Reply to HHI for $700K house?

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[quote=Anonymous][quote=Anonymous]If you've recently bought a house around $700K, what is your HHI? Ours is $160K, and the "how much house can you afford?" calculators all tell me we can swing a $700-$800K house. We have about $200K in equity in our current house that would be available for downpayment, and no other debt. Right now we are paying for daycare x2, so $700K sounds way out of reach. But it feels like it will be a little high even in a few years, when daycare will be over. I'd been thinking we could afford more like $600K then. But going up to $700 would really open up a lot of options for us. Are other people buying those houses with a similar income?[/quote]

Work backwards--this is what we did when we upgraded.  If you could sell your house and clear $200k after paying realtors, etc., would the entire $200k go into the new house, or would you want to buy some new furniture, a new car, put $$ in college funds, etc.?  Lets say you want to put $150k of your profit into a house, that means that for a $700k house, you will be mortgaging $550k.  So figure out what your monthly mortgage payment would be, what your escrow would be each month for taxes, insurance, etc., and then figure out whether you can work with that amount as your mortgage payment every month based on your other expenses.

We put approx $140k down on our current house, and we are in a much nicer house than we would be able to afford each month than if we didn't have as significant of a down payment. Added benefit, we didn't have to pay PMI. [/quote]

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