Making 150k with mortgage of 550k?

[Anonymous]

That sounds high to me.

We have similar income and have a $400,000 mortgage. On one hand, we're still a couple years from finishing paying off school loans and we're at the beginning of the daycare years, so that limited us. However, we have spent so much on various house projects and other issues, that I'm glad our spare cash will be available for more such projects, life expense, and savings once we're done.

How project-oriented is the house? If you're paying that amount for something freshly renovated with few issues, fine, but look carefully at the house and yard and think about what you might like to do and whether the size of the mortgage might limit you in that regard.

[Anonymous]

I wouldn't do it, but I like to live below my means. This is not living below your means. $150k HHI is on the low end of middle class living here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wouldn't do it. 150K is your gross, right? What would be your monthly mortgage + tax + insurance?

What are your other expenses? Would you be able to save some $ every month, including retirement and maybe college?

You may end up being house rich, cash poor.

Our HHI is about $155K gross, and our mortgage is $240K. Mortgage + tax + ins is probably around $2000/mo. We max out on 401K, so net take home is about $7800 or so.

We have 2 kids, no childcare expenses, no car payments, no other loans. Our monthly expenses can easily be around $7500/mo without living too frugally. That doesn't leave much wiggle room.

Luckily, I'm working PT, so the extra income goes to extra things like vacations. But before I went back to work PT, we were living pretty much paycheck to paycheck. The only reason we weren't stressed about it is because we have savings for at least 6mo of expenses.

Do you live in the DC area? 550k doesn't really get your a "rich house" and 240K doesn't get you shit unless you bought in 1990

I live in west MoCo. We put a very large down payment on our house. Zillow currently values our house around $850K, and we bought a couple of years ago. Our house, including finished basement is 3400 sqft. I'm careful not to over extend ourselves. I feel like the last recession and housing bubble burst hasn't taught a lot of people much.

Lol it hasn't taught you a damn thing if you bought far outside the beltway and didn't take advantage of a larger loan with historically low interest rates.

[Anonymous]

With rates where they are, you will NEVER Be able to afford more house for $550K. When rates go up, prices will drop, but not in proportion.

I would go for it - 100%. lock in now, grow into the number. As long as you aren't in an area where it would be difficult to sell, what is the real downside? Almost everyone goes through a period where they are concerned about that mortgage number. Not a unique thing.

[Anonymous]

Anonymous wrote:With rates where they are, you will NEVER Be able to afford more house for $550K. When rates go up, prices will drop, but not in proportion.

I would go for it - 100%. lock in now, grow into the number. As long as you aren't in an area where it would be difficult to sell, what is the real downside? Almost everyone goes through a period where they are concerned about that mortgage number. Not a unique thing.

I agree with this. 100%. With luck, your salaries will continue to go up, and in a few years it won't be a stretch at all.

[Anonymous]

I agree too, but only if there is potential for increased salaries.

[Anonymous]

Your numbers are fine, and it is not at all overextending yourself.

[Anonymous]

I wouldn't.

[Anonymous]

Wouldn't it make more sense to post your budget here and let people evaluate it? With just those numbers we have no idea how much you spend.

[Anonymous]

I'm skeptical. You should post more of your budget for better answers. In particular, how much is your pension? I'm assuming from your response that you are a dual fed family. If you work 30 years as a fed, will your pensions be sufficient? I'm pretty frugal but I'm not relying on pension alone. Also, you said your kids are 5 and 7 so you don't have daycare expenses. What about summer camps and aftercare?

[Anonymous]

Anonymous wrote:I agree too, but only if there is potential for increased salaries.

+1...DH and I took out a 500k mortgage when our HHI was 150k. However, were GS 12s in ladder positions that went up to GS-14. A year and a half later our HHI is about 210k. We wouldn't have taken out the 500k mortgage if we didn't know we'd be drastically increasing our income.

[Anonymous]

What is your monthly payment (with taxes + insurance) vs monthly take home pay? Is the mortgage a fixed interest rate so you can be sure of no increases?

Assuming you keep spending at the same rate, how much would you expect to save every month? Will you be able to replenish an emergency fund and use it for home repairs periodically?

Do you expect your income to go up significantly in the next 5 years or stay flat?

You should ask yourself each of these questions. I think this will clarify what the answer is for you.

[Anonymous]

I wouldn't go by "income in 5 yrs". A lot can happen in 5 yrs. I would go by what I can afford now and live comfortably, especially if you have kids.

[Anonymous]

Anonymous wrote:I wouldn't do it, but if you have run the numbers and it still allows for retirement savings and other goals, go for it.

+1 and make sure you include the costs of childcare if you are planning in having kids in the future.

[Anonymous]

We have 550 mortgage and hhi between 180-250 depending on bonus. P and I is about 2,700. We are able to travel, max 401k, and go out. Our kid is in public in MoCo so no daycare costs. Perfectly comfortable.