Would you spend 700K on a house with 165k HHI?

[Anonymous]

We have a HHI of 350k and we live in house we bought for 300K. At the time we bought the house, 20 years ago, our HHI was around 150K. Today, we feel that this was the best decision we made because it made everything else in our lives so much easier. We have fully funded retirement and college for our kids. One kid is in medical school, another is in law school. We are able to fully fund both of them without impacting our retirement. We are very comfortable financially and are able to live an affluent lifestyle. with cleaning service, ;awan service, foreign vacations and tutors for our students. Kids went to public schools (magnets), we did not have childcare costs or student loans. However, the single biggest factor for our financial freedom was the house we could afford easily. Our house is valued for $565K currently.

[Anonymous]

Of course you can do it with that down payment. I don’t see why your PITI would be that high, though. Shouldn’t it be closer to 2500 on a 450k mortgage?

[Anonymous]

Investing and growing out wealth is very important to us. I would not like to be on a financial treadmill on a path to no where, so no I would not intentionally make myself house poor.

[Anonymous]

Anonymous wrote:Investing and growing out wealth is very important to us. I would not like to be on a financial treadmill on a path to no where, so no I would not intentionally make myself house poor.

The problem is that it may be impossible to find a home less than this amount with a decent commute.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Investing and growing out wealth is very important to us. I would not like to be on a financial treadmill on a path to no where, so no I would not intentionally make myself house poor.

The problem is that it may be impossible to find a home less than this amount with a decent commute.

Why do you/she need a decent commute? Your DH works from home?

Something has got to give. To answer your question, no, I would not take on that much of a mortgage with a $165k income. We make about $200k, and we took on only a $200k mortgage (we had save a huge down payment over quite a few years). We paid this mortgage off entirely in five years, then we went on to building wealth.

That much mortgage is going to cripple you financially for the rest of your working lives.

[Anonymous]

Anonymous wrote:I make 300K and thought 700K was high... So yeah I would not have done it on your salary

You either have huge debts you're also paying or are unreasonably conservative.

[Anonymous]

Anonymous wrote:Of course you can do it with that down payment. I don’t see why your PITI would be that high, though. Shouldn’t it be closer to 2500 on a 450k mortgage?[/quote

Op here. Yes, preapproval from bank quote for PITI on 450k mortgage (so 700k house for us) is $3,050 a month. I put the range in just in case taxes are higher. The first year we lived in our current house paid PITI $1900 then 2nd year realized the taxes were very messed up the first year and our mortgage increased to $2500. I always estimate higher just in case.

[Anonymous]

Well, not taking down payment into consideration, I wouldn’t go higher than $412,500 on that income.

[Anonymous]

So your mortgage would be 450k and piti shouldn't be more than 3000, likely less. I think that is fine as long as your jobs are stable.

[Anonymous]

Do you anticipate that your income is likely to increase? Are your jobs fairly stable? If the answer to both those is yes, go for it. Otherwise, this is really tight. I'm guessing that your take home per month is roughly 8K? That would mean you would be spending close to half your take home on the mortgage. That said, you do have a healthy emergency fund. Are your savings for retirement, college, etc on track? Where is the extra $500 - $1K going to come from in your budget?

While your kids might be cheap at this moment, they do get more expensive as they get older (food, clothes, activities, etc).

[Anonymous]

That is out of the question, way too high

[Anonymous]

No. I wouldn’t feel comfortable feeling that stretched. Our HHI is close to yours and we bought around $575K. Life is expensive and your kids are young. To me, financial freedom is more important than an impressive house.

[Anonymous]

Anonymous wrote:So your mortgage would be 450k and piti shouldn't be more than 3000, likely less. I think that is fine as long as your jobs are stable.

Not true. Go do full calculations. I know this because I financed 450k with a much lower interest rate than what is offered today. Depending on taxes and HOA and insurance it's around ~3200 and this is in my low tax county.

[Anonymous]

Anonymous wrote:

Anonymous wrote:So your mortgage would be 450k and piti shouldn't be more than 3000, likely less. I think that is fine as long as your jobs are stable.

Not true. Go do full calculations. I know this because I financed 450k with a much lower interest rate than what is offered today. Depending on taxes and HOA and insurance it's around ~3200 and this is in my low tax county.

Absolutely true, at least for me in Bethesda. Borrowed 545k, piti is $3300. OP would be borrowing a full 100k less.

[Anonymous]

I would not, but if your monthly budget indicates you can afford it, and still have savings/retirement/emergency funds, then it's probably OK.