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Thoughts on this house purchase

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  • StarTrekDoc
    You have 450k liquid with finishing fellowship and 200k in retirement already? You're well on your way and prior history with stated BH mentality - this is perfectly fine as long as it works out on the job front.


    Stay for a bit now that's you've cracked Lurker shell

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  • VentAlarm
    The problem is that you may hate your job.

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  • xraygoggles
    If you really want/need a house now, then yes - you can afford it.

    But it's also possible the housing market cools off a bit (and already has a little) the rest of this year. Home prices may be cheaper, but that's no guarantee ofc.

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  • CordMcNally
    As long as there are other jobs in the area in case your first job doesn't work out then you should be in good shape.

    Leave a comment:

  • Sin Nombre
    started a topic Thoughts on this house purchase

    Thoughts on this house purchase

    Hey everyone, long time lurker (thanks for all the advice along the way!), looking at buying a house and wanted to get some input to double check if it's reasonable. I generally consider myself a Boglehead and like to keep costs low and save aggressively.

    Finishing fellowship, planning on buying in MCOL area with hot housing market (which is even worse for rentals). I know it's typical to not buy coming out of training, but we're from the area and are comfortable with the commitment.

    Income: ~230k first year, ~450k thereafter after billing gets rolling. Spouse will likely make ~50-60k/yr as well after getting settled/starting working
    Med school debt: ~290k (100k federal and ~190k refinanced just under 3% for 15 years), total monthly payments $1,700/mo. Would like to hammer down the 100k federal and plan to hold onto 190k at ~3% for awhile given low interest rate
    No other debt

    ~200k invested for retirement, not touching for house purchase
    ~40k cash
    -30k I-bonds (saving for house purchase, but might hold onto until mortgage interest>I-bond interest rate)

    The house:
    -875k, great house in great location, well maintained, has everything we'd really want but isn't extravagant by any means. It's not a big dumb doctor house but honestly, the housing market these last two years makes me feel like every ramshackle house is a BDDH based on the price.
    -We have ~450k available for a down payment, meaning a mortgage of 425k, mortgage payments of $2,400/mo and insurance/taxes estimating ~$1,100/month
    -The house has an ADU currently rented for ~$850/mo which I would continue, market price likely closer to $1000/mo

    -Overall housing payments of $2,650/month (mortgage+taxes+insurance-rent from ADU), post-tax monthly income ~12k thus spending ~22% on housing (without utilities) during the first year, less after that (not including any income from spouse, which will likely be another 2-3k/mo post tax).
    -Renting a house would likely be $3000-3200/month, for a pretty dated house +/- small yard

    -Mortgage ~1x full income once billing gets going
    -Monthly cost is likely a little less than renting, and get a much better place
    -Could rent out house+ADU easily for $3,500/mo (likely more) if we wanted in the future
    -Room to save ~15% first year and certainly over 20+% of pretax income once billing gets rolling
    -I like the idea of having an ADU to rent out and possibility of renting out both in the future if we wanted to

    -Just feels like a lot of money?

    Thoughts? Thanks in advance for any advice!