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

[Anonymous]

Anonymous wrote:We totally fell in love with the house, saw it as our forever home, and went for it.

Now I am here in the light of day and panicking.

Trying to talk myself down from the ledge:

Total mortgage debt is $710,000
Total monthly payment, including principal, interest, taxes, and insurance, is $3,700. (30 year fixed mortgage with a great rate).
No other major debts, and kids are done with daycare.
Our gross monthly income, before taxes, is $15,500.
So our mortgage debt payment is 24% of our gross monthly income.

On paper, that seems pretty reasonable.

What say you, DCUM? Did I screw up and buy too much house?

Hell Yes!

Our gross income is $15,000 a month. Our total monthly payment including all of that is $1,300 because we bought under our means and saved for years to put over 200K down. No student loans, CC debt, or health debt. Car note is $600 a month (2 paid off, 1 not). I need a new car but taking on a second note freaks me out. I would be throwing up if I was you.

[Anonymous]

Anonymous wrote:I mean that seems like a lot but if you make it a budget priority then doable. We bought a 550k house on 170k HHI with 50k down. Our HHI has increased about 50k since then and our mortgage is about 2800. We feel like we have plenty of. money to spare so we could definitely do 1k more a month in mortgage, but yes, it would be a lot.

You make 40K a year more than OP and your mortgage is 1K less. So the fact that you fell like you have plenty of money isn't relevant. Accounting for taxes and such you have 3K more a month than OP=so yeah you have money to spare. They will not.

[Anonymous]

Anonymous wrote:OP here...

Our net income - after taxes and after saving for retirement - is about $11,000. So our total PITI payment will be 34% of our net income.

The good news is that we don't have any other debt (no credit cards, student loan, or car payments).

You shouldn't have gone over 25% net. Our income is 180,000 and we net $9,500 a year. What are you putting into 401K. If you're pulling 11K that makes me think your contributions are low.

[Anonymous]

Our net is just over $11k, and our mortgage is $2,200. No way would we have one that high. If we did, we wouldn't be able to afford sending our dyslexic kid to a private dyslexia school. Probably swinging the dyslexia tutor this year would've been difficult. You're stretching yourself VERY thin. You'll want a substantial emergency fund.

We are looking at moving closer to the school and were happy to see we could find a cheaper house and save even more!

[Anonymous]

Anonymous wrote:OP, you are going to be fine. Buying your perfect forever house is worth stretching a bit for and will be a good investment.

We bought a house with less than 20% down, $675k mortgage on $205k HHI (gross), and we still had one in day care. It has been fine. Our mortgage was initially around $4k/month but we refinanced down to $3,500 late last year. One of us is a fed also and our HHI has increased to $230k in 2.5 years. We are maxing out retirement and working toward more college savings. We are comfortable. We love our forever house. No regrets.

Congrats! Enjoy it.

The term forever home needs to end. It will not be your forever home-I can promise you that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, you are going to be fine. Buying your perfect forever house is worth stretching a bit for and will be a good investment.

We bought a house with less than 20% down, $675k mortgage on $205k HHI (gross), and we still had one in day care. It has been fine. Our mortgage was initially around $4k/month but we refinanced down to $3,500 late last year. One of us is a fed also and our HHI has increased to $230k in 2.5 years. We are maxing out retirement and working toward more college savings. We are comfortable. We love our forever house. No regrets.

Congrats! Enjoy it.

The term forever home needs to end. It will not be your forever home-I can promise you that.

How do you know that? We don't plan on moving. Our house is small and will be paid off in a few years so moving doesn't make sense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, you are going to be fine. Buying your perfect forever house is worth stretching a bit for and will be a good investment.

We bought a house with less than 20% down, $675k mortgage on $205k HHI (gross), and we still had one in day care. It has been fine. Our mortgage was initially around $4k/month but we refinanced down to $3,500 late last year. One of us is a fed also and our HHI has increased to $230k in 2.5 years. We are maxing out retirement and working toward more college savings. We are comfortable. We love our forever house. No regrets.

Congrats! Enjoy it.

The term forever home needs to end. It will not be your forever home-I can promise you that.

How do you know that? We don't plan on moving. Our house is small and will be paid off in a few years so moving doesn't make sense.

Maybe if you were retired and bought the house, but yeah no. You'll move again.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

A life insurance policy that costs 200/year plus some from work is probably not going to be enough to help the surviving spouse stay in the house. Also there was a poster on this thread who talked about being disabled. You need disability insurance.

What a crappy generalization. My company offers $50K life insurance + $20/month for 2.5x my salary, which they reimburse me for, so essentially still free. This is part of my benefits plan. Plus $15/month for disability.

A life insurance policy worth a few hundred thousand dollars is probably not enough for income replacement. Certainly not in the OP's case if they want to continue to afford their hefty mortgage while savings for college and retirement.

That is why its such a crappy generalization. That is a couple hundred thousand life insurance right there that is free, I'm not paying for. Then just $20/month for term insurance for another $500K. There's almost a cool mil at expense of only $20month. Which is alot of money. Might not pay off the house, but why can't the surviving spouse work to bring in some income, even if its a few years later? Kids.. tough luck b/c you just lost a parent, do well in school and hopefully you get some merit scholarship. Worst case, they can take out a loan. Their ability to go to college isn't hinged on whether or not I left them enough in my life insurance to cover tuition.

But we don't know OPs whole financial picture, his expenses or his savings. If OP has zero savings left, just kinda living paycheck to paycheck, I'll be freaking out with those numbers. I'm in the same boat as OP in terms of similar income and housing budget.. and I am not freaking out or feel like I'm pushing the limits. Maybe because I have savings and low expenses.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

A life insurance policy that costs 200/year plus some from work is probably not going to be enough to help the surviving spouse stay in the house. Also there was a poster on this thread who talked about being disabled. You need disability insurance.

What a crappy generalization. My company offers $50K life insurance + $20/month for 2.5x my salary, which they reimburse me for, so essentially still free. This is part of my benefits plan. Plus $15/month for disability.

A life insurance policy worth a few hundred thousand dollars is probably not enough for income replacement. Certainly not in the OP's case if they want to continue to afford their hefty mortgage while savings for college and retirement.

That is why its such a crappy generalization. That is a couple hundred thousand life insurance right there that is free, I'm not paying for. Then just $20/month for term insurance for another $500K. There's almost a cool mil at expense of only $20month. Which is alot of money. Might not pay off the house, but why can't the surviving spouse work to bring in some income, even if its a few years later? Kids.. tough luck b/c you just lost a parent, do well in school and hopefully you get some merit scholarship. Worst case, they can take out a loan. Their ability to go to college isn't hinged on whether or not I left them enough in my life insurance to cover tuition.

But we don't know OPs whole financial picture, his expenses or his savings. If OP has zero savings left, just kinda living paycheck to paycheck, I'll be freaking out with those numbers. I'm in the same boat as OP in terms of similar income and housing budget.. and I am not freaking out or feel like I'm pushing the limits. Maybe because I have savings and low expenses.

OP said they have a 150K emergency fund and no debt so they are doing quite well.

You are lucky in terms of life insurance. I was just turned down for a 20 year term life policy (1 million) with an estimated cost $162/month. I do get 50K life insurance for free from my job and pay ~$45 dollars a month for ~300K life insurance on top of that through my employer. As a single parent though I wanted more coverage for my kid though. I agree OP should have adequate disability (for both OP and DW) and life insurance at least to cover house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

A life insurance policy that costs 200/year plus some from work is probably not going to be enough to help the surviving spouse stay in the house. Also there was a poster on this thread who talked about being disabled. You need disability insurance.

What a crappy generalization. My company offers $50K life insurance + $20/month for 2.5x my salary, which they reimburse me for, so essentially still free. This is part of my benefits plan. Plus $15/month for disability.

A life insurance policy worth a few hundred thousand dollars is probably not enough for income replacement. Certainly not in the OP's case if they want to continue to afford their hefty mortgage while savings for college and retirement.

That is why its such a crappy generalization. That is a couple hundred thousand life insurance right there that is free, I'm not paying for. Then just $20/month for term insurance for another $500K. There's almost a cool mil at expense of only $20month. Which is alot of money. Might not pay off the house, but why can't the surviving spouse work to bring in some income, even if its a few years later? Kids.. tough luck b/c you just lost a parent, do well in school and hopefully you get some merit scholarship. Worst case, they can take out a loan. Their ability to go to college isn't hinged on whether or not I left them enough in my life insurance to cover tuition.

But we don't know OPs whole financial picture, his expenses or his savings. If OP has zero savings left, just kinda living paycheck to paycheck, I'll be freaking out with those numbers. I'm in the same boat as OP in terms of similar income and housing budget.. and I am not freaking out or feel like I'm pushing the limits. Maybe because I have savings and low expenses.

PP can you take the policy with you if you change jobs or are unable to work in the future? If not, you may want to consider separate insurance in case you become uninsurable later. A $600K policy was only $20/month when I was in my mid thirties (20 year term).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

A life insurance policy that costs 200/year plus some from work is probably not going to be enough to help the surviving spouse stay in the house. Also there was a poster on this thread who talked about being disabled. You need disability insurance.

What a crappy generalization. My company offers $50K life insurance + $20/month for 2.5x my salary, which they reimburse me for, so essentially still free. This is part of my benefits plan. Plus $15/month for disability.

A life insurance policy worth a few hundred thousand dollars is probably not enough for income replacement. Certainly not in the OP's case if they want to continue to afford their hefty mortgage while savings for college and retirement.

That is why its such a crappy generalization. That is a couple hundred thousand life insurance right there that is free, I'm not paying for. Then just $20/month for term insurance for another $500K. There's almost a cool mil at expense of only $20month. Which is alot of money. Might not pay off the house, but why can't the surviving spouse work to bring in some income, even if its a few years later? Kids.. tough luck b/c you just lost a parent, do well in school and hopefully you get some merit scholarship. Worst case, they can take out a loan. Their ability to go to college isn't hinged on whether or not I left them enough in my life insurance to cover tuition.

But we don't know OPs whole financial picture, his expenses or his savings. If OP has zero savings left, just kinda living paycheck to paycheck, I'll be freaking out with those numbers. I'm in the same boat as OP in terms of similar income and housing budget.. and I am not freaking out or feel like I'm pushing the limits. Maybe because I have savings and low expenses.

OP said they have a 150K emergency fund and no debt so they are doing quite well.

You are lucky in terms of life insurance. I was just turned down for a 20 year term life policy (1 million) with an estimated cost $162/month. I do get 50K life insurance for free from my job and pay ~$45 dollars a month for ~300K life insurance on top of that through my employer. As a single parent though I wanted more coverage for my kid though. I agree OP should have adequate disability (for both OP and DW) and life insurance at least to cover house.

I disagree with this attitude entirely. What a shame to tell kids, sorry, you lost mom or dad and have to take out loans for college or not go to graduate school because mom or dad couldn't pay a few hundred dollars a year more for life insurance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

A life insurance policy that costs 200/year plus some from work is probably not going to be enough to help the surviving spouse stay in the house. Also there was a poster on this thread who talked about being disabled. You need disability insurance.

What a crappy generalization. My company offers $50K life insurance + $20/month for 2.5x my salary, which they reimburse me for, so essentially still free. This is part of my benefits plan. Plus $15/month for disability.

A life insurance policy worth a few hundred thousand dollars is probably not enough for income replacement. Certainly not in the OP's case if they want to continue to afford their hefty mortgage while savings for college and retirement.

That is why its such a crappy generalization. That is a couple hundred thousand life insurance right there that is free, I'm not paying for. Then just $20/month for term insurance for another $500K. There's almost a cool mil at expense of only $20month. Which is alot of money. Might not pay off the house, but why can't the surviving spouse work to bring in some income, even if its a few years later? Kids.. tough luck b/c you just lost a parent, do well in school and hopefully you get some merit scholarship. Worst case, they can take out a loan. Their ability to go to college isn't hinged on whether or not I left them enough in my life insurance to cover tuition.

But we don't know OPs whole financial picture, his expenses or his savings. If OP has zero savings left, just kinda living paycheck to paycheck, I'll be freaking out with those numbers. I'm in the same boat as OP in terms of similar income and housing budget.. and I am not freaking out or feel like I'm pushing the limits. Maybe because I have savings and low expenses.

OP said they have a 150K emergency fund and no debt so they are doing quite well.

You are lucky in terms of life insurance. I was just turned down for a 20 year term life policy (1 million) with an estimated cost $162/month. I do get 50K life insurance for free from my job and pay ~$45 dollars a month for ~300K life insurance on top of that through my employer. As a single parent though I wanted more coverage for my kid though. I agree OP should have adequate disability (for both OP and DW) and life insurance at least to cover house.

I don't really see how $150K emergency fund helps them to pay the mortgage and pay for kids and save for retirement if someone passes prematurely. OP--if you are reading this, please evaluate your life insurance needs now that you have this very large mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

You sound very underinsured. Most people are.

Term life, yesterday.

Back to finance basics school for you...yesterday,.

You appear all high and mighty. Most people posting on these forums are let’s just say upper middle class....they will feel offended if we call them well to do or some such factual label.

You cannot give advise whether someone needs term life insurance or not unless you know their NW. In most cases also factoring in future inheritances.
If someone has a NW of say $5M why would they need term life even if they are 50 and only spouse works and they have kids. In that case it’s not clear cut. You will be surprised how many people here have NW in the millions.

Thank you, PP. I am the poster who posted the above budget. This is exactly our situation. We had more insurance when our kids were younger and we had less net worth. Now with one child who is an adult and two others who are teenagers and a much higher net worth ($3M), we don't need as much life insurance. Calling out a specific budget item from my post was meaningless, anyway. The point of my post was to show that our family lives on $5K per month just fine (even extra life insurance wouldn't add that much), and I'm sure the OP can live on $7K after they pay their mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

You sound very underinsured. Most people are.

Term life, yesterday.

Back to finance basics school for you...yesterday,.

You appear all high and mighty. Most people posting on these forums are let’s just say upper middle class....they will feel offended if we call them well to do or some such factual label.

You cannot give advise whether someone needs term life insurance or not unless you know their NW. In most cases also factoring in future inheritances.
If someone has a NW of say $5M why would they need term life even if they are 50 and only spouse works and they have kids. In that case it’s not clear cut. You will be surprised how many people here have NW in the millions.

Thank you, PP. I am the poster who posted the above budget. This is exactly our situation. We had more insurance when our kids were younger and we had less net worth. Now with one child who is an adult and two others who are teenagers and a much higher net worth ($3M), we don't need as much life insurance. Calling out a specific budget item from my post was meaningless, anyway. The point of my post was to show that our family lives on $5K per month just fine (even extra life insurance wouldn't add that much), and I'm sure the OP can live on $7K after they pay their mortgage.

If you are factoring future inheritances into your insurance needs and retirement planning, I think you are the one who needs to go back to finance basics school.

[Anonymous]

I think you are ok; it’s a little stretch, but not a mistake. How is hhi divided, and how stable are the jobs?