Buying $1.5 million home - can we afford it?

[Anonymous]

With 300K income, figure you can afford a 1 mil mortgage.

[Anonymous]

No way, this is insane. If you planned to live in the house forever and it was a dream home maybe. But as an investment? No way. Prices are sky high right now throughout the area and who knows how much the house will be worth in 10 years.

[Anonymous]

Wow we thought we were stretching with a slighter higher HHI and a 1m house that we plan to live in forever. I think you are going to feel stressed.

[Anonymous]

Anonymous wrote:Currently in the market to purchase a $1.4m-1.5m home in a very nice suburban area close to the beltway.

HHI: 300k (not including bonus ~$50k)
Downpayment: ~250k
Financed in part through 30-year VA loan

I'm looking at a 10 year minimum term of ownership, and view this a good investment opportunity given current historically low interest rates and seeing that most of the homes in this price range are still significantly below their pre-market crash prices ($500k+ below high market value in some areas). Currently approved for financing, and it appears we'll be able to balance the budget barring any major unexpected costs. However, finances will be very tight at least until our two toddlers are out of daycare in another 2 years, although spouse and I are both under 40 and would reasonably expect our incomes to rise in the coming years.

Good idea, or are we crazy?

What would you consider a "major unexpected cost"? Medical bills? Car accident/replacing a vehicle?

As for daycare - do you have twins who are both finishing daycare at the same time? Why not wait until then to purchase a home at this price, or buy something slightly less expensive? I can't imagine that you can't find something decent in the $1mil range in NOVA.

[Anonymous]

Anonymous wrote:Wow we thought we were stretching with a slighter higher HHI and a 1m house that we plan to live in forever. I think you are going to feel stressed.

At 300 HHI we were thinking we were stretching 800.

[Anonymous]

If you have to ask, you know the answer. Go for it. It will be a great foreclosure for someone.

[Anonymous]

When we had that income we spent $980K and felt stretched.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Wow we thought we were stretching with a slighter higher HHI and a 1m house that we plan to live in forever. I think you are going to feel stressed.

At 300 HHI we were thinking we were stretching 800.

This.

[Anonymous]

When we had that income, we bought a 900k home.

[Anonymous]

seeing that most of the homes in this price range are still significantly below their pre-market crash prices ($500k+ below high market value in some areas).

What makes you so confident that prices should go back to that level?

Currently approved for financing, and it appears we'll be able to balance the budget barring any major unexpected costs.

With that amount of leverage you need to build a contingency. If not it's not worth it.

[Anonymous]

You people are nuts unless of course, you have a big ass down payment. On 300K, we were nervous spending $600,000. When we moved away from DC where housing is more affordable, we paid $350,000. Same 300K income. Why on earth would you stretch yourself like that? What happens if there is a job loss? An unexpected medical expense? Or any other surprise expense.

[Anonymous]

Anonymous wrote:You people are nuts unless of course, you have a big ass down payment. On 300K, we were nervous spending $600,000. When we moved away from DC where housing is more affordable, we paid $350,000. Same 300K income. Why on earth would you stretch yourself like that? What happens if there is a job loss? An unexpected medical expense? Or any other surprise expense.

Forget unexpected medical. My DH just got sick of working for the man and decided to try on his own, so we refinanced to have a 400 loan on a 700 house (used savings) so I could manage the payment (and the rest of expenses) on my income. It all worked out in the end, but only because we could afford it on one income for several years.

[Anonymous]

Depends on your savings.

[Anonymous]

We need more people like the OP. Please extend yourself and buy as much house as you can. When the next downturn comes around (soon, I'd expect), jobs will be lost, homes will be foreclosed and the smart ones can buy his $1.5 M house for $1M or less.. As they say "a fool and his money..."

[Anonymous]

Nuts. WAY too expensive of a house without more of a downpayment.