Reply to Did you buy a house that stretched your budget? Was it worth it?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]OP here - thanks for the reality check guys.  I think a few factors made us nervous, 1) mortgage  would be 38% of net take home, which is higher than many people advise, 2) we've become used to saving at a high rate every month, 3) the downpayment would deplete our savings and it would take longer to fill up the emergency fund.  [b]Also, once we move we will not be able to get by on just one salary if one of us no longer can work.[i][/i][/b] But I guess thats the case even if we buy a smaller home.  Thanks for the input![/quote]

This would make me nervous.   Does one spouse make a lot more than the other?  Do you have a lot of other expenses outside of the mortgage?  [/quote]

Me too.  My souse and I based our mortgage on one income.  Thank goodness we did....you never know what the future holds and if our mortage was based on two income we would had lost our house.[/quote]

I've never understood the buy a house on one income philosophy.  In the unlikely event that something catastrophic happens you can use your emergency fund and, if the other person still can't work, eventually sell the house.[/quote]

[b]It's about flexibility[/b],  not catastrophe. When we purchased our 500k home on a 300k salary, (financing 400k) we wanted to always be able max out our 401k, ESPP, and college savings. We have just turned 40 and have 1M in 401k and have fully paid off 4 years of college in the Virginia pre-paid for our 2 kids.  It ferls great to not even worry a thing about the cost of college for our kids. Our ncome is now higher and we take great vacations and have absolutely no financial stressors. We've invested in real estate as well that is cash flow positive. If one of us ended up working somewhere intolerable or somewhere that became incompatible with having a young family, we could quit without even having work lined up. We will probably be prepared for a very comfortable  retirement by 60, if we so choose. There is a certain amount of career confidence one has at the workplace when you are working not because you HAVE to, but because you want to. It enables you to take risks and actions that  (for me) has ultimately lead to bigger leadership positions and income growth.

[b]I TOTALLY understand that lower income people have no choice[/b], but to spend a huge amount of their income on housing, but if you have a high income, I feel like there are so many better options to spend all my disposable income on rather than housing. Not to mention the freedom that comes with being flush with cash.[/quote]

A substantial majority of the population does not have the luxury of that flexibility.  [/quote]

New poster and mortgage underwriter here.  Actually, I see so  many loans come across my desk in this area where people are making 300K or so a year and stretching themselves to the max.  Being in a position of doing a financial cavity search on DC metro residents, I can say that there is a HUGE portion of the population in this area that does have that flexibility, but instead are big spenders. When I see a 300K salary of a family in their mid 40s, with a 401K barely scratching 200K taking out an 800K loan, it really does shock me that people squander the great opportunities they have been given.

I also see  people like the above who have made a good, but not enormous salary stretch across some very smart investments.  Those are the people who are building wealth, not blowing it.[/quote]

You may see a lot of people making $300K plus that are idiots but statistically a very small number of people are making $300K plus.  So if what you're getting at is that it's great for an extremely narrow segment of the population to buy a house they can afford on only one income that's great but it still isn't applicable to the vast majority of people.

The advice not to stretch to the max is well taken for all people though.[/quote]

Statistically very low nationwide, but not at all uncommon for home buyers in the DC Metro area. Actually highest concentration in the nation. We only handle A+ borrowers , obviously that group is more likely to have 300k earners. I see tons and tons of dual income federal employees who easily are hitting around 300k. Lots of IT workers making even more. [/quote]

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