Did you buy a house that stretched your budget? Was it worth it?
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Anonymous
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0) you are not stretching your budget.
1) I did that in 1999. Only I stretched to the point where the savings were about 100/mo. Borrowed 225K @ 7% when I made 5K/mo.. 2) Because of that, I locked in my housing costs at 2K/mo (now lower, due to refinancing). I now make 14K/mo. |
Anonymous
| OP here - thanks for the reality check guys. I think a few factors made us nervous, 1) mortgage would be 38% of net take home, which is higher than many people advise, 2) we've become used to saving at a high rate every month, 3) the downpayment would deplete our savings and it would take longer to fill up the emergency fund. Also, once we move we will not be able to get by on just one salary if one of us no longer can work. But I guess thats the case even if we buy a smaller home. Thanks for the input! |
Anonymous
This would make me nervous. Does one spouse make a lot more than the other? Do you have a lot of other expenses outside of the mortgage? |
Anonymous
| No debt outside of a mortgage (no car loans, student lians or credit card debt). I make about 2/3 of our HHI. |
Anonymous
They usually talk about it in terms of Gross. For example, my mortgage payment is 15% gross, but 25% net. |
Anonymous
I hear you OP! I'm also financially conservative. For us, we too would consider 38% of net "high". We don't take on more debt than one income can'take handle because you never know what curve balls can come your way. When we purchased we spent 25% of our net, now we are at about 18% of our net and did indeed weather a job loss with very little resulting financial stress. We were very grateful to only have to focus on finding the right job, and not worry about the money aspect. |
Anonymous
not in my world either.... |
Anonymous
| Humble brag |
Anonymous
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This is not a stretch.
We stretch more than we wanted to at first to get the school and neighborhood we wanted and 2 years in I am still glad every day we made that choice. And we don't save anywhere near $3,500 a month beyond our maxed 401ks. You are fine. |
Anonymous
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Our mortgage is a huge percentage of our take home right now. Not going to give numbers but it's a major stretch.
We did it for a few reasons: - we wanted to do a 15 year loan so we're not paying a mortgage into our 70s - kept our old house as a rental... we're actually socking away the rental income into a separate account - haven't touched it yet but it's there if we need it. The old house is leverage as we will consider selling if we get into a situation where we need cash - we probably have $300k equity in it that we could roll into the new mortgage and make the monthly payments much more manageable. Alternatively we may pay it off and that will give us a couple thousand $$ better cash flow every month. - after a sizeable down payment still have a considerable nest egg in savings and investments that we can tap into (even monthly) if we need to Our budget probably has us at negative cash flow, but the first year in the new house we've been able to avoid dipping into savings. A decent bonus and a tax refund came around the time things looked to get tight. It makes me a little nervous but we haven't really adjusted our lifestyle (which is pretty frugal anyhow). Just moving less to savings every month but we're still maxing out 401k, contributing to 529, and have plenty in reserves so I'm not sure what we need to put extra into savings for anyhow... |
Anonymous
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I've been bled dry with every move; we made it to the house that we plan to stay in for the conceivable future and have been here for 12 years. As my income has gone up we've arrived at a place where my wife doesn't work (3 little kids) and I can cover savings, IRA's and all other costs of life comfortably....but...it was nerve wracking for a few years.
If the house is all you want it to be and your kids will be in the best schools for them I'd say go for it, it might be tough at times but that's what makes life interesting. Good luck! |
Anonymous
Yea, we'll I bought me house 13yrs ago too. My mortgage is $2,000/MO. Those days are long gone. Incomes have not kept up with the steep increase in housing, not to mention the commutes people have to endure for these expensive homes. Totally different ball game back in prehistoric days. |
Anonymous
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(1) This is not a stretch.
(2) Yes, I did, in the sense that we knew covering the mortgage would be a stretch after we started having kids. But we have been lucky enough to buy in a rapidly appreciating neighborhood. We refinanced after kid2 was born at 3%, which loosened up the budget a bit. and it is about to appraise for almost 200k more than we paid for it. so, we're in a good place now. |
Anonymous
| 38% of net is a stretch when you make 50k. 38% of 250k salary is not a stretch whatsoever. The mortgage rules that you shouldn't spend more than 1/3 your income were meant for people in lower income brackets because things like car payments and food can send them under easier since there's not much actual cash left over after you spend 1/3 income of 50k. |
Anonymous
| Classic DCUM humblebrag. |