$410k house with DH salary stretching ourselves too thin?

[Anonymous]

Stretching too much.

[Anonymous]

DH and I are frugal and theoretically willing to stretch a bit (between 3-4X income) on our mortgage with 20% down, but that's because our big expense (daycare) is going to drop, and he has nowhere but up to go in income; he's in school right now. I say theoretically, because we haven't been able to pull the trigger since it feels too tight. Unless your kids are going to school and you have a marketable skill and you are planning to go back to work in the near future, I wouldn't do it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We found a house we love but my gut says we can't afford it. My DH makes $84k plus bonus (usually 10%) and I SAH. We have 20% for down payment but would have just $10k left in savings. We have tiny amount of student loan debt and no other debt.

My gut says it's too much of a stretch but the numbers say it's do-able.

What do you think?

What's your future HHI income potential?

How many kids? How old? Are you done having kids?

What do you pay in rent now? How is that working out/how does it compare?

Are you willing to go back to work to pick up the slack if needed or go back to work eventually?

My hunch is it would be tight for a while but things would get better as your income increases and housing payments stay stable.

This.
We did it- our income has increased 35% in two years. You'll be fine.

You're kidding, right? The average increase in the Washington DC area is between 0-2% annually over the last several years. You may have had a 35% increase in 2 years, but the majority of the region did not.

OP--you have some homework to do. First, you have to figure out what your absolute minimum monthly expenses will be. You should set aside 4-6 months worth of those payments that you don't touch. Those are emergency funds in case your husband gets laid off or fired. While his job may seem stable, in the last several years, millions of Americans who thought they had stable jobs have been laid off or fired. The current job market still has very high unemployment rates (9% in MD, 11% in VA, 19% in DC), that does not include the many who have dropped off of the employment rolls because they fell off of unemployment, but are still looking, and there are many more candidates for every job out there than ever before. So, now, average time to get a replacement job is months instead of days or weeks. You need to factor that in.

After all of that, you can expect to need to put some money into the house after you purchase it (repairs, maintenance, furniture, etc). And $10K is really not going to cover all that and still give you security. You should either consider waiting and saving more, looking for a less expensive house, or looking into alternative financing including possible getting an FHA loan (which would allow you to put down less money and not have to have PMI, since FHA is the mortgage guarantor) or trying to get a 80-10 or 80-5 loan so that you can put down less.

A situation like yours is usually unsustainable over the long haul. You need to consider how you will get out of that situation. As some suggest, increasing your HHI is one way. Decreasing your mortgage payments or expenses is another.

Unless you are very strict with yourself and trustworthy, you don't want to do this. You'll be very house-poor, cash-strapped and stressed. This type of stress (money stress) is the single biggest contributing factor to divorces. How well do you and DH handle money stress? Is that going to cause one or both of you enough trouble that it will threaten your marriage?

[Anonymous]

Can I ask a question, OP- what's your current rent?

Depending on where you're looking at apartments around here, a 2bdrm in a decently safe area is around $1800-$2k/month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We found a house we love but my gut says we can't afford it. My DH makes $84k plus bonus (usually 10%) and I SAH. We have 20% for down payment but would have just $10k left in savings. We have tiny amount of student loan debt and no other debt.

My gut says it's too much of a stretch but the numbers say it's do-able.

What do you think?

What's your future HHI income potential?

How many kids? How old? Are you done having kids?

What do you pay in rent now? How is that working out/how does it compare?

Are you willing to go back to work to pick up the slack if needed or go back to work eventually?

My hunch is it would be tight for a while but things would get better as your income increases and housing payments stay stable.

This.
We did it- our income has increased 35% in two years. You'll be fine.

You're kidding, right? The average increase in the Washington DC area is between 0-2% annually over the last several years. You may have had a 35% increase in 2 years, but the majority of the region did not.

OP--you have some homework to do. First, you have to figure out what your absolute minimum monthly expenses will be. You should set aside 4-6 months worth of those payments that you don't touch. Those are emergency funds in case your husband gets laid off or fired. While his job may seem stable, in the last several years, millions of Americans who thought they had stable jobs have been laid off or fired. The current job market still has very high unemployment rates (9% in MD, 11% in VA, 19% in DC), that does not include the many who have dropped off of the employment rolls because they fell off of unemployment, but are still looking, and there are many more candidates for every job out there than ever before. So, now, average time to get a replacement job is months instead of days or weeks. You need to factor that in.

After all of that, you can expect to need to put some money into the house after you purchase it (repairs, maintenance, furniture, etc). And $10K is really not going to cover all that and still give you security. You should either consider waiting and saving more, looking for a less expensive house, or looking into alternative financing including possible getting an FHA loan (which would allow you to put down less money and not have to have PMI, since FHA is the mortgage guarantor) or trying to get a 80-10 or 80-5 loan so that you can put down less.

A situation like yours is usually unsustainable over the long haul. You need to consider how you will get out of that situation. As some suggest, increasing your HHI is one way. Decreasing your mortgage payments or expenses is another.

Unless you are very strict with yourself and trustworthy, you don't want to do this. You'll be very house-poor, cash-strapped and stressed. This type of stress (money stress) is the single biggest contributing factor to divorces. How well do you and DH handle money stress? Is that going to cause one or both of you enough trouble that it will threaten your marriage?

You do know you don't have to work for the same employer forever right? Or did that info not reach you out in neverneverland.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
You're kidding, right? The average increase in the Washington DC area is between 0-2% annually over the last several years. You may have had a 35% increase in 2 years, but the majority of the region did not.

OP--you have some homework to do. First, you have to figure out what your absolute minimum monthly expenses will be. You should set aside 4-6 months worth of those payments that you don't touch. Those are emergency funds in case your husband gets laid off or fired. While his job may seem stable, in the last several years, millions of Americans who thought they had stable jobs have been laid off or fired. The current job market still has very high unemployment rates (9% in MD, 11% in VA, 19% in DC), that does not include the many who have dropped off of the employment rolls because they fell off of unemployment, but are still looking, and there are many more candidates for every job out there than ever before. So, now, average time to get a replacement job is months instead of days or weeks. You need to factor that in.

After all of that, you can expect to need to put some money into the house after you purchase it (repairs, maintenance, furniture, etc). And $10K is really not going to cover all that and still give you security. You should either consider waiting and saving more, looking for a less expensive house, or looking into alternative financing including possible getting an FHA loan (which would allow you to put down less money and not have to have PMI, since FHA is the mortgage guarantor) or trying to get a 80-10 or 80-5 loan so that you can put down less.

A situation like yours is usually unsustainable over the long haul. You need to consider how you will get out of that situation. As some suggest, increasing your HHI is one way. Decreasing your mortgage payments or expenses is another.

Unless you are very strict with yourself and trustworthy, you don't want to do this. You'll be very house-poor, cash-strapped and stressed. This type of stress (money stress) is the single biggest contributing factor to divorces. How well do you and DH handle money stress? Is that going to cause one or both of you enough trouble that it will threaten your marriage?

You do know you don't have to work for the same employer forever right? Or did that info not reach you out in neverneverland.

You do know what "record unemployment" means, right? The number of people that are job hopping is at a long-time low. There are still a huge number of people in every field that are currently unemployed and competing for too few jobs. People are taking much longer to change jobs. If they are stretched beyond their comfort zone, then how many months can they put up with that before the stress causes significant problems. It is not unusual for someone to take 8-12 months to find a new job to change to. For some, 8-12 months of stressful finances can be devastating on the family.

I think you're closer to Neverneverland or you're still living in the early 2000's.

[Anonymous]

http://www.bizjournals.com/washington/news/2012/04/10/washington-unemployment-lowest-46k.html

The Washington metro area tied with Oklahoma City in February for the lowest unemployment rate among big cities and posted healthy job growth, according to data from the Labor Department’s Bureau of Labor Statistics.

Unemployment rates fell in 344 of the nation’s 372 cities in February, the Labor Department said.

[Anonymous]

Anonymous wrote:

You do know you don't have to work for the same employer forever right? Or did that info not reach you out in neverneverland.

BWAHAHAHAHAHAH!!! Tell that to your mortgage lender and see what he says!

[Anonymous]

PP with the 35% increase - that's awesome for you. Really. But you have to admit that no one can count on that. Even with job hopping, it's not a guarantee, especially depending on what field you're in. Yes, unemployment is lower here, but even not considering the state of the economy, no one should be buying a house counting on their income going up that much.

[Anonymous]

I would say that you can't afford it. Why not rent?

[Anonymous]

Having only $10,000 in savings would really worry me. What if there's a serious medical situation? What if your house needs major unexpected repairs? Will you be able to build up your savings at a decent speed, or will you be living paycheck to paycheck? I have a similar HHI and personally I don't feel comfortable with less than $40,000 in reserve.

[Anonymous]

Anonymous wrote:OP, if your husband has the potential to change jobs to increase his income, then YES increasing by 35% is very possible. Also consider a side gig at home for yourself- ETSY shop, etc. would increase the household income.

Seriously, 35% is about 30k- between those two things I just listed that should be very possible. Do the math, and do it again. Be sure.

You don't even know what her husband does for a living. Stop giving her false hope.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, if your husband has the potential to change jobs to increase his income, then YES increasing by 35% is very possible. Also consider a side gig at home for yourself- ETSY shop, etc. would increase the household income.

Seriously, 35% is about 30k- between those two things I just listed that should be very possible. Do the math, and do it again. Be sure.

You don't even know what her husband does for a living. Stop giving her false hope.

It's not false hope. It is not unreasonable OP couldn't consider doing a part-time side gig from home. Depending on her education level & background- tutoring, music lessons, teaching another language, online professor... all things can be done to earn money on the side, increase HHI, while still being a SAHM. As kids get older, she will have more time to do these things as well.
Thinking of everything positive doesn't help without a dose of realism- but don't infuse the entire debate with the premise that the sky is always falling. It's ridiculous.
OP- YOU are in control of your income. YOU can figure it out and make it work if you want to. It is possible. You can be a self-starter and get in control, and make this work. It is false hope to believe ANY employer is providing you with economic stability in any market at any time. On the other hand, your husband could see what's out there- in his field, adjacent fields, etc- to see if he could increase his income as well. Be proactive about the situation.

[Anonymous]

I saw a lot of conservative people here. If this is a real world, our housing market will not crash, because people will never be late for their mortgage payment. House will not be foreclosed. Let's see some number base on OP's post.

$84k plus 10% bonus. That's only use $84k.
$410K house with 20% down, therefore PITI, ins and tax will be around $2K per month.
I will assume their take home pay will be somewhere around $5000. Basically there will be $3K left for other use.

OP: here will be your call how to manage the $3K for your day to day living. No one really can give you advice for that. since you are SAHM. I think you will cook a lot. If you would like to dine out most of time. i would said $3K will not be good enough for you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, if your husband has the potential to change jobs to increase his income, then YES increasing by 35% is very possible. Also consider a side gig at home for yourself- ETSY shop, etc. would increase the household income.

Seriously, 35% is about 30k- between those two things I just listed that should be very possible. Do the math, and do it again. Be sure.

You don't even know what her husband does for a living. Stop giving her false hope.

It's not false hope. It is not unreasonable OP couldn't consider doing a part-time side gig from home. Depending on her education level & background- tutoring, music lessons, teaching another language, online professor... all things can be done to earn money on the side, increase HHI, while still being a SAHM. As kids get older, she will have more time to do these things as well.
Thinking of everything positive doesn't help without a dose of realism- but don't infuse the entire debate with the premise that the sky is always falling. It's ridiculous.
OP- YOU are in control of your income. YOU can figure it out and make it work if you want to. It is possible. You can be a self-starter and get in control, and make this work. It is false hope to believe ANY employer is providing you with economic stability in any market at any time. On the other hand, your husband could see what's out there- in his field, adjacent fields, etc- to see if he could increase his income as well. Be proactive about the situation.

You don't know anything about her or her skills nor do you know what her husband does for a living. You can't make generalizations like "oh, you can easily increase your household income" if you don't know anything about a person.