One Million Dollar house...talk me out of it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Well if the crystal ball suggests your steady and increasing income then you're probably fine. Otherwise, you'll be like the gazillion others who are house poor and underwater on mortgages.

OP, is your income secure and likely to increase?

Very secure, not likely to increase and not likely to decrease, it all depends on what the fed. annual increases are.

[Anonymous]

Anonymous wrote:What about your monthly credit card bill? Was that included?

No credit card bills, we pay it off every month

[Anonymous]

With no income increases likely, I'd say you're budget is tight. But if you forego the separate "fun money" you'll have some cushion. You seem committed and informed. Good luck!

[Anonymous]

Anonymous wrote:My husband and I are falling in love with a home in a very nice neighborhood and a better school district for my sons (1 month and 2 years). While our HHI is 300K, I did the math and it appears that we will still be ok but it'll wipe out our savings and what we normally put into savings every month. Not living paycheck to paycheck but very close. I guess I am trying to convince myself out of love with it so that I can just move on and accept what we have.

The real question is not about the price of the house. It is about the size of the mortgage. OP, if you have been saving enough money for a sizable down-payment, say 30-40% of the house, I see no problem with it. (Assuming you don't need to touch retirement savings)

[Anonymous]

Absolutely crazy. You're already worried about money and you haven't even bid on the place.

"Nothing needs to be fixed" is wishful thinking. You haven't had the place inspected yet! You have no idea what's wrong with it, and something is ALWAYS wrong.

Please look for a cheaper house.

[Anonymous]

I would never do this. We have a similar income to yours two kids (8 and 6) and a mortgage that is only 3000 and I still feel like it is tight. Eventually you'll want to travel, sign the kids up for activities and sports, get them therapy or allergy shots or private school if the end up with special needs. You'll need to furnish that much larger house with nicer furniture because cheap furniture is going to look weird in such nice rooms. Your food bills will continue to increase as your kids get older and who the heck knows if when we might get a COL increase again, much less bonuses or an end to the sequestration. You will be wiping out your savings! Please don't do this. Maybe it would be okay but you will always have this size mortgage and it will take you forever to gain equity and housing prices fall and you need to move you will be screwed!

[Anonymous]

This may be your only chance. If you like the house and does not need much work go ahead. Most posters do not have your income

[Anonymous]

[quote=Anonymous]Most people on these threads are uber-conservative because they bought their houses pre-2002 and can't relate. So take what people advise on here with that understanding. [/quote]

Why ouldn't people who bought at market peak in 2007 and wound up underwater a year later be more cautious than those who bought before the land rush? I'd think that lessons learned from the housing crash are crucial to this discussion.

[Anonymous]

[quote=Anonymous]This may be your only chance. If you like the house and does not need much work go ahead. Most posters do not have your income [/quote]

I beg to differ. I have similar income, more home equity and a larger retirement account and there's no way I'd buy that house. I have kids to consider and the sequester continues, which could shrink the area's economy, particularly when next year's budget comes into play. I've known several people -- seasoned professionals with years' experience in their specialties -- who've been laid off only to be rehired at comparable or lower pay, sometimes with lesser or no benefits. So proceed with extreme caution.

[Anonymous]

Two feds making 300K are already at the top of the federal pay scale. There will be no meaningful raises for the rest of their working lives, unless they're in jobs that command big money in the private sector - those are the exception, not the rule.

Wiping out savings AND eliminating the ability to save, as OP indicated, will put this household in a very precarious position. Freedom from worry is worth more to me than a dream house.

[Anonymous]

Anonymous wrote:My husband and I are falling in love with a home in a very nice neighborhood and a better school district for my sons (1 month and 2 years). While our HHI is 300K, I did the math and it appears that we will still be ok but it'll wipe out our savings and what we normally put into savings every month. Not living paycheck to paycheck but very close. I guess I am trying to convince myself out of love with it so that I can just move on and accept what we have.

That is our HHI too (two GS-15s), and we also have two kids, and we have a mortgage half that size. I can't imagine having $2,000 less per month, not to mention having no savings (if you're borrowing that much from TSP, assume that means you're cleaning out your cash). The stress is not worth it.

You don't say what your current house is like, or if you've looked at any cheaper houses, but an economist would tell you to compare the marginal "utility" (happiness) you get out of something to the marginal cost of getting it, compared to something else. So, compared to an $800,000 house, are you really going to feel that it's worth $1,000 a month more to live in the million dollar home? I personally would have to like something a LOT to spend that much money on it every single month.

[Anonymous]

Anonymous wrote:Two feds making 300K are already at the top of the federal pay scale. There will be no meaningful raises for the rest of their working lives, unless they're in jobs that command big money in the private sector - those are the exception, not the rule.

Wiping out savings AND eliminating the ability to save, as OP indicated, will put this household in a very precarious position. Freedom from worry is worth more to me than a dream house.

This was my thought too. But we're financially conservative. What if one of the kids needs some special care or private school or a parent decides to scale back from work to PT or the A/C unit inexplicably needs replaced? I never wanted to be in a position where our mortgage made decisions for us (or kept us from us making the decisions we wanted to make). So we bought a house we could afford at the time (even though our salaries continued to steadily increase). Eventually I decided to SAH and we're really happy that we were able to work that out without financial ruin.

[Anonymous]

What's your current mortgage payment?

[Anonymous]

We rented a very expensive home for several years. The unexpected costs of maintaining the more expensive home, the sprinklers we inevitably broke and replaced, the special landscaping and costs to have it done (because we didn't have time to handle it all), the more elaborate Christmas decor, special filtering system, pp mentioned better quality/more furnishing needs, on and on and on, convinced us we weren't yet in a position to buy at that level. It caused to many conversations about tight budgets and we decided it wasn't worth it.

[Anonymous]

And how old are you?
What are your other financial goals (retirement by age x, vacations, college for kids, etc.)