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  • Home advice requested

    Good Morning,
    My wife and I are looking at buying a long term (15 plus years) home to raise our young family. We have found a home in a neighborhood (greater CLT area) we have long coveted. I have run the numbers and they work but I am looking for someone who has no emotional attachment to the decision to take a second look for me (full disclosure we really want this house). The home we have found is close to family, which will be able to assist some with the children since my wife and I work full time. The school district is very good which should eliminate the need to save for private schools.

    Here is our situation:
    We are both 33 years old
    No debt
    Gross family income: 285,000 no bonuses included
    Retirement savings: just north of 500k
    One child, plan is to have one more within the next year or so
    Current 529 plan has 15k in it (son is two years old)
    Wife and I should both be looking at significant raises over the next few years
    Credit score 800
    Emergency fund of 5 months


    Potential home:
    Purchase price is 941k
    Down payment will be 250k (profit from recent sell of our home)
    Mortgage would be 691k at 3.0%
    Monthly payment (property tax and HOA included) $3,606
    We net roughly $13,000 per month
    13,000-3,606 = 9,394

    This house would not affect our savings rate of 25%. Am I missing anything here?
    Thanks for any insight.

  • #2
    What does your overall spending look like? You want to avoid being house poor. How likely are bonuses and raises? Will the spouse continue to work full time after 2 kids? These are the questions to ask yourself.

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    • #3
      If the house won’t affect your savings rate of >20% gross income, you can afford it. Don’t buy the matching boat though

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      • #4
        It's a small stretch but you can prioritize housing over other spending and still save 25% so you'll be fine. With the info about being close to family I say go for it.

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        • #5
          It all depends on other luxuries. You can have anything you want just not everything. If this house is the major thing you want and you are willing to sacrifice other areas so be it. But a lot of people buy a lot of house and everything else as well. Do not let that be you!

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          • #6
            how much of your income comes from your wife and are you 100% sure you are both going to keep working FT after second kid?

            what does family help mean? full time child care could be $3k/mo or more leaving you w/ pretty large fixed expenses. i would get this nailed down and plan for the worst. are they actually going to provide childcare and defer expenses or is this house going to make it easier to have sunday lunch?

            for me it's a lot of uncertainty with a 2.4X house purchase.

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            • #7
              You're doing great. Hot market, send that offer in ASAP--and don't forget to feel good about it.

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              • #8
                As long as you're saving 20% or more you can afford just about anything else within reason. The house is within reason, but the problem that comes with a $950k house is $950k house furnishing and maintenance. Just be careful with the potential increase in spending in other areas of life.

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                • #9
                  Originally posted by Nysoz View Post
                  As long as you're saving 20% or more you can afford just about anything else within reason. The house is within reason, but the problem that comes with a $950k house is $950k house furnishing and maintenance. Just be careful with the potential increase in spending in other areas of life.
                  Completely agree.

                  What kind of house is this? Is it a 3bed 2 back 200Sq foot on 1/4 acre but expensive because of location?

                  Or is it a 5 bed 4 bath 4500sq foot home on an acre or more? Much more expensive to upkeep!

                  Also taxes, insurance, etc.

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                  • #10
                    Not what you asked and you may have mentioned it and I missed it but:

                    How stable are your jobs? New job or have you been there for a while?

                    How long have you been at current jobs?

                    How happy are you guys with current work situation?

                    That is an expensive house but if you can still save 20-25% (and you are committed to doing it) then pull the trigger, but ONLY if the jobs are stable.

                    Good luck.

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                    • #11
                      The numbers look ok to me. I assume that it is a 30 year mortgage though? I personally would aim for a 15 year mortgage. I know you come out ahead of the time most of the time by investing the difference, but I think that you would have a lot more flexibility in your life and career if you had a paid for home in your late 40's vs carrying a mortgage into your early 60's. I don't know what area you are looking at, but I have read that a lot of areas maybe overpriced these days due to mismatch of supply and demand. I don't know what the housing market will be like next year so I wouldn't try to time the housing market, but I just wouldn't count on home prices to continue to rise. I think home prices in my area are up some 10% from last year.

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                      • #12
                        Originally posted by MPMD View Post
                        how much of your income comes from your wife and are you 100% sure you are both going to keep working FT after second kid?

                        what does family help mean? full time child care could be $3k/mo or more leaving you w/ pretty large fixed expenses. i would get this nailed down and plan for the worst. are they actually going to provide childcare and defer expenses or is this house going to make it easier to have sunday lunch?

                        for me it's a lot of uncertainty with a 2.4X house purchase.
                        Genuine question- per WCI standards, should the house number be <2x income or the mortgage be <2x income?

                        Comment


                        • #13
                          I may have a contrarian view on this matter. As we all say....life is short. Fortunately, you and your wife have some pretty exciting choices. If you are willing to buy at what could be the top of the market (who knows) and remain satisfied in your purchase, go for it. My family only got more expensive as the kids aged. We never ever expected to send kids to private school and then we did (best decision and more than worth the cost). Future home and lifestyle projections are just that .... projections. For me, houses are pretty much sticks and glass. My wife and I focus on life experiences outside of possessions. Maybe for some ~ a particular house may be integrated into their life experience equation. In the end, you will have plenty of money to live a great life.

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                          • #14
                            It was my experience, when I did a significant upgrade in my house and neighborhood, that everything costs far more than I ever thought it would. I love my house and am very happy with my choice but just keep that in mind,

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                            • #15
                              Originally posted by ObgynMD View Post

                              Genuine question- per WCI standards, should the house number be <2x income or the mortgage be <2x income?
                              Mortgage 2x Income.

                              Op, what are daycare costs like for 2 kids? What is your monthly spending? When we were at your income I felt like our mortgage of 2.5k a month was comfortable but 3.5k would not have felt as doable. Just make sure you are willing to make the sacrifices this will entail.

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