$350k combined household income - making an offer on a $840k home. Thoughts or advice?

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Should be easily affordable unless you have like 3 kids in college.

likesmart

It’s obvious but... All depends on your tax rate, actual repayments each month and other outgoings. I wanted a mortgage that we could easily afford if one of us lost our job or just needed to say f-you and quit. We have combined income of about $400k and bought at $450k. We’re in a state with high property taxes so mortgage plus taxes etc is about $3.2k per month. We have no kids so at the moment, we’re able to save a bunch of cash and if all stays the same, we’ll pay this off in 3-4 years and with $450k equity could get another $450k loan but on a $900k property. However, I’m well aware that a lot of variables can change (job, where we want to live etc) and so keeping a low repayment is always a nice safety net. Not the boldest strategy but helps me sleep at night.

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I’ve said this on another thread but my mortgages are the same for a $450k condo and $750k home in 2 different centralized downtown properties. Tier 2 and tier 4 cities. Combined income is the same as OP. It’s all about that tax!!

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Damn. Wish we could find a home for $840K

likefunnysmart

Rates are so low 840k mortgage payments is just like paying rents for a 2 bedroom in NYC not really a flex honestly

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Can I have like 1k plz

funnylike

Offer submitted and accepted. Putting 20% down and mortgage ended up right at $3,600 (including taxes, insurance, premium, and interest). Right at around 26% of monthly take home. Now it’s all about getting the house set up and tackling small projects that require updates.

Thanks for the comments!

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Grats but pray that nothing goes wrong. Literally one bad event away from being house poor.

likefunny

Put down 20% if possible to avoid additional fees on your mortgage

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Ended up with City National, but applied with the four or five major banks directly plus an independent broker. For jumbos, Wells Fargo is known to be very competitive, but their reserve requirements were higher and in my state they cannot go below 15%. 10% and easy reserves was worth an extra eighth on the rate for me.

Oh yeah, not sure if we’ve talked about reserves yet. To get these kind of terms with low down payments, many banks require you to have a bunch of liquid assets, as high as six months liquid +6 months other eg retirement

likesmart

I’d be quite hesitant to make such a large purchase at this point in time, lots of uncertainty with employment, etc. If either of you lost your job, that mortgage could become quite tough to manage. But, you also do need to live.
Should be affordable, but may not be prudent at this time.

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They would be one health problem or baby away from being house poor. Buying things this expensive is an expedited trip to a stressful life for the next 30+ years.

likefunny

Why not wait a few months and put in offers for 75% of the asking price. There should be a bunch of foreclosures and short sales and people will be desperate.

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With up to 1y of forebearance, you wont have foreclosures before 18 mo. Also government will ask to put those missed payments at the end of the mortgage so i doubt there will be much foreclosure

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Try to maximize your down payment as much as possible. My strategy was to keep my mortgage as low as possible

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@D5: https://www.bogleheads.org/forum/viewtopic.php?t=304655

I’m in a similar boat... I’m nervous about one of us losing our job and 6 months wouldn’t be enough

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Hey C4, nice boat. May I come aboard? Don’t worry, I’ll take my shoes off

My 2 cents - no one in here is a Real Estate person, so probably asking the wrong crew.

I’m actively looking as well and can tell you that this group got the right “general” trends but that may or may not apply to you depending on where you are and want to go.

I’m in NY/NJ area and know for sure that NY families are making a dash to NJ burbs. Listing to sale time has gone down drastically here for the good areas, which eventually means higher prices.

My suggestion- find a good agent and then you can check your facts with this group.

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I’m seeing a lot of $1-2mil+ houses for sale with huge reductions. The 500-1mil houses aren’t being reduced that much as those people that can afford are not hit as hard financially (yet). Tax refunds and stimulus checks have been helping cash flow. If things stay bad, I feel like the desperate times will come around July and august

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As long as you can put 20% down (or at least 15%) should be fine. Wife and I make similar, and we just purchased a house in the $700s. Bottom line for us was that we plan to grow roots, have a baby on the way, and found a house we loved - so we don’t care really if we could have gotten it for like $50k cheaper, it’s what we wanted/needed at this point in time. Nobody really knows if the markets going to go up or down, if you found a place you love and have job security, go for it! Wish you all the best.

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Get a smaller cheaper home and save the rest you’d be spending on a mortgage

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I'd be uncomfortable paying more than 1.5x household income. Our household income is $250k and our home was $282k. I find comfort in knowing that I can easily hussle $1800 to make my mortgage if my wife and I lost our jobs.

I'm probably on the extreme end of risk adverse.

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M3. You have a place in a Chicago proper for $282k? May I ask what neighborhood and bed/bath?

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Use your wealth management account as collateral to put $0 down and get a great rate on an ARM. I did this through BofA (Merrill Lynch is the wealth manager) and got a 2.25% Interest Only 7/1 ARM on an $810k home.

I’m essentially renting it from the bank and putting what would’ve been my down payment/fixed rate monthly payments into investments. I calculated +$170k difference vs. 20% down, 30y fixed rate loan over the first 7y assuming my investments do 5% per year. Pre Covid, obvi.

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Check out UWM. 30 year mortgage for mid to high 2s.

Good time to buy... rates are dirt cheap

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As long as you have a big down payment...at least 20% ...preferably more, and your debt payments to gross monthly income is less than 30% ...could be a good bet.

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Is now a good time to buy or should we wait? You think home prices will drop?

6-8 months to see a drop..a few houses I'm following have all moved to pending sale/contingent status in the past week.

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Without knowing more, sure. It’s perfectly plausible you could swing that comfortably.

I’m also a Realtor and OP as long as you aren’t at the extremes of DTI you should be just fine. PM me if you want to chat

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