Did you buy a house that stretched your budget? Was it worth it?

[Anonymous]

Anonymous wrote:Classic DCUM humblebrag.

+1,000,000

We bought our house two years ago, and really stretched our budget to buy our $650K house. At the time we were only making about $165K base salary, plus $25K in bonuses. We have one child in part time day care, and no other debt except our condos, which are both rented out, and monthly credit card debt. Now two years later, we are making $205K base salary with about 28K in bonuses, so we are still tight but its more manageable. I think it was worth it, because we got into a top school district, and our house is worth at least $25K more than what we paid for it. We expect to continue making more every year, so it was worth it, even though I was a complete nervous wreck when we bought.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Classic DCUM humblebrag.

+1,000,000

We bought our house two years ago, and really stretched our budget to buy our $650K house. At the time we were only making about $165K base salary, plus $25K in bonuses. We have one child in part time day care, and no other debt except our condos, which are both rented out, and monthly credit card debt. Now two years later, we are making $205K base salary with about 28K in bonuses, so we are still tight but its more manageable. I think it was worth it, because we got into a top school district, and our house is worth at least $25K more than what we paid for it. We expect to continue making more every year, so it was worth it, even though I was a complete nervous wreck when we bought.

Oh the irony

[Anonymous]

OP you want stretch... This is us:

Me - 78k
DW - 47k
Total - 125k

Home : 550k

Down payment : 5%
Mortgage : $522,500

Mortgage: ~$3,200/month

Student loans payment between the two of us: $1,500/month

1 credit card at 0% we are trying to pay off before 0% expires (8k).

And it used to be worse... Things got so tight that we made the bad decision of cashing out my 401k from my old employer to pay off:
- car note 12k at $480/month
- 42k in credit card payment that was $800/month payment
----> 42k + 8k left above were for fertility treatments.

2 operations, 4 IUI's, 1 miscarriage and 2 rounds of IVF we are 13 weeks pregnant.

So yeah for a minute it was really tight as in literally paycheck to paycheck. Using my old 401k while not recommended allowed us some breathing room!

Our only remaining debt is the mortgage, student loans and the 8k at 0% interest.

Yes we stretched and it almost broke us!

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here - thanks for the reality check guys. I think a few factors made us nervous, 1) mortgage would be 38% of net take home, which is higher than many people advise, 2) we've become used to saving at a high rate every month, 3) the downpayment would deplete our savings and it would take longer to fill up the emergency fund. Also, once we move we will not be able to get by on just one salary if one of us no longer can work. But I guess thats the case even if we buy a smaller home. Thanks for the input!

This would make me nervous. Does one spouse make a lot more than the other? Do you have a lot of other expenses outside of the mortgage?

This is our situation, more or less. We need both salaries (fairly equivalent salaries) to afford our similar 'affordable' 38% payment. But if one of our kids needs special care or DW just decides she would like to SAH for a spell, it is COMPLETELY off the table. I think OP is like us: modest background, probably sending money home to parents, no external safety net. So any pickle we find ourselves in we have to unwind.

And this commitment, to BOTH of us working through 20+ years of kids is a hard one. It is far easier with a disproportionate salary which makes it an easy calculus for home buying and lifestyle.

[Anonymous]

OP, we just moved into a house that was at the tippy top of our budget. We thought it was in "good condition" and we wouldn't have to do much to it.....

WRONG! Even houses that seem nice/updated have a lot of warts that you don't notice until everything is cleared out. And you need to put things in to fit the way you live (i.e shelves, blinds, curtains, art, etc.). We have to buy new washer/dryer/dishwasher, have the drywall ripped out of the master bath water closet b/c we didn't notice that it stinks of cigar smoke and it's in the drywall, have the wallpaper removed in a bedroom, new updated ceiling fans x3, new blinds in a few rooms, new curtains b/c our old ones don't fit, new barstools b/c we didn't have a pull up island before, new chandelier and foyer light b/c they old gold ones were too outdated and ornate, pulling out and replacing the 20 yr old overgrown bushes, etc., etc.

We are bleeding out financially. All of this would be kind of fun IF we weren't already at the top of our budget (and beyond b/c of closing costs). If I had to do it over again, I would have pushed more for the house that cost a lot less (like 200k less) and then I'd feel better about updating the house.

My advice is buy a house that is at least $20k UNDER your max budget and then have a little space to update it b/c it costs a lot.

[Anonymous]

Anonymous wrote:OP, we just moved into a house that was at the tippy top of our budget. We thought it was in "good condition" and we wouldn't have to do much to it.....

WRONG! Even houses that seem nice/updated have a lot of warts that you don't notice until everything is cleared out. And you need to put things in to fit the way you live (i.e shelves, blinds, curtains, art, etc.). We have to buy new washer/dryer/dishwasher, have the drywall ripped out of the master bath water closet b/c we didn't notice that it stinks of cigar smoke and it's in the drywall, have the wallpaper removed in a bedroom, new updated ceiling fans x3, new blinds in a few rooms, new curtains b/c our old ones don't fit, new barstools b/c we didn't have a pull up island before, new chandelier and foyer light b/c they old gold ones were too outdated and ornate, pulling out and replacing the 20 yr old overgrown bushes, etc., etc.

We are bleeding out financially. All of this would be kind of fun IF we weren't already at the top of our budget (and beyond b/c of closing costs). If I had to do it over again, I would have pushed more for the house that cost a lot less (like 200k less) and then I'd feel better about updating the house.

My advice is buy a house that is at least $20k UNDER your max budget and then have a little space to update it b/c it costs a lot.

We just bought in a similar position - house really could use entirely new paint, window treatments, some new appliances, has brass fans, we don't have enough furniture, etc. We are doing some ourselves to save money (taking down wallpaper and painting, for example) and will get to the rest after we've built back up some more savings. While I would like to do more right away, none of it is a "need." The house is safe and sound and we got the location, schools, and layout we wanted. For us it was about what we wanted to prioritize- things like location, which we can't change - versus living with some Home Depot paper shades for awhile. I think our choice was the less popular but it has worked for us.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, we just moved into a house that was at the tippy top of our budget. We thought it was in "good condition" and we wouldn't have to do much to it.....

WRONG! Even houses that seem nice/updated have a lot of warts that you don't notice until everything is cleared out. And you need to put things in to fit the way you live (i.e shelves, blinds, curtains, art, etc.). We have to buy new washer/dryer/dishwasher, have the drywall ripped out of the master bath water closet b/c we didn't notice that it stinks of cigar smoke and it's in the drywall, have the wallpaper removed in a bedroom, new updated ceiling fans x3, new blinds in a few rooms, new curtains b/c our old ones don't fit, new barstools b/c we didn't have a pull up island before, new chandelier and foyer light b/c they old gold ones were too outdated and ornate, pulling out and replacing the 20 yr old overgrown bushes, etc., etc.

We are bleeding out financially. All of this would be kind of fun IF we weren't already at the top of our budget (and beyond b/c of closing costs). If I had to do it over again, I would have pushed more for the house that cost a lot less (like 200k less) and then I'd feel better about updating the house.

My advice is buy a house that is at least $20k UNDER your max budget and then have a little space to update it b/c it costs a lot.

We just bought in a similar position - house really could use entirely new paint, window treatments, some new appliances, has brass fans, we don't have enough furniture, etc. We are doing some ourselves to save money (taking down wallpaper and painting, for example) and will get to the rest after we've built back up some more savings. While I would like to do more right away, none of it is a "need." The house is safe and sound and we got the location, schools, and layout we wanted. For us it was about what we wanted to prioritize- things like location, which we can't change - versus living with some Home Depot paper shades for awhile. I think our choice was the less popular but it has worked for us.

We took a similar approach to you. We have a few of the extra rooms (living room, dining room) that are unfurnished for now. We're slowly growing into the house and furnishing as we go along. We used all of the furniture from our apartment which fits just fine in the new house. A lot of the things the PP mentioned are optional and you can live with them but it's a matter of what you prioritize. We also do almost all of the home maintenance ourselves (lawn, fixing things, cleaning, etc.) although we do hire out the gutters due to the steep pitch of the roof.

[Anonymous]

Anonymous wrote:OP you want stretch... This is us:

Me - 78k
DW - 47k
Total - 125k

Home : 550k

Down payment : 5%
Mortgage : $522,500

Mortgage: ~$3,200/month

Student loans payment between the two of us: $1,500/month

1 credit card at 0% we are trying to pay off before 0% expires (8k).

And it used to be worse... Things got so tight that we made the bad decision of cashing out my 401k from my old employer to pay off:
- car note 12k at $480/month
- 42k in credit card payment that was $800/month payment
----> 42k + 8k left above were for fertility treatments.

2 operations, 4 IUI's, 1 miscarriage and 2 rounds of IVF we are 13 weeks pregnant.

So yeah for a minute it was really tight as in literally paycheck to paycheck. Using my old 401k while not recommended allowed us some breathing room!

Our only remaining debt is the mortgage, student loans and the 8k at 0% interest.

Yes we stretched and it almost broke us!

Congrats on the pregnancy! Wish you the very best!

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here - thanks for the reality check guys. I think a few factors made us nervous, 1) mortgage would be 38% of net take home, which is higher than many people advise, 2) we've become used to saving at a high rate every month, 3) the downpayment would deplete our savings and it would take longer to fill up the emergency fund. Also, once we move we will not be able to get by on just one salary if one of us no longer can work. But I guess thats the case even if we buy a smaller home. Thanks for the input!

This would make me nervous. Does one spouse make a lot more than the other? Do you have a lot of other expenses outside of the mortgage?

Me too. My souse and I based our mortgage on one income. Thank goodness we did....you never know what the future holds and if our mortage was based on two income we would had lost our house.

[Anonymous]

We make $225Kish and our house was $501K in 2013 (new construction). Put down 10% in cash. Mortgage with taxes/escrow/insurance/etc. is $3,100 per month. Our old mortgage was $1,500 per month so this was a very hard transition to make but one we felt was needed/right for us.

There are days I regret it immensely because money is tied up in the house that I now want to consider using for private school. I didn't think we would go that route, and so we're in a bit of a jam now. We don't want to sell this house but private school AND this mortgage... ouch.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here - thanks for the reality check guys. I think a few factors made us nervous, 1) mortgage would be 38% of net take home, which is higher than many people advise, 2) we've become used to saving at a high rate every month, 3) the downpayment would deplete our savings and it would take longer to fill up the emergency fund. Also, once we move we will not be able to get by on just one salary if one of us no longer can work. But I guess thats the case even if we buy a smaller home. Thanks for the input!

This would make me nervous. Does one spouse make a lot more than the other? Do you have a lot of other expenses outside of the mortgage?

Me too. My souse and I based our mortgage on one income. Thank goodness we did....you never know what the future holds and if our mortage was based on two income we would had lost our house.

I've never understood the buy a house on one income philosophy. In the unlikely event that something catastrophic happens you can use your emergency fund and, if the other person still can't work, eventually sell the house.

[Anonymous]

Anonymous wrote:OP you want stretch... This is us:

Me - 78k
DW - 47k
Total - 125k

Home : 550k

Down payment : 5%
Mortgage : $522,500

Mortgage: ~$3,200/month

Student loans payment between the two of us: $1,500/month

1 credit card at 0% we are trying to pay off before 0% expires (8k).

And it used to be worse... Things got so tight that we made the bad decision of cashing out my 401k from my old employer to pay off:
- car note 12k at $480/month
- 42k in credit card payment that was $800/month payment
----> 42k + 8k left above were for fertility treatments.

2 operations, 4 IUI's, 1 miscarriage and 2 rounds of IVF we are 13 weeks pregnant.

So yeah for a minute it was really tight as in literally paycheck to paycheck. Using my old 401k while not recommended allowed us some breathing room!

Our only remaining debt is the mortgage, student loans and the 8k at 0% interest.

Yes we stretched and it almost broke us!

I hope the pregnancy works out for you. We are still renting, but have 2 younger kids and I am a SAHM.
How are you going to pay for childcare on top of $5200 must have expenses?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here - thanks for the reality check guys. I think a few factors made us nervous, 1) mortgage would be 38% of net take home, which is higher than many people advise, 2) we've become used to saving at a high rate every month, 3) the downpayment would deplete our savings and it would take longer to fill up the emergency fund. Also, once we move we will not be able to get by on just one salary if one of us no longer can work. But I guess thats the case even if we buy a smaller home. Thanks for the input!

This would make me nervous. Does one spouse make a lot more than the other? Do you have a lot of other expenses outside of the mortgage?

Me too. My souse and I based our mortgage on one income. Thank goodness we did....you never know what the future holds and if our mortage was based on two income we would had lost our house.

I've never understood the buy a house on one income philosophy. In the unlikely event that something catastrophic happens you can use your emergency fund and, if the other person still can't work, eventually sell the house.

It's about flexibility, not catastrophe. When we purchased our 500k home on a 300k salary, (financing 400k) we wanted to always be able max out our 401k, ESPP, and college savings. We have just turned 40 and have 1M in 401k and have fully paid off 4 years of college in the Virginia pre-paid for our 2 kids. It ferls great to not even worry a thing about the cost of college for our kids. Our ncome is now higher and we take great vacations and have absolutely no financial stressors. We've invested in real estate as well that is cash flow positive. If one of us ended up working somewhere intolerable or somewhere that became incompatible with having a young family, we could quit without even having work lined up. We will probably be prepared for a very comfortable retirement by 60, if we so choose. There is a certain amount of career confidence one has at the workplace when you are working not because you HAVE to, but because you want to. It enables you to take risks and actions that (for me) has ultimately lead to bigger leadership positions and income growth.

I TOTALLY understand that lower income people have no choice, but to spend a huge amount of their income on housing, but if you have a high income, I feel like there are so many better options to spend all my disposable income on rather than housing. Not to mention the freedom that comes with being flush with cash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here - thanks for the reality check guys. I think a few factors made us nervous, 1) mortgage would be 38% of net take home, which is higher than many people advise, 2) we've become used to saving at a high rate every month, 3) the downpayment would deplete our savings and it would take longer to fill up the emergency fund. Also, once we move we will not be able to get by on just one salary if one of us no longer can work. But I guess thats the case even if we buy a smaller home. Thanks for the input!

This would make me nervous. Does one spouse make a lot more than the other? Do you have a lot of other expenses outside of the mortgage?

Me too. My souse and I based our mortgage on one income. Thank goodness we did....you never know what the future holds and if our mortage was based on two income we would had lost our house.

I've never understood the buy a house on one income philosophy. In the unlikely event that something catastrophic happens you can use your emergency fund and, if the other person still can't work, eventually sell the house.

It's about flexibility, not catastrophe. When we purchased our 500k home on a 300k salary, (financing 400k) we wanted to always be able max out our 401k, ESPP, and college savings. We have just turned 40 and have 1M in 401k and have fully paid off 4 years of college in the Virginia pre-paid for our 2 kids. It ferls great to not even worry a thing about the cost of college for our kids. Our ncome is now higher and we take great vacations and have absolutely no financial stressors. We've invested in real estate as well that is cash flow positive. If one of us ended up working somewhere intolerable or somewhere that became incompatible with having a young family, we could quit without even having work lined up. We will probably be prepared for a very comfortable retirement by 60, if we so choose. There is a certain amount of career confidence one has at the workplace when you are working not because you HAVE to, but because you want to. It enables you to take risks and actions that (for me) has ultimately lead to bigger leadership positions and income growth.

I TOTALLY understand that lower income people have no choice, but to spend a huge amount of their income on housing, but if you have a high income, I feel like there are so many better options to spend all my disposable income on rather than housing. Not to mention the freedom that comes with being flush with cash.

A substantial majority of the population does not have the luxury of that flexibility.

[Anonymous]

Anonymous wrote:We make $225Kish and our house was $501K in 2013 (new construction). Put down 10% in cash. Mortgage with taxes/escrow/insurance/etc. is $3,100 per month. Our old mortgage was $1,500 per month so this was a very hard transition to make but one we felt was needed/right for us.

There are days I regret it immensely because money is tied up in the house that I now want to consider using for private school. I didn't think we would go that route, and so we're in a bit of a jam now. We don't want to sell this house but private school AND this mortgage... ouch.

What did you expect? 500K is not the price of a new home, it should be over a million. You get what you pay for.