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Anonymous wrote:We're hoping to stay WOTP where there is not nearly as much room for appreciation as gentrifying neighborhoods.

With your relatively low income for your debt and desired place to live I'd just accept renting forever.

?? They owe $90K on $270K income. They could literally pay it off this year and live on income that is still more than twice the average HHI in DC.

OP, I wouldn't worry about the debt given that it's at a low interest rate, but I would aggressively save for a downpayment. When you can do 20%, see what that gets you.

Lol! They are saving 2400/mo. Where is the rest going to come from? The money tree?

The same place it comes from for everyone else who saves up for a downpayment. The idea that you should be able to save for a downpayment in a couple of months is kind of insane unless you are extremely wealthy. If OP wants a $1M house, she needs $200K saved. At current rate of savings, that's 6.5 years (assuming they have nothing saved yet). Many people save for far longer than that to afford a downpayment. If OP wants to buy before then, she can either escalate the saving (which she should be able to do on $270K even with daycare, though it may mean cutting back on other things they enjoy) or look at less expensive homes. That's how this works. She could also do 10% down, but you typically pay for that in the interest rate, so it's not necessarily a win.

Especially if the bump in HHI is recent, take everything over what you previously earned and put it in the downpayment fund, rather than using it for upping quality of life. You won't miss it the way that you would if you'd gotten used to including it in your spending and had to cut back.

You stated they could pay a 90k loan down in a year. Keep on topic.

On $270K, of course you could, if that were your priority. Even if you assume 40% going to taxes, that's $13,500 a month. Set aside $7,500/month to pay off that debt and that leaves you $5,500--more or less the median household income in DC, after taxes, so clearly it is possible if someone told you you *had* to pay the debt off within the year, even if it would mean not living in your neighborhood or apartment size of choice or using your daycare of choice or eating out or what-have-you. People certainly do make it work at that income by making different choices with their finances.

Does that mean OP *should* do this? No, of course not--presumably they are saving less than that because they have prioritized other things in their budget (like retirement and college savings, neighborhood, preschool, etc.) The point is just that debt is not inherently evil and $90K is a very reasonable amount of student loan debt to have on an income of $270K, and certainly not a level of debt that would preclude buying a home. (Now, $90K in high-interest credit card debt because of problems managing spending--that would be another story.)

Not with daycare and rent. Not with 2 people contributing max to 401k, FSA and health. Not with another baby in the way.

Sure, but life ebbs and flows. We decreased our 401k when we had two in daycare. When we had one in daycare, we upped it a bit. When our second got out of daycare, we upped it again. Unless you make a TON of money, you can't do everything all the time, but you can choose different priorities. Owning a home could pay off a lot in the long run so it might be worth decreasing other savings in the short term.

Not that I would encourage you to be house poor but we only put down 15% and it wasn't that big of a deal. People act like it's the worst thing in the world, but we stretched our budget a bit to get a bigger house, and here's how it went down:

For 2 years we had to pay a $220 monthly PMI. After two years, mostly due to house appreciation but in part to paying down our principle a bit, we were able to demonstrate that we had more than 20% equity in our house and get the PMI removed. All told it cost us 220x24 months = $5280.

Obviously avoiding that payment would have been better but it would have taken us literally years to save up the last 5% of our down payment. Instead, we got into our house and watched prices go up around us a lot more than $5k over two years, I guarantee that. Plus we got a great mortgage rate (late 2012) but that was luck.

Alternatively, maybe we should have gotten a smaller house. But our family has grown from 2 to 4 in that time, and we feel zero pressure to move, which wouldn't have been the case otherwise. We'll stay in this house at least 3 years longer than we could have a smaller house. I'm confident those three years with our (now relatively) low mortgage and interest are worth more than the $5k we paid in PMI.

Obviously a lot of this is specific to our situation but I wanted to mention it because people act like putting down less than 20% is on par with, like, payday loans or something in terms of financial irresponsibility. But I'm really confident that it was a great option for us that will yield us 10s of thousands of dollars in the long run.

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Anonymous wrote:We're hoping to stay WOTP where there is not nearly as much room for appreciation as gentrifying neighborhoods.

With your relatively low income for your debt and desired place to live I'd just accept renting forever.

?? They owe $90K on $270K income. They could literally pay it off this year and live on income that is still more than twice the average HHI in DC.

OP, I wouldn't worry about the debt given that it's at a low interest rate, but I would aggressively save for a downpayment. When you can do 20%, see what that gets you.

Lol! They are saving 2400/mo. Where is the rest going to come from? The money tree?

The same place it comes from for everyone else who saves up for a downpayment. The idea that you should be able to save for a downpayment in a couple of months is kind of insane unless you are extremely wealthy. If OP wants a $1M house, she needs $200K saved. At current rate of savings, that's 6.5 years (assuming they have nothing saved yet). Many people save for far longer than that to afford a downpayment. If OP wants to buy before then, she can either escalate the saving (which she should be able to do on $270K even with daycare, though it may mean cutting back on other things they enjoy) or look at less expensive homes. That's how this works. She could also do 10% down, but you typically pay for that in the interest rate, so it's not necessarily a win.

Especially if the bump in HHI is recent, take everything over what you previously earned and put it in the downpayment fund, rather than using it for upping quality of life. You won't miss it the way that you would if you'd gotten used to including it in your spending and had to cut back.

You stated they could pay a 90k loan down in a year. Keep on topic.

On $270K, of course you could, if that were your priority. Even if you assume 40% going to taxes, that's $13,500 a month. Set aside $7,500/month to pay off that debt and that leaves you $5,500--more or less the median household income in DC, after taxes, so clearly it is possible if someone told you you *had* to pay the debt off within the year, even if it would mean not living in your neighborhood or apartment size of choice or using your daycare of choice or eating out or what-have-you. People certainly do make it work at that income by making different choices with their finances.

Does that mean OP *should* do this? No, of course not--presumably they are saving less than that because they have prioritized other things in their budget (like retirement and college savings, neighborhood, preschool, etc.) The point is just that debt is not inherently evil and $90K is a very reasonable amount of student loan debt to have on an income of $270K, and certainly not a level of debt that would preclude buying a home. (Now, $90K in high-interest credit card debt because of problems managing spending--that would be another story.)

Not with daycare and rent. Not with 2 people contributing max to 401k, FSA and health. Not with another baby in the way.

If you were under pressure to pay down a $90K loan within a one-year window, you wouldn't be making any retirement contributions, let alone maxing them. You wouldn't pay $2K a month for daycare or $3K a month for rent--there are many cheaper options for both. You would make different choices on all of that to free up the necessary money. (Again, not saying OP should do any of this--of course not! But the idea that you can't possibly figure out how to cover basic needs in DC on $5500 a month if you had to is insane. People do it every day.)

To that end, one way that OP can ramp up the downpayment savings would be to temporarily reduce retirement contributions. (A 401(k) loan for the downpayment could also boost it a bit.) They should also go through their budget to identify some of the smaller expenses like meals out and work to reduce those and capture all of those savings for the house, too. If you each get a latte three times a week and can cut that out to make coffee at home, there's $1K right there. The small things add up over the course of a year. Make a plan for when you ideally hope to buy and then backwards map from there to figure out what you need to shift to get to the downpayment.

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Anonymous wrote:I'd really wonder what specific neighborhoods you're looking at in DC.

Really anywhere that feeds Deal or Hardy and Wilson.

What houses now are 800k that feed into those schools that a family of 4 could comfortably live in?

There aren't a ton but they pop up. Mostly duplexes or small row houses that haven't been updated. They aren't exactly HGTV ready but they are perfectly nice houses that plenty of families would be happy in.

Show me one.

I see plenty of 3 bedrooms sold over last year for under $800k

https://www.redfin.com/DC/Washington/4818-41st-St-NW-20016/home/9961102?utm_source=ios_share&utm_medium=share&utm_campaign=copy_link&utm_nooverride=1&utm_content=link

Here's another. https://www.redfin.com/DC/Washington/3728-Albemarle-St-NW-20016/home/9972252

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'd really wonder what specific neighborhoods you're looking at in DC.

Really anywhere that feeds Deal or Hardy and Wilson.

What houses now are 800k that feed into those schools that a family of 4 could comfortably live in?

There aren't a ton but they pop up. Mostly duplexes or small row houses that haven't been updated. They aren't exactly HGTV ready but they are perfectly nice houses that plenty of families would be happy in.

Show me one.

I see plenty of 3 bedrooms sold over last year for under $800k

https://www.redfin.com/DC/Washington/4818-41st-St-NW-20016/home/9961102?utm_source=ios_share&utm_medium=share&utm_campaign=copy_link&utm_nooverride=1&utm_content=link

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We're hoping to stay WOTP where there is not nearly as much room for appreciation as gentrifying neighborhoods.

With your relatively low income for your debt and desired place to live I'd just accept renting forever.

?? They owe $90K on $270K income. They could literally pay it off this year and live on income that is still more than twice the average HHI in DC.

OP, I wouldn't worry about the debt given that it's at a low interest rate, but I would aggressively save for a downpayment. When you can do 20%, see what that gets you.

Lol! They are saving 2400/mo. Where is the rest going to come from? The money tree?

The same place it comes from for everyone else who saves up for a downpayment. The idea that you should be able to save for a downpayment in a couple of months is kind of insane unless you are extremely wealthy. If OP wants a $1M house, she needs $200K saved. At current rate of savings, that's 6.5 years (assuming they have nothing saved yet). Many people save for far longer than that to afford a downpayment. If OP wants to buy before then, she can either escalate the saving (which she should be able to do on $270K even with daycare, though it may mean cutting back on other things they enjoy) or look at less expensive homes. That's how this works. She could also do 10% down, but you typically pay for that in the interest rate, so it's not necessarily a win.

Especially if the bump in HHI is recent, take everything over what you previously earned and put it in the downpayment fund, rather than using it for upping quality of life. You won't miss it the way that you would if you'd gotten used to including it in your spending and had to cut back.

You stated they could pay a 90k loan down in a year. Keep on topic.

On $270K, of course you could, if that were your priority. Even if you assume 40% going to taxes, that's $13,500 a month. Set aside $7,500/month to pay off that debt and that leaves you $5,500--more or less the median household income in DC, after taxes, so clearly it is possible if someone told you you *had* to pay the debt off within the year, even if it would mean not living in your neighborhood or apartment size of choice or using your daycare of choice or eating out or what-have-you. People certainly do make it work at that income by making different choices with their finances.

Does that mean OP *should* do this? No, of course not--presumably they are saving less than that because they have prioritized other things in their budget (like retirement and college savings, neighborhood, preschool, etc.) The point is just that debt is not inherently evil and $90K is a very reasonable amount of student loan debt to have on an income of $270K, and certainly not a level of debt that would preclude buying a home. (Now, $90K in high-interest credit card debt because of problems managing spending--that would be another story.)

Not with daycare and rent. Not with 2 people contributing max to 401k, FSA and health. Not with another baby in the way.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'd really wonder what specific neighborhoods you're looking at in DC.

Really anywhere that feeds Deal or Hardy and Wilson.

What houses now are 800k that feed into those schools that a family of 4 could comfortably live in?

There aren't a ton but they pop up. Mostly duplexes or small row houses that haven't been updated. They aren't exactly HGTV ready but they are perfectly nice houses that plenty of families would be happy in.

Show me one.

Anonymous wrote:This is what I would do. I would pay off the 90k debt. Simultaneously not fund 529 right now. Then add to your current savings and buy a house in the burns for 600k, near a metro. My door to door commute from DC to a VA suburb is only 35 mins in am and 45 mins in pm. If that’s too much then oh well.

What metro, and what part of DC?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'd really wonder what specific neighborhoods you're looking at in DC.

Really anywhere that feeds Deal or Hardy and Wilson.

What houses now are 800k that feed into those schools that a family of 4 could comfortably live in?

There aren't a ton but they pop up. Mostly duplexes or small row houses that haven't been updated. They aren't exactly HGTV ready but they are perfectly nice houses that plenty of families would be happy in.

Meant burbs. How old are you guys and what’s your NW, retirement and outside retirement? If House was important, I would reduce retirement by a tad bit just till downpayment of 20% available.

This is what I would do. I would pay off the 90k debt. Simultaneously not fund 529 right now. Then add to your current savings and buy a house in the burns for 600k, near a metro. My door to door commute from DC to a VA suburb is only 35 mins in am and 45 mins in pm. If that’s too much then oh well.

Anonymous wrote:

Anonymous wrote:I'd really wonder what specific neighborhoods you're looking at in DC.

Really anywhere that feeds Deal or Hardy and Wilson.

What houses now are 800k that feed into those schools that a family of 4 could comfortably live in?

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Anonymous wrote:

Anonymous wrote:OP I would buy now with these rates. I would assume your 800-900K starter home is in DC.. adjust where your looking 500K still gets a decent home in the burbs.... 3.5% down payment first time buyer too. Waiting to plow away 170K could take years meanwhile rates are low and you could already own. Ok PMI may cost you 3K per year but as it stands now you'd more than make that up with tax deducted interest where you have no tax ded now ( PMI is not tax deductible but the interest is)

OP here - I get all of that but at this stage in our life, with a one year old and hopefully another one soon, we are not willing to give up our short commutes.

Another kid, commute, or get a higher paying job. Pick your poison.