Anonymous
06/16/2014 00:16
Subject: Re:Can't afford private - taking out $800k mortgage - anyone else?
Doctors - the could afford the tuition...Anonymous wrote:I think it really depends on your kids, which is of course impossible to plan for their future needs/quirks related to education.
My girlfriend's parents are both doctors outside of Hartford, CT. Most of their colleagues live in tony suburb neighborhoods, such as West Hartford. My girlfriend's parents still live in the same ranch house they bought 30 years ago after they married in a fairly stable middle class 'hood. To this day, other houses in the 'hood only sell for $350K max. They've been debt free for decades, despite making close to $400-500K per year.
By keeping their overhead low, it enabled her parents to pay for 4 years of elite prep school (TSAO) for her and her brother. It also allowed her parents to pay full freight for NESCAC tuitions for each kid for 4 years. My GF and her brother are both insanely brilliant and received personalized, world class educations. A few things that can be said about these schools is (1.) class sizes are smaller than the best public schools, (2.) the network you have is filled with the wealthiest and most powerful families in the country, and (3.) these private schools truly prepare to enter the "real" world post-college. My girlfriend always says that her prep school was MUCH harder than college and more akin to her current phd STEM program in terms of self-direction, long hours, the need to be efficient/organized, etc. College was a joke for her, despite going to an elite small liberal arts college.
In terms of financial return, you might be better off financing it through the expensive house and going public. But you'll be yoked to that huge mortgage for 30 years. However, if you go probate, your kid needs to go to the best-of-the-best. There's no half-assing it.
Anonymous
06/15/2014 22:46
Subject: Re:Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote:I think it really depends on your kids, which is of course impossible to plan for their future needs/quirks related to education.
My girlfriend's parents are both doctors outside of Hartford, CT. Most of their colleagues live in tony suburb neighborhoods, such as West Hartford. My girlfriend's parents still live in the same ranch house they bought 30 years ago after they married in a fairly stable middle class 'hood. To this day, other houses in the 'hood only sell for $350K max. They've been debt free for decades, despite making close to $400-500K per year.
By keeping their overhead low, it enabled her parents to pay for 4 years of elite prep school (TSAO) for her and her brother. It also allowed her parents to pay full freight for NESCAC tuitions for each kid for 4 years. My GF and her brother are both insanely brilliant and received personalized, world class educations. A few things that can be said about these schools is (1.) class sizes are smaller than the best public schools, (2.) the network you have is filled with the wealthiest and most powerful families in the country, and (3.) these private schools truly prepare to enter the "real" world post-college. My girlfriend always says that her prep school was MUCH harder than college and more akin to her current phd STEM program in terms of self-direction, long hours, the need to be efficient/organized, etc. College was a joke for her, despite going to an elite small liberal arts college.
In terms of financial return, you might be better off financing it through the expensive house and going public. But you'll be yoked to that huge mortgage for 30 years. However, if you go probate, your kid needs to go to the best-of-the-best. There's no half-assing it.
"Probate" = private. Damn autocorrect.
Anonymous
06/15/2014 22:43
Subject: Re:Can't afford private - taking out $800k mortgage - anyone else?
I think it really depends on your kids, which is of course impossible to plan for their future needs/quirks related to education.
My girlfriend's parents are both doctors outside of Hartford, CT. Most of their colleagues live in tony suburb neighborhoods, such as West Hartford. My girlfriend's parents still live in the same ranch house they bought 30 years ago after they married in a fairly stable middle class 'hood. To this day, other houses in the 'hood only sell for $350K max. They've been debt free for decades, despite making close to $400-500K per year.
By keeping their overhead low, it enabled her parents to pay for 4 years of elite prep school (TSAO) for her and her brother. It also allowed her parents to pay full freight for NESCAC tuitions for each kid for 4 years. My GF and her brother are both insanely brilliant and received personalized, world class educations. A few things that can be said about these schools is (1.) class sizes are smaller than the best public schools, (2.) the network you have is filled with the wealthiest and most powerful families in the country, and (3.) these private schools truly prepare to enter the "real" world post-college. My girlfriend always says that her prep school was MUCH harder than college and more akin to her current phd STEM program in terms of self-direction, long hours, the need to be efficient/organized, etc. College was a joke for her, despite going to an elite small liberal arts college.
In terms of financial return, you might be better off financing it through the expensive house and going public. But you'll be yoked to that huge mortgage for 30 years. However, if you go probate, your kid needs to go to the best-of-the-best. There's no half-assing it.
My girlfriend's parents are both doctors outside of Hartford, CT. Most of their colleagues live in tony suburb neighborhoods, such as West Hartford. My girlfriend's parents still live in the same ranch house they bought 30 years ago after they married in a fairly stable middle class 'hood. To this day, other houses in the 'hood only sell for $350K max. They've been debt free for decades, despite making close to $400-500K per year.
By keeping their overhead low, it enabled her parents to pay for 4 years of elite prep school (TSAO) for her and her brother. It also allowed her parents to pay full freight for NESCAC tuitions for each kid for 4 years. My GF and her brother are both insanely brilliant and received personalized, world class educations. A few things that can be said about these schools is (1.) class sizes are smaller than the best public schools, (2.) the network you have is filled with the wealthiest and most powerful families in the country, and (3.) these private schools truly prepare to enter the "real" world post-college. My girlfriend always says that her prep school was MUCH harder than college and more akin to her current phd STEM program in terms of self-direction, long hours, the need to be efficient/organized, etc. College was a joke for her, despite going to an elite small liberal arts college.
In terms of financial return, you might be better off financing it through the expensive house and going public. But you'll be yoked to that huge mortgage for 30 years. However, if you go probate, your kid needs to go to the best-of-the-best. There's no half-assing it.
Anonymous
06/15/2014 16:48
Subject: Re:Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote:If you took a map and drew around the borders of our HS, you will find that there are roughly 2000+ people who made the same decision.
More than that. There are 2000 kids just in our HS, plus many many more in the feeders schools. Lots of people have chosen to live here specifically for the schools (Whitman cluster). Of course I don't know what their mortgages are but anyone who has bought in the last decade probably has a decent size mortgage.
Anonymous
06/15/2014 16:09
Subject: Can't afford private - taking out $800k mortgage - anyone else?
We moved to a less expensive house and went with private school for our two kids. We contemplate moving, but realized that if we weren't happy with the "great" schools, we'd be stuck...but if the private we chose wasn't a good fit, we could switch.
Anonymous
06/10/2014 15:32
Subject: Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote:$800K is a pretty big mortgage on $270 HHI. Our HHI is $230 and our mortgage is $450K and I wouldn't want more than that. Of course, YMMV but I would run the numbers and make sure you are comfortable. You will want to save for college etc.
I think the point is that if you go for the bigger mortgage you may not be able to save as much for college, however you'll have more equity to borrow against when college rolls around.
Anonymous
06/10/2014 15:30
Subject: Re:Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote:Anonymous wrote:Anonymous wrote:I'm debating this with DH now....the homes in pyramids he's interested in need a lot of work and would cause us to be house poor. I'm not sure I can stomach it though and am leaning towards cheaper/nicer home and using private school
oxymoron?
Not the poster you are talking to, but it's not an oxymoron to buy a house in a worse neighborhood that is nicer and still cheaper than a more expensive (but not as nice) house in a good neighborhood.
Yep. I have a REALLY nice house in Silver Spring for much much less than it would cost in Bethesda.
Anonymous
06/10/2014 15:29
Subject: Can't afford private - taking out $800k mortgage - anyone else?
$800K is a pretty big mortgage on $270 HHI. Our HHI is $230 and our mortgage is $450K and I wouldn't want more than that. Of course, YMMV but I would run the numbers and make sure you are comfortable. You will want to save for college etc.
Anonymous
06/10/2014 15:22
Subject: Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote:We stayed in a cheap house (Zillow says it is worth $240k today) and send out 1 child to private. Would it be a better investment to move to a good school district? Maybe, but other trade offs come with it, like commute, costs of actually moving, loss of our neighborhood, and the strangling, panicky feeling I get when I think of having all my money in a house. For whatever reason, I'm more comfortable putting my money into tuition.
With one child, the expensive house and public schools isn't that much better than staying in a cheaper house and doing private school and if there are other compelling reasons, it makes sense. When you have 2-3 kids, the costs of private are so much versus the high house and public schools. Everyone has to do what they think works best for them. Obviously, the decisions isn't always 100% financial. However, financially, the public schools and high housing costs usually make more sense than private with 2 or more children, unless the schools are dioceses schools.
Anonymous
06/10/2014 15:12
Subject: Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:We bought in AU park - not a huge mortgage though, but our HHI is a lot lower. Anyways, we can't afford private.
I'm the PP that is currently trying to do this and we are hoping our offer is accepted shortly on an house we bid on in AU park. I really like the area and hope we can get a house. This is our 3rd offer.
Good luck - it took us 8 offers.
Only took us 5!
We didn't get it. Bummer. Fife red above asking and thei closing date of choice. Someone else offered more $$. Back to the drawing board.
Sorry to hear that. Keep trying! In the end we had to waive all contingencies and paid 81k over asking via an escalation clause.
5 offer poster here. We had to waive everything and escalated more than $100K. Good times.
That is really frightening. I am just not comfortable waiving financing and home inspection. We're already stretching ourselves, if we got a house and then found it had an awful deceft we'd be SOL. Going to go see another one tonight.
I don't think you could buy a house in AU Park right now with any contingencies. Other areas, yes.
Anonymous
06/10/2014 14:51
Subject: Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:We bought in AU park - not a huge mortgage though, but our HHI is a lot lower. Anyways, we can't afford private.
I'm the PP that is currently trying to do this and we are hoping our offer is accepted shortly on an house we bid on in AU park. I really like the area and hope we can get a house. This is our 3rd offer.
Good luck - it took us 8 offers.
Only took us 5!
We didn't get it. Bummer. Fife red above asking and thei closing date of choice. Someone else offered more $$. Back to the drawing board.
Sorry to hear that. Keep trying! In the end we had to waive all contingencies and paid 81k over asking via an escalation clause.
5 offer poster here. We had to waive everything and escalated more than $100K. Good times.
That is really frightening. I am just not comfortable waiving financing and home inspection. We're already stretching ourselves, if we got a house and then found it had an awful deceft we'd be SOL. Going to go see another one tonight.
Anonymous
06/10/2014 14:25
Subject: Can't afford private - taking out $800k mortgage - anyone else?
We stayed in a cheap house (Zillow says it is worth $240k today) and send out 1 child to private. Would it be a better investment to move to a good school district? Maybe, but other trade offs come with it, like commute, costs of actually moving, loss of our neighborhood, and the strangling, panicky feeling I get when I think of having all my money in a house. For whatever reason, I'm more comfortable putting my money into tuition.
Anonymous
06/10/2014 14:17
Subject: Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:We bought in AU park - not a huge mortgage though, but our HHI is a lot lower. Anyways, we can't afford private.
I'm the PP that is currently trying to do this and we are hoping our offer is accepted shortly on an house we bid on in AU park. I really like the area and hope we can get a house. This is our 3rd offer.
Good luck - it took us 8 offers.
Only took us 5!
We didn't get it. Bummer. Fife red above asking and thei closing date of choice. Someone else offered more $$. Back to the drawing board.
Sorry to hear that. Keep trying! In the end we had to waive all contingencies and paid 81k over asking via an escalation clause.
5 offer poster here. We had to waive everything and escalated more than $100K. Good times.
Anonymous
06/10/2014 14:16
Subject: Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:We bought in AU park - not a huge mortgage though, but our HHI is a lot lower. Anyways, we can't afford private.
I'm the PP that is currently trying to do this and we are hoping our offer is accepted shortly on an house we bid on in AU park. I really like the area and hope we can get a house. This is our 3rd offer.
Good luck - it took us 8 offers.
Only took us 5!
We didn't get it. Bummer. Fife red above asking and thei closing date of choice. Someone else offered more $$. Back to the drawing board.
Sorry to hear that. Keep trying! In the end we had to waive all contingencies and paid 81k over asking via an escalation clause.
Anonymous
06/10/2014 14:03
Subject: Re:Can't afford private - taking out $800k mortgage - anyone else?
Anonymous wrote: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.
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.