If you are house poor, do you regret it?

[Anonymous]

We did and I regret it. The commute isn't even great, in our case. We did it for the property. I wish we would have done what I was pushing for, a smaller home closer to work.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A 7 figure mortgage is just tremendous.

Agreed. But what can you do? We are looking at cramped townhomes or 1+hr commutes...

Live waaay below your means for a few years to save. We have a $1.1M home but a $400k mortgage. We lived in a crappy apartment in a rough part of DC to save up a large down payment.

[Anonymous]

We (I) regret it. I worry what what happens if one of us loses our job and even though we have savings if it's depleted, then what? We should've bought a smaller home with the smaller mortgage. We're not struggling, we're doing just fine but i worry that I have in the back my head at all times .

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You need to be so, so careful about this. What percentage of your gross income are you talking about in mortgage + property taxes?

Your budget needs to include approximately 7.5% of the purchase price per year for home repairs/improvements. You can only delay any costly repairs for so long, and they will still cost you. A more expensive house usually means more expensive construction and more expensive repairs.

That is crazy. My million dollar house does not need anywhere near $75k in repairs/improvements every year. Wow, I am conservative in budgeting, but not that conservative.

Yeah, that suggested figure is wrong. The standard number is 1-2% per year.

NP here but my house doesn't need anywhere near 1-2% per year of maintenance. I think that figure is intended for LCOL areas where you can get a SFH for $200K - $300K.

At 1% per year that means I would be spending $150K over 20 years on repairs on my $750K house and I don't spend close to that even including the major costs like roof replacement, HVAC and AC compressors. At 2% that would be $300K over 20 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A 7 figure mortgage is just tremendous.

Agreed. But what can you do? We are looking at cramped townhomes or 1+hr commutes...

Bull. There are plenty of SFHs in Arlington and Alexandria for less than $1.3M. You don't "need" new and shiny. Make some compromises.

[Anonymous]

Anonymous wrote:NP. Let’s do the numbers. We are considering exact same thing. Our combined income is $300k, and we are looking at $1.3M homes with a $1m mortgage.

We have about $400k saves up so have some emergency fund after.

But that $1M debt rattled me.

This is the only way I would do this -- two INCREDIBLY stable jobs with pensions built in. (I mean, I personally still wouldn't do it -- we took out a $600k mortgage on $290kHHI with one fed/one private -- but I won't talk you out of it.) You can afford to live closer to the edge, because for dual fed households there kind of isn't ever an edge.

OP, assuming even one of your jobs is private sector don't do it.

[Anonymous]

Anonymous wrote:Considering wiping out our entire savings and taking on a hefty mortgage for shorter commute and excellent schools. We are still in our 30s and high income. Taking on a seven figure mortgage just seems daunting. I feel it is the right move to be able to eat dinner with dad and have him take kids to soccer. Seems worth it. I know we can have good schools and longer commute but DH doesn’t want to add 1 min to his commute. We currently live in our starter home in Alexandria.

So...you'd wipe out your savings and STILL have a 7 figure mortgage? There's just no way you can't find something more reasonably priced. You have got to really separate your wants from your needs and start looking again.

What is your income?

I have this feeling that your definition of house poor and what it *actually* means to be house poor are not the same.

[Anonymous]

We did it and don't regret it, BUT a large part of that is that the appreciation has been significant so if we had to sell we'd still come out ahead.

[Anonymous]

We regretted it and sold it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You need to be so, so careful about this. What percentage of your gross income are you talking about in mortgage + property taxes?

Your budget needs to include approximately 7.5% of the purchase price per year for home repairs/improvements. You can only delay any costly repairs for so long, and they will still cost you. A more expensive house usually means more expensive construction and more expensive repairs.

That is crazy. My million dollar house does not need anywhere near $75k in repairs/improvements every year. Wow, I am conservative in budgeting, but not that conservative.

Yeah, that suggested figure is wrong. The standard number is 1-2% per year.

We budget conservatively at 4% and have never come close to that.

Even when we had a new roof put on it was only $8800, but that was covered by insurance because it was hail damage. Largest non-insurance things we've had to do is replace our fridge and stove. Our house was built in 2011 and we're the second owners.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Considering wiping out our entire savings and taking on a hefty mortgage for shorter commute and excellent schools. We are still in our 30s and high income. Taking on a seven figure mortgage just seems daunting. I feel it is the right move to be able to eat dinner with dad and have him take kids to soccer. Seems worth it. I know we can have good schools and longer commute but DH doesn’t want to add 1 min to his commute. We currently live in our starter home in Alexandria.

So...you'd wipe out your savings and STILL have a 7 figure mortgage? There's just no way you can't find something more reasonably priced. You have got to really separate your wants from your needs and start looking again.

What is your income?

I have this feeling that your definition of house poor and what it *actually* means to be house poor are not the same.

400 salary plus bonus. Don’t want to rely on bonus for fixed expenses.

[Anonymous]

We regretted it so much that we are selling. Hoping to go on the market this week. We lived in the house for 6 months. Thankfully, the market is so hot that we've every reason to believe we'll get more than we paid.

In the meantime, we found an apartment in a wealthy community we had not previously considered when we were looking to buy. The commute (huge surprise to us) actually ended up being shorter than it was from our super expensive house that's technically closer-in. Dad is home every night for dinner. Schools are great. The rent is also only about 66% of our old mortgage, which has allowed us to save more in cash than we were getting in earned equity on our $1 million loan. That's great too.

The other thing to consider are repair and updating costs. Maintenance and repair are often more expensive on higher-end homes (bigger yards, more windows, expensive finishes, etc.). We found that these costs were an unexpected budget killer. Now, we bought a 100 year old house, which was part of the problem, but higher repair costs are still something to consider, even with newer homes.

The other thing to consider is square footage. Because we moved into a closer-in neighborhood, we got less space for more money. We went from a 2/2.5 with a small den to a 2/1, no den. We initially thought we could live with this - DH shared a bedroom with 5 brothers! - but it made a huge difference in our QOL on a day-to-day basis. The apartment we've rented is actually bigger!

Our plan is to save and invest aggressively (and carefully) until such time as we're able to purchase a more appropriate home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Considering wiping out our entire savings and taking on a hefty mortgage for shorter commute and excellent schools. We are still in our 30s and high income. Taking on a seven figure mortgage just seems daunting. I feel it is the right move to be able to eat dinner with dad and have him take kids to soccer. Seems worth it. I know we can have good schools and longer commute but DH doesn’t want to add 1 min to his commute. We currently live in our starter home in Alexandria.

So...you'd wipe out your savings and STILL have a 7 figure mortgage? There's just no way you can't find something more reasonably priced. You have got to really separate your wants from your needs and start looking again.

What is your income?

I have this feeling that your definition of house poor and what it *actually* means to be house poor are not the same.

400 salary plus bonus. Don’t want to rely on bonus for fixed expenses.

Get a lesser close in house. You don't need a million dollar mortgage for a short commute and good schools.

Case in point: https://www.redfin.com/VA/Arlington/3863-30th-St-N-22207/home/11230927

[Anonymous]

Anonymous wrote:You need to be so, so careful about this. What percentage of your gross income are you talking about in mortgage + property taxes?

Your budget needs to include approximately 7.5% of the purchase price per year for home repairs/improvements. You can only delay any costly repairs for so long, and they will still cost you. A more expensive house usually means more expensive construction and more expensive repairs.

Also, can you afford a new car if you need it? Will you ever go on vacation? What about kids to summer camps? What if one of you loses a job? What if you have to take a leave of absence to care for an elderly parent?

You have a high income, so maybe you can float yourself on savings if you need to, but consider whether money stress might not outweigh the other benefits.

This isn’t true and especially isn’t true in dc where home prices are much higher. If you’re spending 50-70k on home repairs there’s something seriously wrong!

[Anonymous]

Anonymous wrote:

Anonymous wrote:NP. Let’s do the numbers. We are considering exact same thing. Our combined income is $300k, and we are looking at $1.3M homes with a $1m mortgage.

We have about $400k saves up so have some emergency fund after.

But that $1M debt rattled me.

This is the only way I would do this -- two INCREDIBLY stable jobs with pensions built in. (I mean, I personally still wouldn't do it -- we took out a $600k mortgage on $290kHHI with one fed/one private -- but I won't talk you out of it.) You can afford to live closer to the edge, because for dual fed households there kind of isn't ever an edge.

OP, assuming even one of your jobs is private sector don't do it.

Even with two fed pensions, yes, you are stable, but what happens when one of you wants to go back to school, or take a hiatus, or transition into a lesser-paying non-profit career? You're really tying yourself to your fed job for 30 more years. Yes, you could sell, but what happens when the market slows down?

Point is, you'll have a lot less flexibility, and maybe you're okay with that. Just some things to think about . . .