caveat for #2 above--if you want flexibility to work part-time, take a risk with a career change, etc than your goal should really be mortgage less than 2x HHI.

Also, w/regard to the poster saying to be willing to spend another $1000/mo more on the mortgage...I appreciate the sentiment as it certainty doesn't make sense to be penny-wise pound foolish. But consider that it's not really $1000 more per month, it's closer to $1500 pre-tax. So if you live in the house for 10 years that extra "1k/mo" works out to ~$180,000. Is that worth it? Only you can know.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I wouldn’t be buying anything right now! Only reason I’d buy would be if I had to relocate for a job. I’d wait this one out.

So what do you recommend people do? Wait for a “crash” that may never happen? Same mindset of not investing money. Who cares if the price declines in the short term, you’ll never time it right, so just buy and play the long game.

I bought in 2006 and wish that I hadn't. It really damaged me financially at a young age. Sitting it out is actually wise advice.

I say that as someone who is currently under contract to buy a house. I was able to sell my house at a high price, relocated for work, and am making a large down-payment for our current house. One hand is essentially washing the other since I profited from the market. That isn't the case for a first time home buyer.

OP, I think when you're starting out, it's normal be stretched with your mortgage, and you grow into it. But if you're nervous, it's okay to live under your means. We have a HHI of 900k, but our new house has a mortgage of $6k/month. That puts us in the upper range for the area that we moved to and makes sense, since we don't want to be in a house on a hill away from the community we moved into. But 1.2M doesn't go far in DC so you may need to be comfortable with a hefty payment. There is no one answer to what you should have as a mortgage at higher incomes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wouldn’t be buying anything right now! Only reason I’d buy would be if I had to relocate for a job. I’d wait this one out.

So what do you recommend people do? Wait for a “crash” that may never happen? Same mindset of not investing money. Who cares if the price declines in the short term, you’ll never time it right, so just buy and play the long game.

I bought in 2006 and wish that I hadn't. It really damaged me financially at a young age. Sitting it out is actually wise advice.

I say that as someone who is currently under contract to buy a house. I was able to sell my house at a high price, relocated for work, and am making a large down-payment for our current house. One hand is essentially washing the other since I profited from the market. That isn't the case for a first time home buyer.

OP, I think when you're starting out, it's normal be stretched with your mortgage, and you grow into it. But if you're nervous, it's okay to live under your means. We have a HHI of 900k, but our new house has a mortgage of $6k/month. That puts us in the upper range for the area that we moved to and makes sense, since we don't want to be in a house on a hill away from the community we moved into. But 1.2M doesn't go far in DC so you may need to be comfortable with a hefty payment. There is no one answer to what you should have as a mortgage at higher incomes.

Same. I don’t understand what the rush is. OP hasn’t been able to save 20% down yet. There is some serious FOMO going on. It simply isn’t possible for homes to continue to increase 20% a year for years. I don’t see what OP has to lose by waiting.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you earn $500k I don't think you need to be getting financial advice from an anonymous message board.

That said, how are you getting a $7k mortgage payment on a $1.2 home (unless you're including taxes and insurance)? That's just not possible if you're paying 20% down. If you haven't saved enough for a 20% down payment on your HHI then I'm skeptical you should be making such a large financial commitment.

We are putting down 115k or so as we also just paid for a wedding and our honeymoon costs.

Then you're crazy for wanting to buy now. You're looking at total monthly payments of $8-8500. With that income and no kids you can easily live frugally for a couple years and be in a much better position to buy, no matter what happens with prices and interest rates.

[Anonymous]

Our HHI is $460K (includes bonus), there is absolutely no way in hell we would want to do a $7K mortgage, even though I'm sure we would qualify. We max out our 401K, we have one kid out of college and one at community college. No really big expenses besides one car payment. Our mortgage is around $5K (includes taxes and insurance).

Life is expensive and it's only getting more and more expensive. The thought of that $7K albatross around my neck for the next 30 years....no thank you.