Reply to Can't afford private - taking out $800k mortgage

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[quote=Anonymous][quote=Anonymous]It's funny to me that a lot of the analysis of how how big your mortgage should be assumes that this is strictly your housing expense or a place to park your money as an investment.  We're being driven almost exclusively by the school issue.  When you do the math and compare the expense of private school for 3 kids to taking out a big loan, the numbers, at least for us, favor taking out the big mortgage.  [/quote]

I don't think anybody is viewing a mortgage as a pure "investment," instead they're seeing it in the context of savings, and all that savings can mean for college options and retirement. If you put your money into a mortgage, at the end of the day you will have housing equity that you can draw on for college retirement. You see all the time on DCUM where posters talk about how private school tuition payments cause them to save less for college and retirement.

You will argue, correctly, that private school has many benefits but we can't put a dollar sign on these benefits. However, it seems that a lot of families who pay $800K for a house in a good school district have decided that the non-quantifiable benefits of private school education, good though that may be, aren't that much greater than a good local public education.

This is why of people who are "driven by the school issue" choose not to go private, instead they stretch themselves to buy $800K houses in good school districts. At a HHI of $250K with a good down payment, you can (just barely) swing a mortgage on that $800K house, and when it's time for college there will be housing equity to help pay college bills.  But at $250K you will be hard pressed to send two kids to private school, you won't qualify for financial aid, and you will be skimping on your savings. For many families, this is part of the "school issue" too.[/quote]

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