am i insane for considering this? 820k mortgage on a 240k income

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What about emergency funds, college tuition, retirement savings, vacations, preparing for sandwich years? Can you afford a layoff/furlough, medical diagnosis, if your parents have dementia/healthcare needs? If your car is totaled tomorrow, how will you swing it?

+1 Or if your car breaks down, or you unexpectedly need a roof, or your kid really wants to do an expensive extracurricular activity. Risk is a personal decision but I think you're cutting it really close to the edge and setting yourself up for alot of stress, or failure.

Seriously, does everyone really rely on cars for everything here? If you are paying that much for a house, I'd assume you are next to work/transport/school. Otherwise, why pay 1M?

You're not from around here, are you?

[Anonymous]

$820K loan would be "high balance conforming" and not a Jumbo, if OP is buying in DC or one of the surrounding suburbs.

The Jumbo loan limit in 2021 is ~$827K for these parts. So they will probably qualify for a sub-3% interest rate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What about emergency funds, college tuition, retirement savings, vacations, preparing for sandwich years? Can you afford a layoff/furlough, medical diagnosis, if your parents have dementia/healthcare needs? If your car is totaled tomorrow, how will you swing it?

+1 Or if your car breaks down, or you unexpectedly need a roof, or your kid really wants to do an expensive extracurricular activity. Risk is a personal decision but I think you're cutting it really close to the edge and setting yourself up for alot of stress, or failure.

Seriously, does everyone really rely on cars for everything here? If you are paying that much for a house, I'd assume you are next to work/transport/school. Otherwise, why pay 1M?

You're not from around here, are you?

Live in tenleytown in a semi-detached row home. Not sure why everyone in my neighborhood needs to drive everywhere. The schools are right there, metro to dupont is a quick walk, and you can stop at the grocery store on the way home. Or is this post about folks who desperately want a mclean place that requires two cars?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What about emergency funds, college tuition, retirement savings, vacations, preparing for sandwich years? Can you afford a layoff/furlough, medical diagnosis, if your parents have dementia/healthcare needs? If your car is totaled tomorrow, how will you swing it?

+1 Or if your car breaks down, or you unexpectedly need a roof, or your kid really wants to do an expensive extracurricular activity. Risk is a personal decision but I think you're cutting it really close to the edge and setting yourself up for alot of stress, or failure.

Seriously, does everyone really rely on cars for everything here? If you are paying that much for a house, I'd assume you are next to work/transport/school. Otherwise, why pay 1M?

You're not from around here, are you?

Live in tenleytown in a semi-detached row home. Not sure why everyone in my neighborhood needs to drive everywhere. The schools are right there, metro to dupont is a quick walk, and you can stop at the grocery store on the way home. Or is this post about folks who desperately want a mclean place that requires two cars?

It's about the vast majority of people who don't like in a neighborhood where they can walk to school and grocery stores, or have easy access to mass transit. Surely you understand that?

Seriously, there are thousands of homes at $1m+ where people need cars. Come on.

[Anonymous]

Anonymous wrote:240k HHI, very stable jobs but limited upside aside from reg step increases

NO DEBT aside from a 500 dollar car payment

one child in elementary with no plans for more

980k house minus 160k downpayment (820k mortgage)

I think its reasonable, but others have implied that it is a HUGE reach.. what do you guys think? For those that think its reasonable, do you think theres room to stretch more?

I think it is probably fine, but you really need to do a full up annual budget and consider all costs. Count in money for house repairs, eventual car replacement, plus (obviously) all taxes, insurance utilities, etc. Private school will be out of reach. Will you be able to build up cash savings and retirement savings? How old are you and how much do you have already in retirement.

[Anonymous]

why is that insane? That's less than $4k/mo. OP is taking home probably nearly 12k/mo, right?

[Anonymous]

Anonymous wrote:why is that insane? That's less than $4k/mo. OP is taking home probably nearly 12k/mo, right?

I have a $725k loan at 1.7 percent, which is obviously very low (it's an ARM). My monthly payment is $2600. Taxes and insurance are another $1100. So I'm at nearly 4k a month for a smaller mortgage and a lower interest rate.

So, no, OP will be paying more.

[Anonymous]

I think that’s what a lot of people in that income range are spending these days especially if no student debt. I know a lot of people in the $220-$250k income range with two equal or fairly close to equal incomes, and most are in homes between $750k-just under $1 million. Those that had a lot of home equity from their first home to roll over to the DP on their new home are even higher than that.

[Anonymous]

Nothing happens past two it’s true

[Anonymous]

Anonymous wrote:I think that’s what a lot of people in that income range are spending these days especially if no student debt. I know a lot of people in the $220-$250k income range with two equal or fairly close to equal incomes, and most are in homes between $750k-just under $1 million. Those that had a lot of home equity from their first home to roll over to the DP on their new home are even higher than that.

I agree. so much so that i keep thinking i should also get a 1M$ home, and the truth is i could afford it.

OP: i dont think you are insane, depends what your priorities are. You will see from the breakdown of some other posters with your stat, and criticizing your choice, that they are putting a lot in maxing retirement/529s/ back door IRAs.

You know your budget (or at least you should, if you dont, sign up for a free mint account), look at what that PITI leaves you for your other choices (savings and spending), and you will get your answer. 820K on a 240K is doable, it is not bankruptcy insane with your fed jobs (those who tell you that got their mortgage at a much higher interest rate so their alarm bell goes on at any mortgage above 600k). It just means less of something else. I decided it wasn't worth it for me because i want to fully fund college, do some travel now, not be stressed out by money. but sometimes i wish i did get the $1M house!

[Anonymous]

Too much, and why do you have car debt?

[Anonymous]

We bought a new construction about 6 years ago with 900K mortgage, HHI was 230K. We just refinanced on 800K mortgage, with HHI 280K, and our house value has increased 300K. If we did not buy the house at that time, we will definitely be priced out of the neighborhood we are living. So glad that we stretched back then. You will be fine, OP.

[Anonymous]

Anonymous wrote:Ok here are our stats - close, but not exact -

240K income with a 780K loan @ 30 years/2.25% from last Dec (we got a relationship discount since we have 250K in a brokerage account - would be 2.5 otherwise).

PI: 2983
Tax: 550
Insurance: 100
PITI: 3600

Take Home: 10.5K/mo (after max 401k and 100% of medical/transport, and some daycare costs).

Average budget:
Other housing (sinking fund+maintenance/utilities): 470 (we get about 200/mo in SREC offsets by living in DC)
Daycare (outside the pre-tax FSA): 700
Other kid stuff+college fund: 800
Car maintenance/insurance/gas (metro/included in payroll): 100
Food: 1200
Shopping: 450
Fun (tickets/vacation/etc): 1600
Extra Brokerage/Donations: 1500

Overall, seems fine. We spend about 20K/year on vacations + entertainment and still save (max 401K+Match+Brokerage) = 90K/year,

How will the mortgage feel when you retire?

[Anonymous]

OP, go to the real estate forum and see what they have to say. This forum is RIDICULOUSLY conservative. If it were up to this forum, you'd only be able to buy a $500k house and afford a $30k car if you made $1M per year. Stupid, stupid, stupid.

What are you going to do with your money? Bonds? Lol, they're worthless toilet paper these days. Save cash? Dumb. Inflation is eating at it more and more into your savings in a lousy account earning 1% interest or less. Stocks? Lol. They're horrendously overvalued right now, and many are predicting a big correction coming.

Given the threat of inflation, hard assets will be most valuable over the coming years. That, and given the simple economic fact that there is more demand for housing than supply, it means owning a home is still a good investment to protect against inflation. In fact, given the interest rates and levels of inflation, you could essentially borrow money for free almost right now to own a home. Plus, on top of that, unlike almost all other investments, at least a home provides additional utility as a place of shelter. I wouldn't be afraid to stretch a little bit to own at all right now.

[Anonymous]

You can absolutely afford it. We have a 1.4M house (1M+ mortgage) on a 200k solo income. Our monthly bill is $5,700 and we get $2,400 from our basement rental unit. We are out of pocket $3,400/month on an amazing house. Less than we were paying for our rental apartment. Not to mention the house has appreciated 200k I'm the two years we've had it. I'm sure if I had come on here when we were buying people would have called me an idiot but ultimately I know our monthly costs, I knew we could swing the full mortgage if we couldn't find tenants (or just have drastically reduced rent and easily found renters). You know your spending, savings and ultimate financial situation but there are many scenarios in which this is doable.