Just bought an $800,000 house on a $186,000 salary and now I'm panicking....

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It amazes me how many people on this board must be terrible with money and waste money on who knows what. If you are one of those people, then you shouldn't buy that much house with your income. If you are good with money and don't go crazy spending money you will be fine. Our HHI is 170K with 2 kids and we just bought a 700K house (550K mortgage, 2,900 PITI). It is about $500 more per month than our last house, so we are comfortable we can afford it.

I totally agree. What do people need so much money to spend on? Our combined gross income is only $150000; we purchased a house for $800000 5 years ago which is paid off now. We sold our previous house and put a downpayment of $650000. We have 1 child that goes to public school. We are careful with money and don't spend it on frivolous things like going to Starbucks, nail salons etc.

I like to take care of myself - nails, hair, skin, pilates, gym, barre. Looking and feeling good are not frivolous.

priorities - priorities.
I'd rather have a house I like then spend money on pilates, gym and barre. Hiking and biking is free.

PS didn't read the whole 13 pages, but I did same thing as OP - bought $785K house in my late 30s on under $200K HHI 7 years ago. It was a bit tight at the beginning with 4.5K monthly payments, but now we're fine. Income grew overtime, rates went down, initial set-up costs went away.
Everything s possible if you set your mind and stick to your goals.

+1. Why stop at an $800k house? How about 2million? Your income will increase. Just make a budget!

I don't need $2m house Not my goal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It amazes me how many people on this board must be terrible with money and waste money on who knows what. If you are one of those people, then you shouldn't buy that much house with your income. If you are good with money and don't go crazy spending money you will be fine. Our HHI is 170K with 2 kids and we just bought a 700K house (550K mortgage, 2,900 PITI). It is about $500 more per month than our last house, so we are comfortable we can afford it.

I totally agree. What do people need so much money to spend on? Our combined gross income is only $150000; we purchased a house for $800000 5 years ago which is paid off now. We sold our previous house and put a downpayment of $650000. We have 1 child that goes to public school. We are careful with money and don't spend it on frivolous things like going to Starbucks, nail salons etc.

I like to take care of myself - nails, hair, skin, pilates, gym, barre. Looking and feeling good are not frivolous.

priorities - priorities.
I'd rather have a house I like then spend money on pilates, gym and barre. Hiking and biking is free.

PS didn't read the whole 13 pages, but I did same thing as OP - bought $785K house in my late 30s on under $200K HHI 7 years ago. It was a bit tight at the beginning with 4.5K monthly payments, but now we're fine. Income grew overtime, rates went down, initial set-up costs went away.
Everything s possible if you set your mind and stick to your goals.

+1. Why stop at an $800k house? How about 2million? Your income will increase. Just make a budget!

Yes, on this forum people will tell you the stories of how incomes went up and everything worked out. You will not hear the sad stories where things did not work out. It's a dumb idea to buy more house than you can afford currently based on the hopes that incomes will go up in the future. Bad financial planning and irresponsible if you have a family. Some people are living in a bubble or believe they are invincible. Just look at around at all of the covid-related job loss. Do you think your job is bullet proof or you will always earn as much as you do now?

I have my own stories about health-related loss of income. Well, we managed it on one income + disability payments for almost a year. Common, $800k mortgage on $200k is not the same as $400k on $100k. Much more disposable income to work with.
It is manageable mortgage assuming you can stick to your budget an don't try to keep up with Jones.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It amazes me how many people on this board must be terrible with money and waste money on who knows what. If you are one of those people, then you shouldn't buy that much house with your income. If you are good with money and don't go crazy spending money you will be fine. Our HHI is 170K with 2 kids and we just bought a 700K house (550K mortgage, 2,900 PITI). It is about $500 more per month than our last house, so we are comfortable we can afford it.

I totally agree. What do people need so much money to spend on? Our combined gross income is only $150000; we purchased a house for $800000 5 years ago which is paid off now. We sold our previous house and put a downpayment of $650000. We have 1 child that goes to public school. We are careful with money and don't spend it on frivolous things like going to Starbucks, nail salons etc.

I like to take care of myself - nails, hair, skin, pilates, gym, barre. Looking and feeling good are not frivolous.

priorities - priorities.
I'd rather have a house I like then spend money on pilates, gym and barre. Hiking and biking is free.

PS didn't read the whole 13 pages, but I did same thing as OP - bought $785K house in my late 30s on under $200K HHI 7 years ago. It was a bit tight at the beginning with 4.5K monthly payments, but now we're fine. Income grew overtime, rates went down, initial set-up costs went away.
Everything s possible if you set your mind and stick to your goals.

+1. Why stop at an $800k house? How about 2million? Your income will increase. Just make a budget!

Yes, on this forum people will tell you the stories of how incomes went up and everything worked out. You will not hear the sad stories where things did not work out. It's a dumb idea to buy more house than you can afford currently based on the hopes that incomes will go up in the future. Bad financial planning and irresponsible if you have a family. Some people are living in a bubble or believe they are invincible. Just look at around at all of the covid-related job loss. Do you think your job is bullet proof or you will always earn as much as you do now?

I have my own stories about health-related loss of income. Well, we managed it on one income + disability payments for almost a year. Common, $800k mortgage on $200k is not the same as $400k on $100k. Much more disposable income to work with.
It is manageable mortgage assuming you can stick to your budget an don't try to keep up with Jones.

Saying you manage it on one income and disability is meaningless as your one income could be $200K+ a year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It amazes me how many people on this board must be terrible with money and waste money on who knows what. If you are one of those people, then you shouldn't buy that much house with your income. If you are good with money and don't go crazy spending money you will be fine. Our HHI is 170K with 2 kids and we just bought a 700K house (550K mortgage, 2,900 PITI). It is about $500 more per month than our last house, so we are comfortable we can afford it.

I totally agree. What do people need so much money to spend on? Our combined gross income is only $150000; we purchased a house for $800000 5 years ago which is paid off now. We sold our previous house and put a downpayment of $650000. We have 1 child that goes to public school. We are careful with money and don't spend it on frivolous things like going to Starbucks, nail salons etc.

I like to take care of myself - nails, hair, skin, pilates, gym, barre. Looking and feeling good are not frivolous.

priorities - priorities.
I'd rather have a house I like then spend money on pilates, gym and barre. Hiking and biking is free.

PS didn't read the whole 13 pages, but I did same thing as OP - bought $785K house in my late 30s on under $200K HHI 7 years ago. It was a bit tight at the beginning with 4.5K monthly payments, but now we're fine. Income grew overtime, rates went down, initial set-up costs went away.
Everything s possible if you set your mind and stick to your goals.

+1. Why stop at an $800k house? How about 2million? Your income will increase. Just make a budget!

Yes, on this forum people will tell you the stories of how incomes went up and everything worked out. You will not hear the sad stories where things did not work out. It's a dumb idea to buy more house than you can afford currently based on the hopes that incomes will go up in the future. Bad financial planning and irresponsible if you have a family. Some people are living in a bubble or believe they are invincible. Just look at around at all of the covid-related job loss. Do you think your job is bullet proof or you will always earn as much as you do now?

I have my own stories about health-related loss of income. Well, we managed it on one income + disability payments for almost a year. Common, $800k mortgage on $200k is not the same as $400k on $100k. Much more disposable income to work with.
It is manageable mortgage assuming you can stick to your budget an don't try to keep up with Jones.

Saying you manage it on one income and disability is meaningless as your one income could be $200K+ a year.

As I stated in my pp, our combined hhi was a little less then $200k with full pay, so it went down on disability, ltd was 40% of my regular pay. It was hard, but still doable

[Anonymous]

Anonymous wrote:Only thing you will ever do is work to pay for this house.

Yes, this. I’d never do that, but I like to go on vacation and see an occasional movie and eat in a restaurant.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We weren’t comfortable with more than a $200k house on a HHI of $100,000/yr so that would be a big no from us. But we are resisting the two income trap and live in the Midwest.

Same, we make ~$200K a year and live in the Midwest and have a remaining mortgage of $180K-ish. We continually look at new houses, but we absolutely do not want to be house poor or work forever.

So, basically, you have no idea what it's like to live in a HCOL area or how much houses cost in the DMV, but you'd like to weigh in to share your entirely irrelevant opinion why? $200K is a studio/one-bedroom condo that's a mile walk from the metro, likely with stupid high condo fees. There are no $200K houses here. But, hey, living in the Midwest is a big no from us.

Seriously, I wish the Midwestern folks would refrain from giving advice on the RE boards like it's actually feasible here. A 200K house is not an option in the DMV unless you want to have a 4 hour round trip commute. Do a search and see what 200K gets you and where.

And this isn't a case of wanting a "new" house. An 800K house around here is not a brand new, decked out McMansion. And a move to the Midwest is not an option for all of us.

OP - don't panic. You will be fine. Do you have savings? You will be able to pay your bills but will likely not be able to save much for a few years until your income goes up.

We bought an 800K house on an HHI of about 220K, with 20% down. We had no debt but did have daycare costs for two young children. We were able to make it work just fine but not able to save as much as we wanted initially, so not maxing out our 401Ks and not contributing much to the kids' 529s. This resolved in a few years with incomes going up. However, I must note we did have a cash cushion that would have gotten us through about 6 months of living expenses if both of us were to become unemployed at the same time. Still, I'm sure DCUM would have told us we were crazy.

You can buy lower cost houses, you choose not to. We spent under $400K. We could afford to upgrade but choose not to. No way I'd risk just 6 months of living expenses.

I didn't say I *had* to buy an 800K house, obviously I chose to. All I said was that that 200K for a house is not a reasonable budget around here if you want a SFH - that was the number PP mentioned. OP obviously could have bought a <500K house, plenty of those around in decent shape.

Like I said, I know at the time DCUM would have told us we were crazy. We knew we were stretching a bit and we were willing to risk it. Unemployment was low, we are both in high demand fields, and I just wasn't worried about a situation where we were both suddenly unemployed for many months at the same time. We are also very frugal in our daily lives, so we never felt house poor.

OP, why did you choose to pay PMI rather than taking some funds from your (excessive) emergency fund and putting 20% down?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We weren’t comfortable with more than a $200k house on a HHI of $100,000/yr so that would be a big no from us. But we are resisting the two income trap and live in the Midwest.

Same, we make ~$200K a year and live in the Midwest and have a remaining mortgage of $180K-ish. We continually look at new houses, but we absolutely do not want to be house poor or work forever.

So, basically, you have no idea what it's like to live in a HCOL area or how much houses cost in the DMV, but you'd like to weigh in to share your entirely irrelevant opinion why? $200K is a studio/one-bedroom condo that's a mile walk from the metro, likely with stupid high condo fees. There are no $200K houses here. But, hey, living in the Midwest is a big no from us.

Seriously, I wish the Midwestern folks would refrain from giving advice on the RE boards like it's actually feasible here. A 200K house is not an option in the DMV unless you want to have a 4 hour round trip commute. Do a search and see what 200K gets you and where.

And this isn't a case of wanting a "new" house. An 800K house around here is not a brand new, decked out McMansion. And a move to the Midwest is not an option for all of us.

OP - don't panic. You will be fine. Do you have savings? You will be able to pay your bills but will likely not be able to save much for a few years until your income goes up.

We bought an 800K house on an HHI of about 220K, with 20% down. We had no debt but did have daycare costs for two young children. We were able to make it work just fine but not able to save as much as we wanted initially, so not maxing out our 401Ks and not contributing much to the kids' 529s. This resolved in a few years with incomes going up. However, I must note we did have a cash cushion that would have gotten us through about 6 months of living expenses if both of us were to become unemployed at the same time. Still, I'm sure DCUM would have told us we were crazy.

You can buy lower cost houses, you choose not to. We spent under $400K. We could afford to upgrade but choose not to. No way I'd risk just 6 months of living expenses.

I didn't say I *had* to buy an 800K house, obviously I chose to. All I said was that that 200K for a house is not a reasonable budget around here if you want a SFH - that was the number PP mentioned. OP obviously could have bought a <500K house, plenty of those around in decent shape.

Like I said, I know at the time DCUM would have told us we were crazy. We knew we were stretching a bit and we were willing to risk it. Unemployment was low, we are both in high demand fields, and I just wasn't worried about a situation where we were both suddenly unemployed for many months at the same time. We are also very frugal in our daily lives, so we never felt house poor.

OP, why did you choose to pay PMI rather than taking some funds from your (excessive) emergency fund and putting 20% down?

I think if one of you was unemployed you’d be in trouble frankly.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It amazes me how many people on this board must be terrible with money and waste money on who knows what. If you are one of those people, then you shouldn't buy that much house with your income. If you are good with money and don't go crazy spending money you will be fine. Our HHI is 170K with 2 kids and we just bought a 700K house (550K mortgage, 2,900 PITI). It is about $500 more per month than our last house, so we are comfortable we can afford it.

I totally agree. What do people need so much money to spend on? Our combined gross income is only $150000; we purchased a house for $800000 5 years ago which is paid off now. We sold our previous house and put a downpayment of $650000. We have 1 child that goes to public school. We are careful with money and don't spend it on frivolous things like going to Starbucks, nail salons etc.

Hilarious.

Not for nothing, but if you'd put down 20% on the house and invested the $490,000, you'd be doing a lot better now. Bad choice.

[Anonymous]

I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

[Anonymous]

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

How much do you save for retirement? I don't see any line items for property taxes or home and life insurance.

[Anonymous]

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

If OP wants people to tell her that her house purchase was a good idea, then she needs to break out her expenses like this. The fact that she can't/won't is telling. She herself has no idea what she spends. She herself has no idea if she can afford her house or not.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

How much do you save for retirement? I don't see any line items for property taxes or home and life insurance.

Aftercare? Summer camp?

[Anonymous]

Yes I'd hate that. We have the same HHI and our mortgage is $400k and that feels great. We have enough money to make improvements now that one kid is in public school. We'll be able to stock our retirement accounts and travel (post-covid) a lot more once the 2nd kid goes to K.

We'll do our best to help our kids pay for college. I don't want to be tied to a mortgage. Also: we like our smaller house because we know if something happened to either of us we could afford to stay here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

How much do you save for retirement? I don't see any line items for property taxes or home and life insurance.

-We max out the 401k for one earner (whatever the latest figure is) plus a 50% match from the employer. Then we do the $6000 each for IRAs as listed above. So something like $40K per year total.
-Property taxes and home insurance are included in the mortgage figure.
-Life insurance is maybe $200/year plus we have some from my husband's work which is taken out before that $7850 figure above.
-We also have an umbrella policy which is included in the car ins. line because I was trying to simplify the budget here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think OP is fine as long as they don't live a high-price lifestyle. Many people are commenting that they couldn't do that, but if those people have student loans and/or daycare, that makes a huge difference in monthly expenses (could be $2k-$3k per month).

We value a nice home in a neighborhood with good schools more than luxurious vacations (though we love travel), hair/nail salon visits, high-end restaurants, etc. That stuff doesn't really interest us.

After healthcare, taxes, and 401k contribution, our take-home pay is $7,850 per month. Of that, $2850 is our mortgage. That means the rest of our expenses come out of $5000 a month. I'm sure that's unfathomable to some of you or maybe impossible. But we have no student loans, have no daycare, are DIYers, and live pretty simply. We have emergency savings and categories we could easily cut if we had to or wanted to. Rough budget:

Mortgage $2850
Groceries $800
Utilities/phones $500
Travel $500
Car Ins./Gas $400
Activities/Eat Out $500
House/Auto Maint. $200
Clothes $200
Gifts/Charity $200
College savings $500
IRA savings $1000
Misc./Other $200

How much do you save for retirement? I don't see any line items for property taxes or home and life insurance.

-We max out the 401k for one earner (whatever the latest figure is) plus a 50% match from the employer. Then we do the $6000 each for IRAs as listed above. So something like $40K per year total.
-Property taxes and home insurance are included in the mortgage figure.
-Life insurance is maybe $200/year plus we have some from my husband's work which is taken out before that $7850 figure above.
-We also have an umbrella policy which is included in the car ins. line because I was trying to simplify the budget here.

So you save more than TWICE the OP for retirement. And your mortgage + taxes and insurance are $1000 cheaper. You are doing way better than OP.