Anonymous
08/25/2020 10:58
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:Anonymous wrote:No eating out. No vacations. No activities for your kids. No splurges. No new clothes. No going to the movies. No replacing things that get broken that aren't necessities. No upgrading phones. No streaming services.
This is how I grew up. Nice house. Nothing else. It also means extreme stress in every recession or downturn. Even as a kid, I constantly worried that we'd end up homeless because there was no padding. It was our really nice house or, if my dad lost his job, our car.
As a a kid, why were you burdened with the knowledge of your parents' finances? My kids are completely unaware of our financial situation.
How old are they? If more than 10, I'll bet they aren't.
Anonymous
08/25/2020 10:57
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:We are House limited. The stretch in our budget for housing means we have to pick and choose the extras. We can do a vacation, but that might mean we wait on doing the interior painting we want to do on the house. Big, unplanned expenses- like appliances breaking down, or whatever- mean that our vacation budget might be tighter.
It has required us to be diligent in our budgeting, plan ahead for most expenses, delay certain fixes/home preferences, etc.
Totally manageable, and worth it to us.
This. House limited is a great description. Don't get to the point of house poor. We are moving up a bracket house-wise. To a price that as a kid growing up solidly middle class I'd never imagine would be attached to something that isn't branded a "mansion". We will need to budget for really the first time since law school. We will be reducing some expenses. Less fancy vacations. Delaying some furnishings for a year or so. But, we view it as worth it. We're now, I suppose, house middle class.
Anonymous
08/25/2020 09:55
Subject: Re:What is it like to be “house poor”?
Nah. My parents had an idea in their head of success and wanted a house that matched that view of themselves. They thought their income would increase more than it did. They thought they could make it work, but they missed things in their budget. Then there were a few unexpected expenses, a drop in housing prices, a job loss, and unplanned kid, etc.Anonymous wrote:Anonymous wrote:Anonymous wrote:No eating out. No vacations. No activities for your kids. No splurges. No new clothes. No going to the movies. No replacing things that get broken that aren't necessities. No upgrading phones. No streaming services.
This is how I grew up. Nice house. Nothing else. It also means extreme stress in every recession or downturn. Even as a kid, I constantly worried that we'd end up homeless because there was no padding. It was our really nice house or, if my dad lost his job, our car.
Sounds terrible. Why did your family decide to buy a house they couldn’t afford?
Probably rich public schools.
Even now they're paying for that decision in retirement. They have smaller retirement accounts because they didnt contribute as much to afford that mortgage. Now they can't afford to live near their grandkids, who live in a HCOL area. They had to sell their nice house and now live in an okay house in a very poor area. They have to worry a lot about crime--last week someone stole the gas out of their car's gas tank while it was parked in their driveway. It's a classic story of living beyond your means.
Anonymous
08/25/2020 09:48
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:Anonymous wrote:Simple answer
NO EXTRAS. ZERO. HARD BUDGET.
Figure in higher home insurance, property tax, utilities, those sneak in quick with no notice.
Would I do it ? No.
This thread all seems very subjective. Interesting topic we've been thinking about... Wouldn't it be more helpful to consider it in terms of percentage of after-tax income, or something like that, for some perspective?
We currently live in a house that's worth about $1.1M and do private for two kids... The place is perfectly fine, but for our forever home we have a number of "wants" (one is good public schools) and it would be about $2.3-$2.5. Our current mortgage is about 20% of monthly net income of $21k; the more expensive place would be ~40% (w/current interest rates)... only other monthly expenses are 529s. We have a sizable TSP and IRA but otherwise stopped saving for retirement due to a generous defined benefit retirement plan. Risky? Thoughts? We are very thankful for this first world problem FWIW.
We have pretty much the same take home (plus very stable jobs with generous pensions) and live in a 1.4mil house with a 1mil mortgage (5200 PITI). We paid for the location mostly, but I am wondering every day whether it was a smart move. The mortgage is one thing, but you also need to remember that every single thing in a more expensive house will cost you more. Contractors will assume you are loaded and mark up accordingly, updating a 48 inch Wolf range will cost you way more than the generic 30 inch range you could have put into a cheaper house, you will need more furniture and probably higher end furniture, your taxes will be more expensive, etc.. Are you truly financially ready for this? What will you do if one of you loses their job, gets sick or dies? Think through all of this before buying the house. The bank will most likely approve you, but that does not mean it is a smart thing to do.
Anonymous
08/25/2020 09:39
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:Anonymous wrote:No eating out. No vacations. No activities for your kids. No splurges. No new clothes. No going to the movies. No replacing things that get broken that aren't necessities. No upgrading phones. No streaming services.
This is how I grew up. Nice house. Nothing else. It also means extreme stress in every recession or downturn. Even as a kid, I constantly worried that we'd end up homeless because there was no padding. It was our really nice house or, if my dad lost his job, our car.
Sounds terrible. Why did your family decide to buy a house they couldn’t afford?
Probably rich public schools.
Anonymous
08/25/2020 09:37
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:No eating out. No vacations. No activities for your kids. No splurges. No new clothes. No going to the movies. No replacing things that get broken that aren't necessities. No upgrading phones. No streaming services.
This is how I grew up. Nice house. Nothing else. It also means extreme stress in every recession or downturn. Even as a kid, I constantly worried that we'd end up homeless because there was no padding. It was our really nice house or, if my dad lost his job, our car.
Sounds terrible. Why did your family decide to buy a house they couldn’t afford?
Anonymous
08/25/2020 09:33
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Simple answer
NO EXTRAS. ZERO. HARD BUDGET.
Figure in higher home insurance, property tax, utilities, those sneak in quick with no notice.
Would I do it ? No.
This thread all seems very subjective. Interesting topic we've been thinking about... Wouldn't it be more helpful to consider it in terms of percentage of after-tax income, or something like that, for some perspective?
We currently live in a house that's worth about $1.1M and do private for two kids... The place is perfectly fine, but for our forever home we have a number of "wants" (one is good public schools) and it would be about $2.3-$2.5. Our current mortgage is about 20% of monthly net income of $21k; the more expensive place would be ~40% (w/current interest rates)... only other monthly expenses are 529s. We have a sizable TSP and IRA but otherwise stopped saving for retirement due to a generous defined benefit retirement plan. Risky? Thoughts? We are very thankful for this first world problem FWIW.
Crazy. We have a household income of $280k and live in a 500k house. We really like our house and every time we want to make updates it’s cost effective. Our mortgage is $1500/month. You have a first world problem indeed.
Likelihood of $380 HHI getting a 75% LTV jumbo mortgage on a $2.5MM house without very substantial cash reserve is very, very low.
What about 80% on a 2.0M? Same HHI. I was told cash reserves need to be 12 months of mortgage payments (1/2 in cash or stock, other 1/2 can be retirement, but only at 70% value).
I was approved for a Jumbo at 20% down, for a mortgage payment of up to $9.5k a month--this was based on my single salary of $310. That being said, we have a HHI higher than yours right now (two kids, public school) and set $1.2M as the top of our budget. I frankly have no idea how you would swing the monthly payments on an 80% $2M loan.
Anonymous
08/25/2020 00:31
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:Simple answer
NO EXTRAS. ZERO. HARD BUDGET.
Figure in higher home insurance, property tax, utilities, those sneak in quick with no notice.
Would I do it ? No.
Ugh property taxes are the worst and they always go upppp
Anonymous
08/24/2020 23:49
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:I'd buy a second home (actually 3rd for us) over being house poor.
Always thought I'd want a second (vacation) home, but now that it's something we could swing, it seems like more trouble than its worth.
Anonymous
08/24/2020 23:12
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Simple answer
NO EXTRAS. ZERO. HARD BUDGET.
Figure in higher home insurance, property tax, utilities, those sneak in quick with no notice.
Would I do it ? No.
This thread all seems very subjective. Interesting topic we've been thinking about... Wouldn't it be more helpful to consider it in terms of percentage of after-tax income, or something like that, for some perspective?
We currently live in a house that's worth about $1.1M and do private for two kids... The place is perfectly fine, but for our forever home we have a number of "wants" (one is good public schools) and it would be about $2.3-$2.5. Our current mortgage is about 20% of monthly net income of $21k; the more expensive place would be ~40% (w/current interest rates)... only other monthly expenses are 529s. We have a sizable TSP and IRA but otherwise stopped saving for retirement due to a generous defined benefit retirement plan. Risky? Thoughts? We are very thankful for this first world problem FWIW.
Likelihood of $380 HHI getting a 75% LTV jumbo mortgage on a $2.5MM house without very substantial cash reserve is very, very low.
What about 80% on a 2.0M? Same HHI. I was told cash reserves need to be 12 months of mortgage payments (1/2 in cash or stock, other 1/2 can be retirement, but only at 70% value).
I was approved for a Jumbo at 20% down, for a mortgage payment of up to $9.5k a month--this was based on my single salary of $310. That being said, we have a HHI higher than yours right now (two kids, public school) and set $1.2M as the top of our budget. I frankly have no idea how you would swing the monthly payments on an 80% $2M loan.
What kind of rate did you get? We were quoted under $8k P+I on a $2.05 with 20% down (so total loan around $1.6).
Anonymous
08/24/2020 22:21
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Simple answer
NO EXTRAS. ZERO. HARD BUDGET.
Figure in higher home insurance, property tax, utilities, those sneak in quick with no notice.
Would I do it ? No.
This thread all seems very subjective. Interesting topic we've been thinking about... Wouldn't it be more helpful to consider it in terms of percentage of after-tax income, or something like that, for some perspective?
We currently live in a house that's worth about $1.1M and do private for two kids... The place is perfectly fine, but for our forever home we have a number of "wants" (one is good public schools) and it would be about $2.3-$2.5. Our current mortgage is about 20% of monthly net income of $21k; the more expensive place would be ~40% (w/current interest rates)... only other monthly expenses are 529s. We have a sizable TSP and IRA but otherwise stopped saving for retirement due to a generous defined benefit retirement plan. Risky? Thoughts? We are very thankful for this first world problem FWIW.
Likelihood of $380 HHI getting a 75% LTV jumbo mortgage on a $2.5MM house without very substantial cash reserve is very, very low.
What about 80% on a 2.0M? Same HHI. I was told cash reserves need to be 12 months of mortgage payments (1/2 in cash or stock, other 1/2 can be retirement, but only at 70% value).
I was approved for a Jumbo at 20% down, for a mortgage payment of up to $9.5k a month--this was based on my single salary of $310. That being said, we have a HHI higher than yours right now (two kids, public school) and set $1.2M as the top of our budget. I frankly have no idea how you would swing the monthly payments on an 80% $2M loan.
Anonymous
08/24/2020 21:45
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Simple answer
NO EXTRAS. ZERO. HARD BUDGET.
Figure in higher home insurance, property tax, utilities, those sneak in quick with no notice.
Would I do it ? No.
This thread all seems very subjective. Interesting topic we've been thinking about... Wouldn't it be more helpful to consider it in terms of percentage of after-tax income, or something like that, for some perspective?
We currently live in a house that's worth about $1.1M and do private for two kids... The place is perfectly fine, but for our forever home we have a number of "wants" (one is good public schools) and it would be about $2.3-$2.5. Our current mortgage is about 20% of monthly net income of $21k; the more expensive place would be ~40% (w/current interest rates)... only other monthly expenses are 529s. We have a sizable TSP and IRA but otherwise stopped saving for retirement due to a generous defined benefit retirement plan. Risky? Thoughts? We are very thankful for this first world problem FWIW.
Likelihood of $380 HHI getting a 75% LTV jumbo mortgage on a $2.5MM house without very substantial cash reserve is very, very low.
What about 80% on a 2.0M? Same HHI. I was told cash reserves need to be 12 months of mortgage payments (1/2 in cash or stock, other 1/2 can be retirement, but only at 70% value).
Anonymous
08/24/2020 21:35
Subject: Re:What is it like to be “house poor”?
2.5 million? That's just obscene. No one needs that.
Anonymous
08/24/2020 21:27
Subject: Re:What is it like to be “house poor”?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:This thread perfectly illustrates why people are choosing to leave HCOL cities like DC and NYC. Why be house poor and stretch your budget just to make sure your child goes to a good school or you have access to good restaurants or things to do? Reading this thread has really reaffirmed my desire to leave this area and WFH permanently. Thankfully I am in an in demand field and no matter the state of the economy finding a remote job in the event I ever get laid off or fired will be very easy. And like a previous poster said 2020 and the next few years is not the time to be burdening yourself with high house payments or any other liability really. The economic fallout of this crisis has yet to be fully felt and you never know what will happen in the coming months to years.
Great to be optimistic about your skills. However there is one variable that is very difficult to control - HEALTH!
Please elaborate. You don’t have to be in a major city to get covid treatment, if that’s what you’re implying.
What I am saying is that major health events such as cancer do happen and are costly both socially and economically. I am speaking from experience. My wife went through a major health even and despite excellent heath insurance we faced 100k in medical bills over several years. I had to leave my job and when I came back I simply wasn’t the most attractive candidate. But this is life. We should always be optimistic about the future, but we need to be careful as well.
I am the PP and moving away from DC and the high HCOL is another way to make sure in event of a catastrophe I will have saved more money and be able to make less in the event I or my partner need to cut down on hours. Living in DC does not mean your healthcare is better or if you get very sick you will weather the storm better. In fact you will go broke faster and your buffer will be thinner. So yes leaving DC makes economic sense in almost every way for me and my partner.
Anonymous
08/24/2020 21:18
Subject: Re:What is it like to be “house poor”?
And stopping contributing to retirement accounts to buy a 2 million dollar house is dumb