Anonymous
10/09/2013 10:55
Subject: Am I crazy for thinking that we could afford this?
I think it's really unfair to make a home purchase with the expectation that you will get free childcare from parents and in-laws. If it works out that way, great. Save the extra income for college. Then look to move when your kids are in school.
Anonymous
10/09/2013 10:32
Subject: Am I crazy for thinking that we could afford this?
Anonymous wrote:We have a similar HHI, debts, and work situationss (scarily so) and recently bought a house in Rockville with 20% down and a 350K mortgage. It is a stretch for us, mostly because we are paying more than our mortgage cost every month for childcare.
I agree that you need to think very carefully about your childcare expenses. Affordable part-time childcare is almost impossible to find (I actually ended up increasing my work hours for this reason). Our children are in preschool from 9:30-3:30 and the cost is still ridiculous. At this point, we are not saving anything other than maxing our retirement, and our finances are tighter than I am comfortable with.
Can you delay buying and live very frugally for awhile to save for a bigger down payment? At your income, and with no kids, you should be able to save at least $30K in a year (that's nearly what we pay for childcare!). We lived in a one-bedroom with our first baby for a year, and it was fine. Also, I think you can find what you are looking for in Rockville/Gaithersburg for <$450K, especially if you are looking at townhomes. We bought in an area zoned for a great elementary but not one of the top high schools because we'll likely be moving before then (the school is still good enough that it won't be the end of the world if we don't move) which saved us some.
you lived in a 1br with a baby? yikes. i don't know if we could do that =) especially considering my "home office" takes up some space in the bedroom
Anonymous
10/09/2013 10:28
Subject: Am I crazy for thinking that we could afford this?
We have a similar HHI, debts, and work situationss (scarily so) and recently bought a house in Rockville with 20% down and a 350K mortgage. It is a stretch for us, mostly because we are paying more than our mortgage cost every month for childcare.
I agree that you need to think very carefully about your childcare expenses. Affordable part-time childcare is almost impossible to find (I actually ended up increasing my work hours for this reason). Our children are in preschool from 9:30-3:30 and the cost is still ridiculous. At this point, we are not saving anything other than maxing our retirement, and our finances are tighter than I am comfortable with.
Can you delay buying and live very frugally for awhile to save for a bigger down payment? At your income, and with no kids, you should be able to save at least $30K in a year (that's nearly what we pay for childcare!). We lived in a one-bedroom with our first baby for a year, and it was fine. Also, I think you can find what you are looking for in Rockville/Gaithersburg for <$450K, especially if you are looking at townhomes. We bought in an area zoned for a great elementary but not one of the top high schools because we'll likely be moving before then (the school is still good enough that it won't be the end of the world if we don't move) which saved us some.
I agree that you need to think very carefully about your childcare expenses. Affordable part-time childcare is almost impossible to find (I actually ended up increasing my work hours for this reason). Our children are in preschool from 9:30-3:30 and the cost is still ridiculous. At this point, we are not saving anything other than maxing our retirement, and our finances are tighter than I am comfortable with.
Can you delay buying and live very frugally for awhile to save for a bigger down payment? At your income, and with no kids, you should be able to save at least $30K in a year (that's nearly what we pay for childcare!). We lived in a one-bedroom with our first baby for a year, and it was fine. Also, I think you can find what you are looking for in Rockville/Gaithersburg for <$450K, especially if you are looking at townhomes. We bought in an area zoned for a great elementary but not one of the top high schools because we'll likely be moving before then (the school is still good enough that it won't be the end of the world if we don't move) which saved us some.
Anonymous
10/09/2013 10:27
Subject: Am I crazy for thinking that we could afford this?
Anonymous wrote:I am a lender in the Washington DC area and have helped many on DCUM. My advice is to try and keep your loan amount below $417K in order to qualify for the best interest rate and more lenient lending rules. Loan amounts between $417K and $625.5K are considered high balance, command slightly higher interest rates and slightly different lending rules. A loan of $417K would have an estimated payment of $2400 - $2500 / month (principal, interest, taxes, insurance). You may have additional monthly / quarterly HOA fees if you live in a managed development. If you would like more information, please contact me at roger.dennis@caliberhomeloans.com or at (202) 904-9573. Best of luck.
yup, i would be sure to try to keep it within the conforming loan limit. thanks for the advice
Anonymous
10/09/2013 10:22
Subject: Am I crazy for thinking that we could afford this?
I am a lender in the Washington DC area and have helped many on DCUM. My advice is to try and keep your loan amount below $417K in order to qualify for the best interest rate and more lenient lending rules. Loan amounts between $417K and $625.5K are considered high balance, command slightly higher interest rates and slightly different lending rules. A loan of $417K would have an estimated payment of $2400 - $2500 / month (principal, interest, taxes, insurance). You may have additional monthly / quarterly HOA fees if you live in a managed development. If you would like more information, please contact me at roger.dennis@caliberhomeloans.com or at (202) 904-9573. Best of luck.
Anonymous
10/09/2013 10:09
Subject: Am I crazy for thinking that we could afford this?
^^ PP here. Let me add that we have a similar income as you and have a $400K mortgage and pay for daycare and far more in school loans (which are a few years away from being paid off!). It's tight right now, but we're doing ok. I'd recommend getting a home warranty and focus on getting a home in good shape, even if you'd love to redecorate it. Think basics like good roof, HVAC, etc.
Anonymous
10/09/2013 10:04
Subject: Am I crazy for thinking that we could afford this?
Anonymous wrote:Some details...
160k combined income (we both work for the government, in 5 years we expect to have about a 190k combined income)
50k cash for a downpayment
we both have 5 year old cars that are paid off, will be able to drive them for a long time
only debt/loan is a 200 dollar student loan/month
we are planning on trying for kids next year or so... we have both sets of inlaws in the area so childcare won't really be an issue.
we're interested in the rockville/gaithersburg area... i work from home and my wife works in gaithersburg. it seems that for a decent townhome/house in a good school district, you have to pay a minimum of 450-500k for a house. I have seen houses that I like at this price range.
I know that dcurbanmom is generally conservative, but I feel that in our situation, it would be reasonable to have a 400-420k mortgage, considering our stable jobs and guaranteed salary increases (albeit small) in the next few years.
what do you guys think?
Do not bank on this. You have no idea if they will actually be able to commit to 45-50 hours a week of childcare, every week, and if your relationship can withstand that. Even if they each take a day a week, paying for three days a week of a nanny is expensive on an hourly basis. And one of you works from home? You're not going to want your child there while you try to do work. Budget $1300 a month for daycare. It might go down a little when your child hits 2-3 years of age, but don't get a mortgage thinking your daycare costs will be zero.
Anonymous
10/09/2013 10:01
Subject: Re:Am I crazy for thinking that we could afford this?
Good job OP. Sounds like you've thought it out.
Anonymous
10/09/2013 09:58
Subject: Am I crazy for thinking that we could afford this?
OP here... just wanted to address some of the earlier posts
- in terms of spending close to 500k for a home in gaithersburg, I don't see a problem. I work at home, my wife works in gaithersburg... we have no desire or need to be close to DC. all our close friends live in the area.
- in regards to childcare. i am not planning for childcare to be completely free... but considering the fact that we have two sets of inlaws that have agreed to watch the children, plus the fact that i work from home with an EXTREMELY flexible schedule... i think it is likely that we won't ever have to have our kids in a daycare (we would end up putting the kids in some sort of part time preschool at 3-4 to prepare them for kindergarten though). There could obviously be unforseen circumstances, but I am accounting for the LIKELY scenario, not the absolute worst case scenario.
-in terms of a fund, yes we have an emergency fund
-we currently rent a 1br for around 1400 a month.
- in terms of spending close to 500k for a home in gaithersburg, I don't see a problem. I work at home, my wife works in gaithersburg... we have no desire or need to be close to DC. all our close friends live in the area.
- in regards to childcare. i am not planning for childcare to be completely free... but considering the fact that we have two sets of inlaws that have agreed to watch the children, plus the fact that i work from home with an EXTREMELY flexible schedule... i think it is likely that we won't ever have to have our kids in a daycare (we would end up putting the kids in some sort of part time preschool at 3-4 to prepare them for kindergarten though). There could obviously be unforseen circumstances, but I am accounting for the LIKELY scenario, not the absolute worst case scenario.
-in terms of a fund, yes we have an emergency fund
-we currently rent a 1br for around 1400 a month.
Anonymous
10/09/2013 09:49
Subject: Am I crazy for thinking that we could afford this?
We purchased in June 2011 on a similar salary. Mortgage is $411k, but we put 25% down. Based on what you have said, and my own experience, I think you can afford it. BUT, do check on the free childcare you are expecting. My MIL has no interest in watching my kids (every) but did so for her older grandkids. Childcare for 2 can be $2000 to $2500/month. Our PITI is $2415, but you will likely have a higher interest rate.
I do not think you are crazy to anticipate the salary bump (we are feds also), but promotions are slowing, so don't make your decision counting on it.
I do not think you are crazy to anticipate the salary bump (we are feds also), but promotions are slowing, so don't make your decision counting on it.
Anonymous
10/09/2013 09:48
Subject: Re:Am I crazy for thinking that we could afford this?
Even if the grandparents promise double swear to watch your kids full time, circumstances change. I personally think it's too much to ask of grandparents but I understand it works for some. Even still you'll need to calculate the considerable expenses incurred with kids every day. You're likely fine on your plans but you seem naive about how much kids cost outside of childcare expenses.
Anonymous
10/09/2013 09:42
Subject: Re:Am I crazy for thinking that we could afford this?
Anonymous wrote:Please don't plan for full time care duties to be taken on by the grandparents. If it works out, it will be a pleasant surprise. But don't estimate zero for child care expenses.
+1
(Unless they've already said they would be happy to do it full time, and they live near where you're new house would be)
Anonymous
10/09/2013 09:41
Subject: Am I crazy for thinking that we could afford this?
DH and I are both 30. We have a HHI of 175k and bought in Arlington last year with 10% down and paid PMI at closing (lump sum rather than monthly payments) for a $600k house. Out PITI is $3k.
For what it's worth, we have 1 DC (born this past spring) in an in-home daycare and each contribute 10% to retirement and max out our Roth IRAs. Any bonuses that DH receives throughout the year fund DC's 529 and we also contribute $100/month to the 529.
It's tough, but we are doing just fine. Just not saving as much as we'd like to, but we have an emergency fund (6 months expenses).
For what it's worth, we have 1 DC (born this past spring) in an in-home daycare and each contribute 10% to retirement and max out our Roth IRAs. Any bonuses that DH receives throughout the year fund DC's 529 and we also contribute $100/month to the 529.
It's tough, but we are doing just fine. Just not saving as much as we'd like to, but we have an emergency fund (6 months expenses).
Anonymous
10/09/2013 09:39
Subject: Am I crazy for thinking that we could afford this?
I echo the others' comments and make sure your parents and in-laws would be willing to watch your kid(s) 5 days per week every day. My parents helped my siblings with childcare by watching the kids 1 day per week. That was all they could practically do.
You will likely need new cars in about 5 years. Or you will start doing a lot of fixes then. Plan for it.
We have a slightly lower income (about $140K) and bought a $535K house with over $100K down. Our mortgage is $2800 per month. We have no car loans or any other debt. We have 3 kids - no childcare - since our income is a sole income. We live a fairly no-frills lifestyle. Trip to the beach once per year, eat out once per week (places like Baja Fresh). We do maximize my husband's 401K and do the max for IRAs. We save a small amount for college.
I think you are going to be in a tighter situation, since you are both working, might need childcare, won't have time to shop for bargains, prepare meals froom home, etc. Your costs will likely be higher than ours.
Do you have other savings besides the $50K downpayment? Emergency fund?
You will likely need new cars in about 5 years. Or you will start doing a lot of fixes then. Plan for it.
We have a slightly lower income (about $140K) and bought a $535K house with over $100K down. Our mortgage is $2800 per month. We have no car loans or any other debt. We have 3 kids - no childcare - since our income is a sole income. We live a fairly no-frills lifestyle. Trip to the beach once per year, eat out once per week (places like Baja Fresh). We do maximize my husband's 401K and do the max for IRAs. We save a small amount for college.
I think you are going to be in a tighter situation, since you are both working, might need childcare, won't have time to shop for bargains, prepare meals froom home, etc. Your costs will likely be higher than ours.
Do you have other savings besides the $50K downpayment? Emergency fund?
Anonymous
10/09/2013 09:36
Subject: Am I crazy for thinking that we could afford this?
The monthly payment for a 400k mortgage (not house price, but mortgage) is high...especially when you add in taxes, hoa fees...not to mention maintenance of the home (which you haven't factored in). And if your parents bail on free child are, you are screwed.