HHI 200K - how much house can/should we afford

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I agree with PPs that have said DCUM posters tend to be overly conservative and would recommend you look elsewhere or do your own calculations to see what YOU are comfortable with - not that PPs are wrong or bad, but there are just so many variables and such a wide range of comfort levels it's hard to get advise here.

FWIW, our HHI is a little higher than yours (about 260K) and we have a 700k mortgage (yes, this is our mortgage, house was more like $1M). We are fully funding 401ks, saving for the kids college (we have 2), have an emergency cushion of about $50k and between one in daycare for one more year and aftercare for the other our monthly childcare expense is about 1700. We have no other debt (car and student loans paid off) and are living very comfortably... go out to dinner often, take modest vacations, fly to visit family out of state twice a year, etc...

PP would you be willing to share your monthly or annual budget? I don't see how you can do all this. I must be doing something wrong.

I agree. Our HHI is a bit higher than 260k, and with maxing our retirement, saving for college and about the same in daycare but no debt, I do not see how we could carry a 700k mortgage. We have a 400k mortgage.

It isn't so much the mortgage that you carry as your monthly payment... You can't really compare a $400K to a $700K mortgage without knowing interest rates and whether you have a 15 year or 30 year term. At the current low interest rates (assuming you qualify), the monthly payment difference may not be as large as you think. In any event, all this comes down to basic budgeting. Track your expenses to the penny for a year and see where you are spending money and make tweaks where necessary. Sometimes I think people on this board don't know how to build a basic household budget.

[Anonymous]

I have the same HHI and went through the same real estate search. We decided that 625K was our max mortgage and we neded up buying a remodel in Kensington. Busy street so that cut down the cost of the house. I like our area and also think Garrett Park may have possibilities. We looked at the Beverly Farms neighborhood in Churchill which had houses in the 600K range. It's a little further out than Kensington but you can cut straight across to Grovesnor metro. Also the neighborhoods around Tilden Woods are in WJ and had houses in the 650-700 range.

[Anonymous]

Anonymous wrote:With savings rates being so late you are actually losing money by putting it in to the bank. It is much better to put it in real estate with is a tangible investment.

Wow. Not familiar with the risk-return tradeoff now, are we? There is a reason many people (and companies) keep money parked in cash even when interest rates are zero. What you have said only makes sense if there is no risk that housing values decline....

[Anonymous]

Anonymous wrote:I'm the previous poster whose daughter went to an Ivy League college after going to high school in Silver Spring. She did fine in college. She graduated last year (in four years) and got a good job in her field. She thinks that going to high school in Silver Spring was an advantage: she learned to get along with people from a large variety of backgrounds and she thinks that has been a huge benefit that she got from her education.

But, but,... don't those schools have great school rankings less than 10?

There are endless examples like this of students going to "bad" schools and turning out fine. The obsession with rankings on this board is ridiculous.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm the previous poster whose daughter went to an Ivy League college after going to high school in Silver Spring. She did fine in college. She graduated last year (in four years) and got a good job in her field. She thinks that going to high school in Silver Spring was an advantage: she learned to get along with people from a large variety of backgrounds and she thinks that has been a huge benefit that she got from her education.

But, but,... don't those schools have great school rankings less than 10?

There are endless examples like this of students going to "bad" schools and turning out fine. The obsession with rankings on this board is ridiculous.

Not really. I went to a bad school and turned out well. But I had lower odds of doing so than if I'd gone to a better school. I'd rather reduce that risk with my own kids.

[Anonymous]

I am the PP whose daughter went to a Silver Spring HS and an Ivy League College. I still don't understand what makes anyone think that Silver Spring schools are bad. The only major difference I am aware of between Silver Spring schools and Bethesda/Chevy Chase schools is that Silver Spring schools have more minority and ESL students. All Montgomery County schools have excellent resources and all Montgomery County schools follow a similar curriculum.

I wouldn't send my kids to a school that didn't offer the type of curriculum that would enable them to get into a good college and do well once they got there. I just don't think we have those kind of schools in Montgomery County. And, I think my kids got benefits from going to a high school with a diverse population that they would not have gotten if they went to one of the "W" schools.

I grew up in a small, rural town with bad schools. I was bored to death in school as a child. I know what a bad school looks like. It does not look like the schools in Silver Spring.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We were in a similar position. Although we could have afforded a small house in Bethesda, we chose to buy in Silver Spring. My kids went to high school in the Northeast Consortium (Springbrook, Blake, Paint Branch) and got into very good colleges. They are now in their early and mid-20s, employed in jobs in their chosen fields, paying their own rent (not living in my basement!) and self supporting. I've talked to them about it and they think they benefitted from going to schools with very diverse populations. They know they benefitted by the fact that we were able to save enough money for their college education that they did not need to take out any loans.

If we had moved to Bethesda (which we seriously considered) I think there would have been more pressure on us to spend money on fancier clothes, technology, extra-curricular activities, etc. as they were growing up. Additionally, we would have paid more for housing. We certainly would have saved less money.

You can get a very good house in the Northeast Consortium area for $500,000. All the high schools offer A.P. classes and everything else your child needs to get into a good college. It is Montgomery County! Top students from these high schools get into Ivy League and similar colleges every year. Yes, there are fewer kids going to the top colleges than from BCC or Walter Johnson, but I think that may make it easier for your kid (assuming he or she is a top student) to stand out and get accepted. There is a limit to the number of students that any college is going to take from a given high school.

My house is almost paid off, my husband and I are maximizing our contributions to our retirement accounts, we have significant savings outside of retirement accounts, and our kids won't have to worry about supporting us when we get old. There are lots of benefits to living below your means. If you haven't read it, I recommend "The Millionaire Nextdoor." The book is somewhat out of date but the basic message still applies. I don't think anyone looking at us and where we live would think that our net worth is as high as it is and that is fine with me.

I like you.

Me too. I wish I'd read this when we decided to buy in Bethesda. We love it here, but it's tough to manage expectations living amongst the top 1%.

[Anonymous]

My spouse wanted to move to Potomac for our first house. I was against it for a similar reason. There are plenty of studies suggesting you'll be happier with an average or an above-average home in a slightly less nice area than a below average home in a richer area. Even if you really don't feel like you're the keeping-up-with-the-neighbors type, it gradually alters what you perceive to be the baseline for happiness.