How much mortgage can we afford?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When we had student loans from DH's law degree we bought a cheap townhouse in a gentrifying area, and we didn't have any car or consumer loans. We drove an old sedan until the student debt was paid off.

750k is insane. Look for a condo or townhouse where your PITI costs are as close to rent as possible.

Agree that trying to reduce expenses with that much in loans is really important. $722 for a car lease sounds high, but I don't know when OP and her husband got their lease and if interest rates were already high. It would be a shame if they were driving around in a BMW and not paying off loans/funding retirement/funding 529s.

Op here: it’s not a bmw, it’s a Toyota and we bought in 2021 because our 14 year old Camry ran into the ground.

WTH?!?! why are you paying $722/month on a Toyota. You have a family of 4. Another Camry would work just fine or a Rav4. You do not need/cannot afford a Highlander or more expensive at this point. And why lease? Buy a $35K vehicle and pay it off in 3 years then drive it into the ground for the next 10. You can't really afford to live the fancy life until you pay off your student loans. Do that and you will be financially sound.

[Anonymous]

When rates go down prices will soar

[Anonymous]

Anonymous wrote:All this “we bought cheap townhouses” advice is meaningless now because the interest rates are more than double what all these posters paid.

So they can find whatever is "cheap" now. Or find a decent place to rent for a lower price and continue to do that until student loans are gone.

[Anonymous]

Anonymous wrote:I would aim to buy a house the spring/summer before your eldest is going to start kindergarten so you can have stability for them in schools but a little more time (unless "under 5" means they are turning 5 this summer and starting K). Before then, I would put some of your downpayment money to pay off your "other debt" if it's above 4% interest. Your debt load is what is going to limit your options.

If you are only out of law school for 5 years AND had two kids during that time, and the pandemic and student loan debt pauses--your life and your expenses are in a whirl. You might not have a handle on what your expenses really are. So take a little time and more intentionally sort that out.
If you think you can take on a 750k mortgage (seems tight but potentially doable ), start paying what the PITI for that would be (look up estimates for property tax and insurance in the area you want to buy) that plus 1% of the total home cost as the estimated annual cost of home maintenance into your savings/accelerated debt repayment. I would also at least open up 529 plans for your kids and put an autopay enough to get the state income tax break (if you have one) and tax-deferred savings. I would also be contributing the max to your retirement account if you aren't already. At your income you want to take advantage of all the tax breaks you can and you want to have a realistic sense of how tight things will be when you will be owning a house, responsible for taxes, insurance and maintenance, and be contributing appropriately to your future needs (college, retirement) and paying off your past purchases (student loan debt, car debt, other debt).

OP, you've taken a lot of snark in this thread, so let's redirect it. There is almost nothing about the bolded advice above that is correct:

- Pushing to buy a house before OP is financially ready is an awful idea.
- Prioritizing "stability" for kids at the expense of finances is absurd. Kids move all the time. Life happens.
- The size of OP's down payment will inhibit her ability buy much more than debt load.
- With interest rates at 5-7% for mortgages, paying off debt that is 4% or higher is laughably bad advice.

OP, I don't think you're ready to buy yet. Yes, some people can, and do, but if it were me I would save for more of a down payment, get a handle on your spending, and put yourself in a better overall financial position before seriously looking. Aldo, you don't say what your husband does, but he should plan on going back to work when your youngest starts school (at the latest).

[Anonymous]

One thing to note, OP, is that you were rushed to buy a car during a huge car shortage when you couldn't get a good deal because of circumstances outside of your control. Now you have a huge payment and it's getting in the way of other goals. Don't compound that by buying a house at an inopportune time and locking in a high rate for a house that may not even serve you long-term (depending on where you're looking in the DMV, $850k is not going to get you a dream "forever" home). Work on getting your financial house in better order before you start shopping seriously.

[Anonymous]

If I had waited until my student loans were paid off to buy a house I would have missed out on most of the appreciation that allowed me to buy a bigger, nicer house. I don't think that's necessary.

That said, you just need to figure out how much you can comfortably spend on PITI and go from there. Your current rent is probably a good starting point, maybe you can go a little higher since you have been able to save a lot.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When we had student loans from DH's law degree we bought a cheap townhouse in a gentrifying area, and we didn't have any car or consumer loans. We drove an old sedan until the student debt was paid off.

750k is insane. Look for a condo or townhouse where your PITI costs are as close to rent as possible.

Agree that trying to reduce expenses with that much in loans is really important. $722 for a car lease sounds high, but I don't know when OP and her husband got their lease and if interest rates were already high. It would be a shame if they were driving around in a BMW and not paying off loans/funding retirement/funding 529s.

Op here: it’s not a bmw, it’s a Toyota and we bought in 2021 because our 14 year old Camry ran into the ground.

WTH?!?! why are you paying $722/month on a Toyota. You have a family of 4. Another Camry would work just fine or a Rav4. You do not need/cannot afford a Highlander or more expensive at this point. And why lease? Buy a $35K vehicle and pay it off in 3 years then drive it into the ground for the next 10. You can't really afford to live the fancy life until you pay off your student loans. Do that and you will be financially sound.

You haven't shopped for a car lately, huh? Those payments multiply out to a $43k in five years. Assuming there's at least a little interest on it, that's not much more than the $35k car you suggest. It sure as hell isn't a Highlander.

I agree that OP's discipline and savings leave a lot to be desired. But this criticism seems misplaced.

[Anonymous]

Anonymous wrote:If I had waited until my student loans were paid off to buy a house I would have missed out on most of the appreciation that allowed me to buy a bigger, nicer house. I don't think that's necessary.

That said, you just need to figure out how much you can comfortably spend on PITI and go from there. Your current rent is probably a good starting point, maybe you can go a little higher since you have been able to save a lot.

Strong disagree. She hasn't paid her student loans in years. It has to be close to $2k/month at that number, it would be foolish to assume that she can spend her current rent + some or all of her current savings on a mortgage without factoring in the huge bill she's facing down now.

[Anonymous]

Tons of bad advice in this thread. Waiting for interest rates to come down is silly. Prices will go up when that happens and you can always refinance. Unless it happens as part of a recession but the real estate thread is full of people waiting for the recession to come and make their dream home affordable again.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When we had student loans from DH's law degree we bought a cheap townhouse in a gentrifying area, and we didn't have any car or consumer loans. We drove an old sedan until the student debt was paid off.

750k is insane. Look for a condo or townhouse where your PITI costs are as close to rent as possible.

Agree that trying to reduce expenses with that much in loans is really important. $722 for a car lease sounds high, but I don't know when OP and her husband got their lease and if interest rates were already high. It would be a shame if they were driving around in a BMW and not paying off loans/funding retirement/funding 529s.

Op here: it’s not a bmw, it’s a Toyota and we bought in 2021 because our 14 year old Camry ran into the ground.

WTH?!?! why are you paying $722/month on a Toyota. You have a family of 4. Another Camry would work just fine or a Rav4. You do not need/cannot afford a Highlander or more expensive at this point. And why lease? Buy a $35K vehicle and pay it off in 3 years then drive it into the ground for the next 10. You can't really afford to live the fancy life until you pay off your student loans. Do that and you will be financially sound.

You haven't shopped for a car lately, huh? Those payments multiply out to a $43k in five years. Assuming there's at least a little interest on it, that's not much more than the $35k car you suggest. It sure as hell isn't a Highlander.

I agree that OP's discipline and savings leave a lot to be desired. But this criticism seems misplaced.

This is how people get in trouble. They look at the payments vs. the overall cost. That's very expensive for a RAV4.

[Anonymous]

OP - You need to create a budget and track every penny for a few months. I personally like YNAB.com, but there are many online apps out there. They import your income and track every credit card charge, utility payment, etc. and you can categorize them into various buckets such gas, electric, misc, eating out, alcohol, student loan, car loan, etc. It's amazing how much of a budget can be eaten up by the little things, a trip to CVS for shampoo, ordering in instead of cooking because you are exhausted, bring a bottle of wine to a friend's house, etc. Once you have 3-4 months of expenses you can see how much you have left over each month. That amount (minus some percentage to be prudent) will be what you can afford for PITI. Then work backwards to figure out what loan you can afford.

Although there are different schools of thought on this, I would start some college savings in a 529 if you can. If you invest in the plan in your state you will usually get a small tax break. I'd also pay a little more than the minimum on your highest interest debt each month. I think most would agree here that your debt isn't "good" debt, meaning you aren't using it as leverage to make additional money. So you should try to get rid of it as soon as possible. I know that seems daunting given where you are in life, but even a few extra payments a year make a huge difference.

[Anonymous]

Anonymous wrote:Tons of bad advice in this thread. Waiting for interest rates to come down is silly. Prices will go up when that happens and you can always refinance. Unless it happens as part of a recession but the real estate thread is full of people waiting for the recession to come and make their dream home affordable again.

This. If you think interest rates will go down, you buy NOW while prices are lower and refinance when rates drop. OP should have also been paying student loans as aggressively as possible while rates were set to zero, but it's too late for that so that's water under the bridge.

[Anonymous]

Anonymous wrote:When we had student loans from DH's law degree we bought a cheap townhouse in a gentrifying area, and we didn't have any car or consumer loans. We drove an old sedan until the student debt was paid off.

750k is insane. Look for a condo or townhouse where your PITI costs are as close to rent as possible.

This. I cannot believe they have $50k (!!!) in car loans with that debt. I wouldn’t even do that with zero debt. The problem here is they rushed to have the kids and her DH doesn’t work. If they had waited a couple years to have kids after law school they could have eliminated the debt and saved some money before adding in kids. OP should absolutely rent something as cheap as possible until she gets those loans under control and for the love of God don’t have any more kids so DH can work the second the youngest hits school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When we had student loans from DH's law degree we bought a cheap townhouse in a gentrifying area, and we didn't have any car or consumer loans. We drove an old sedan until the student debt was paid off.

750k is insane. Look for a condo or townhouse where your PITI costs are as close to rent as possible.

Agree that trying to reduce expenses with that much in loans is really important. $722 for a car lease sounds high, but I don't know when OP and her husband got their lease and if interest rates were already high. It would be a shame if they were driving around in a BMW and not paying off loans/funding retirement/funding 529s.

Op here: it’s not a bmw, it’s a Toyota and we bought in 2021 because our 14 year old Camry ran into the ground.

WTH?!?! why are you paying $722/month on a Toyota. You have a family of 4. Another Camry would work just fine or a Rav4. You do not need/cannot afford a Highlander or more expensive at this point. And why lease? Buy a $35K vehicle and pay it off in 3 years then drive it into the ground for the next 10. You can't really afford to live the fancy life until you pay off your student loans. Do that and you will be financially sound.

You haven't shopped for a car lately, huh? Those payments multiply out to a $43k in five years. Assuming there's at least a little interest on it, that's not much more than the $35k car you suggest. It sure as hell isn't a Highlander.

I agree that OP's discipline and savings leave a lot to be desired. But this criticism seems misplaced.

This is how people get in trouble. They look at the payments vs. the overall cost. That's very expensive for a RAV4.

RAV4s are not cheap!

[Anonymous]

I'm a lawyer who had law school debt and we paid it off and were public interest lawyers so I understand. But you need to get rid of that other non-school related debt before you buy a house. You also need to have an emergency fund of 3 months expenses. I'd also wait until you have 20%.