How would you handle buying a SFH in this situation?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Responses here are blatant trolling or ridiculously conservative/illogical.

No, someone in their early 30’s with over 1M net worth is not poor.

No, they do not need an 8k/ month mortgage since they have way more to put down than most people buying a 1M house at this age. We’re talking 3-4k a month, completely doable on 250k salary, and they have 30+ years left to work to build up retirement savings and college savings.

People here are dumb as rocks

The big issue, as alluded by a few other posters, is that this is one income. I don't know what tech really means here. He does make an excellent income for someone in his early 30s and that implies room for growth but tech is a field I know nothing about so I don't what his growth potential is like, or his ability to quickly find a new job if he gets unexpectedly laid off. On a single income I would not want to be trapped into a large mortgage and I'd also like to keep as much in easily accessible funds for the same reason rather than tying it all up in equity.

I have a smallish house I want to sell and upsize but between a 2.7% mortgage and that I'm also a single income household, I have held back. I like sleeping easily at night also knowing if I get laid off, the mortgage is affordable and there's plenty of money in the bank to tide things over till I find another job, even if it takes a year. In OP's feet, I would not be looking to upsize until wife is back in the workforce, bringing in the security of a second income.

Job stability is really the only concern. The numbers are fine.

However, I also don’t think it’s good to live in fear of a job loss and allow that to dictate how you live life. I too have held back due to fear of job loss that never materialized.

You can mitigate this by reducing fixed expenses, ie no car loans, big down payment for a low monthly mortgage. Honestly he could just save a few more years and pay cash if a 60% down payment is already being considered.

If s*** really hits the fan but you have a paid off 1M house you still have a lot of options and flexibility.

[Anonymous]

Anonymous wrote:I would never ask this kind of advice on this site. Responses are soooo conservative. You will just feel poor and you are not. They are literally telling you that you are poor, and you are not. We have lower hhi and bought slightly lower and are fine. We’ve been fine for many, many years.

Because this board is full of smug old people who bought their 7 figure house for 1/4 the current price 20 years ago and sneer at anyone of actual child rearing age who wants their kids to grow up in a nice environment for needing to take out any kind of mortgage, no matter how manageable the payment. They’re illogical and out of touch. It’s the quintessential boomer mindset.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would never ask this kind of advice on this site. Responses are soooo conservative. You will just feel poor and you are not. They are literally telling you that you are poor, and you are not. We have lower hhi and bought slightly lower and are fine. We’ve been fine for many, many years.

Because this board is full of smug old people who bought their 7 figure house for 1/4 the current price 20 years ago and sneer at anyone of actual child rearing age who wants their kids to grow up in a nice environment for needing to take out any kind of mortgage, no matter how manageable the payment. They’re illogical and out of touch. It’s the quintessential boomer mindset.

I mean, the illogical thing is believing that you have to live in a certain type of house just because Boomers did, even if you cannot afford it.

food for your children- need
Health insurance - need
Decent schools for kids - need
$1 mil SFH - WANT

[Anonymous]

Anonymous wrote:Pondering buying a single family house. We currently own a town house. Early 30's, 2 kids, wife stays home. I make 250k in tech.

Current PITI/HOA is $2200 combined with a mid 2% rate.

Our assets:

Town house equity is roughly 230k.
450k in retirement accounts
45k in an HSA
390k in brokerage (not much in gains, most of this I recently put in from an inheritance, so minimal tax from selling)
25k in cash

We don't need to buy a bigger house right now but in 5 years I think we'll wish we did, when our kids are older. Given that tech is unstable with layoffs I'm hesitant to make a big purchase and wipe out our savings but I'm also afraid of being priced out of larger houses in the future if we wait. The houses we would aim for are around $1M.

I think your mistake here is making a giant financial decision based on a flimsy prediction of the future - that you will need a bigger house and that you will be “priced out.” Both of those assumptions are really, really poor ways to make the biggest financial decision of your life, a home purchase.

You probably need to meet with a financial planner to better understand your financial situation and set out some goals. For example - the decision is going to look completely different based on whether your wife wants to go back to work, your college aspirations for your kids, your willingness to move further away from your job and commute further and the impact on your QOL of a long commute, and your preferences on public school zones. Most of the people around here who take on a big leap in housing costs at your stage of life do it specifically because they want to access a school pyramid their kids will attend from ES-HS.

With the financial planner you can also map about the impact of different spending and investment choices. For example maybe putting more money into real estate vs the stock market makes sense for you overall. But you need to know exactly the risks and benefits of that choice.

At the end of the day, I find it really hard to justify doubling your fixed costs when you don’t have to.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Pondering buying a single family house. We currently own a town house. Early 30's, 2 kids, wife stays home. I make 250k in tech.

Current PITI/HOA is $2200 combined with a mid 2% rate.

Our assets:

Town house equity is roughly 230k.
450k in retirement accounts
45k in an HSA
390k in brokerage (not much in gains, most of this I recently put in from an inheritance, so minimal tax from selling)
25k in cash

We don't need to buy a bigger house right now but in 5 years I think we'll wish we did, when our kids are older. Given that tech is unstable with layoffs I'm hesitant to make a big purchase and wipe out our savings but I'm also afraid of being priced out of larger houses in the future if we wait. The houses we would aim for are around $1M.

I think your mistake here is making a giant financial decision based on a flimsy prediction of the future - that you will need a bigger house and that you will be “priced out.” Both of those assumptions are really, really poor ways to make the biggest financial decision of your life, a home purchase.

You probably need to meet with a financial planner to better understand your financial situation and set out some goals. For example - the decision is going to look completely different based on whether your wife wants to go back to work, your college aspirations for your kids, your willingness to move further away from your job and commute further and the impact on your QOL of a long commute, and your preferences on public school zones. Most of the people around here who take on a big leap in housing costs at your stage of life do it specifically because they want to access a school pyramid their kids will attend from ES-HS.

With the financial planner you can also map about the impact of different spending and investment choices. For example maybe putting more money into real estate vs the stock market makes sense for you overall. But you need to know exactly the risks and benefits of that choice.

At the end of the day, I find it really hard to justify doubling your fixed costs when you don’t have to.

OP here.

Thanks, this is helpful. Part of it is school related, our ES is decent but the MS/HS are mediocre.

We’re also just a bit tired of living in our townhome.

I agree that worrying about being priced out is a bad way to make major financial decisions. Part of this is due to our experience in 2019 being too conservative with our home purchase and buying a TH when in hindsight if we had stretched a bit and bought a SFH in the 700-800k range we would have come out just fine. Being too cautious with money has only come back to bite me in the end.

[Anonymous]

Anonymous wrote:Pondering buying a single family house. We currently own a town house. Early 30's, 2 kids, wife stays home. I make 250k in tech.

Current PITI/HOA is $2200 combined with a mid 2% rate.

Our assets:

Town house equity is roughly 230k.
450k in retirement accounts
45k in an HSA
390k in brokerage (not much in gains, most of this I recently put in from an inheritance, so minimal tax from selling)
25k in cash

We don't need to buy a bigger house right now but in 5 years I think we'll wish we did, when our kids are older. Given that tech is unstable with layoffs I'm hesitant to make a big purchase and wipe out our savings but I'm also afraid of being priced out of larger houses in the future if we wait. The houses we would aim for are around $1M.

.

That's our HHI and no way would I spend $1m with the current rates plus uncertainty. You're investing it sounds like a good chunk of savings on a payment that's easily $3500/month but probably significantly more depending on insurance and property taxes. Kids get expensive. They have activities. Unless you see a lot of growth soon in your HHI it sounds like a recipe for being house poor.

[Anonymous]

Anonymous wrote:You don’t make enough and you don’t have enough. I’m surprised by how poor some people are.

Well you seem like fun.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Pondering buying a single family house. We currently own a town house. Early 30's, 2 kids, wife stays home. I make 250k in tech.

Current PITI/HOA is $2200 combined with a mid 2% rate.

Our assets:

Town house equity is roughly 230k.
450k in retirement accounts
45k in an HSA
390k in brokerage (not much in gains, most of this I recently put in from an inheritance, so minimal tax from selling)
25k in cash

We don't need to buy a bigger house right now but in 5 years I think we'll wish we did, when our kids are older. Given that tech is unstable with layoffs I'm hesitant to make a big purchase and wipe out our savings but I'm also afraid of being priced out of larger houses in the future if we wait. The houses we would aim for are around $1M.

I think your mistake here is making a giant financial decision based on a flimsy prediction of the future - that you will need a bigger house and that you will be “priced out.” Both of those assumptions are really, really poor ways to make the biggest financial decision of your life, a home purchase.

You probably need to meet with a financial planner to better understand your financial situation and set out some goals. For example - the decision is going to look completely different based on whether your wife wants to go back to work, your college aspirations for your kids, your willingness to move further away from your job and commute further and the impact on your QOL of a long commute, and your preferences on public school zones. Most of the people around here who take on a big leap in housing costs at your stage of life do it specifically because they want to access a school pyramid their kids will attend from ES-HS.

With the financial planner you can also map about the impact of different spending and investment choices. For example maybe putting more money into real estate vs the stock market makes sense for you overall. But you need to know exactly the risks and benefits of that choice.

At the end of the day, I find it really hard to justify doubling your fixed costs when you don’t have to.

OP here.

Thanks, this is helpful. Part of it is school related, our ES is decent but the MS/HS are mediocre.

We’re also just a bit tired of living in our townhome.

I agree that worrying about being priced out is a bad way to make major financial decisions. Part of this is due to our experience in 2019 being too conservative with our home purchase and buying a TH when in hindsight if we had stretched a bit and bought a SFH in the 700-800k range we would have come out just fine. Being too cautious with money has only come back to bite me in the end.

I mean, if you lost your job you wouldn’t say that being too cautious came back to bite you … and of course the fact that in retrospect you could have afforded an $800k house in 2019 days nothing at all about whether you can afford a $1 mil house now. You need to impartially run the numbers and stop seeing this as some kind of moral issue or issue of bravery or luck. Maybe buying into a better school zone is worth the reduced discretionary income and having your money in a house instead of 529s. But you need to be thinking that through.

[Anonymous]

I would do it because I love and want a SFH. No problem with those who enjoy the many benefits of townhomes but I just want a SFH with a years for gardening while raising kids. I would lower my budget for house shopping and look for something that needs some work.

[Anonymous]

I started a thread last week asking about home affordability and like most posters here the general consensus is that I’m going to buy anyway. We have good jobs and I want a house. I realize that it’s possible that we sell in ten years or so due to unforeseen financial circumstances but the truth is that you can’t predict the future. There could be another global pandemic in two years and rates could go back to 2.5% again - you never know! Follow your heart. Be prudent with your money in terms of your budget but your kids are only this age once so our take is to prioritize a comfortable home for the next decade and then sell if it becomes too much down the road. We also aren’t real travelers and believe in state schools for college so those decisions we weighed as well. People are always going to tell you that they wouldn’t take these risks but either they are lying or no fun! Enjoy your life!!

[Anonymous]

Anonymous wrote:I started a thread last week asking about home affordability and like most posters here the general consensus is that I’m going to buy anyway. We have good jobs and I want a house. I realize that it’s possible that we sell in ten years or so due to unforeseen financial circumstances but the truth is that you can’t predict the future. There could be another global pandemic in two years and rates could go back to 2.5% again - you never know! Follow your heart. Be prudent with your money in terms of your budget but your kids are only this age once so our take is to prioritize a comfortable home for the next decade and then sell if it becomes too much down the road. We also aren’t real travelers and believe in state schools for college so those decisions we weighed as well. People are always going to tell you that they wouldn’t take these risks but either they are lying or no fun! Enjoy your life!!

Ffs this is not about fun. What a stupid way to approach buying a $1 million asset. Sure you should understand what you value but throwing caution to the wind is what led lots of folks into foreclosure not too long ago. It’s not an impulse buy.