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Bonus is out for EY GDS steps to see. Goto gdsindiapayroll.greythr.com, click on IT Declaration on left. Then click on My Tax Planner at the top right. Then click create my plan then click view it calculation on bottom right then expand income here under adhoc income you should see variable performance bonus amout.
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Mentor
If you are planning to stay long term, it’s probably best to just go for it. Rent will keep going up, but your P&I payment will stay the same. Interest rates are still low but are expected to climb so cost of financing will likely not be this low again in the near term.
If you can afford it, do it. Not many people regret owning a home 10 years down the line.
Not many, but true.
My parents definitely regret buying their place.
Subject Expert
What would you gain moving from renting to your own place? More space? Backyard? Putting down roots? Often times the plusses of home ownership is measured less in dollar terms but mental peace. But it better be a lot of mental satisfaction to more than double your living expenses! There are quite a bit of headache with owning your home. Upkeep (just general upkeep and not keeping up with the Joneses), regular maintenance, appliance replacement, HOA, ....it can be a big list.
Only you and your family will be able to decide though. Go for it if it makes sense for you. Also know it will possibly delay your FIRE.
Also, I do know my current rent is not a fair comparison because I only have one bedroom and it’s small. The house has four bedrooms. If I were to continue to rent, I would look for a three bedroom and those are hitting almost 4K.
These other points are good things to consider. Thank you
Lock in that low rate, 3-5 will go by before you know it. Rent it out later.
Oh right :)
My suggestion is to buy the house because the houses are very expensive now. And you don’t want to live in a house you are not proud of and you don’t like. It will become a bigger misery then a satisfaction.
Second, use much of your disposable income to pay for the house very quickly. Your goal should be to reduce your principal to an amount that if you you divide it by the remaining loan payment, it comes yo your current rent amount.
Coach
I don’t necessarily agree with the advice to pay the house down quickly.
You’ve borrowed money, gotten an asset - the rest is just math (interest rate vs what you can get in the market)
The higher your leverage the better your ROI (or worse if it crashes lol)
That's a lot of house. If it's more than 35% of your take home pay, I wouldn't do it.
Im at $90k/year for 2 kids in a ny suburb. it's crazy
Yes, you are actually under. You could go to $900k. My HHI is $350k and we bought a $1,050,000 home. It needed a lot of work too.
Mortgage is $4,500 I think and the rest for property taxes. No HOA or PMI.
i know you are asking from a FIRE perspective. but getting out of a city and out of an apartment and in to a house with plenty of space in a town with good schools (HCOL area) was the best decision we have made:
- for the kids
- for the peace
- for the space
- for my mental health
I’m about to do roughly the same in a LCOL area for about $4500 monthly. The house will appreciate, you have to look at it as an investment if you’ll be there for a long time
Not too long ago, a house in Santa Clara county went $800,000 over asking. I hear there is not much inventory - although that particular one was fairly nice.
So if you live in a HCOL area like me, prepare to either have more $$$ on hand if you make an offer or ready your expectations and standards for some browsing.
I wish I had bought 10 years ago. House prices have gone crazy. Also you need to understand property tax, the lesser the home value the lesser the property tax, which is a lot of money 💰💰💰 not spent in the long run if you get in early. It could also be a smart move with taxes for deductions. Talk to a tax guy.
All other points are valid, in terms of upkeep and expenses. Especially if that's your home. Is it better to rent and keep money invested?
It also gives you the opportunity if later you decide you want to live somewhere else, to turn it into a rental / investment property.
Good luck 🤞
Mentor
Deductions are valued in cash by multiplying your marginal rate.
All state and local taxes are deductible subject to a 10k cap. So if you (and a spouse if you have one) already pay $10k in state income tax, there is no additional deduction.
Where it gets a bit more complicated is you need to itemize to get any value, which means all itemized deductions need to exceed 13k for individual or 26k for married. Until you hit that threshold, there’s zero value to them.
Mortgage interest is also deductible up to 750k of debt. At prevailing rates that’s a max deduction of about $25k. So a max $35k deductions over the $26k standard is $9k in incremental deductions so even for a top rate payer, it’s really only like $3.5k of savings. Most people will save less either due to lower rates or lower deductions or both.
Edited to add: non married filers can do significantly better due to the lower standard deduction.
One bedroom to 4 is a big jump. I'm assuming no kids now but expecting in near future?
Even for 2 or more kids, could easily be 10 yrs (!) before you'd need more than one bedroom for them: mine (11, 7, 5) still prefer to sleep in the same 10x10 room (surprised us too). Our 1200sf house has 3 bdr total, I use the guest as my office, and we don't feel crowded. 50% of sf is kitchen/dining/living where we spend most of waking hrs.
So, I'd urge you to go for a smaller house and invest the difference. If school district is a concern, it sounds like you're likely yrs away from that, too.
PM - I hope the home continues to gain value
It is just likely going to keep going up if you are in a hot market.
I would say better to buy in a good neighborhood even if a smaller house because it will appreciate better and allow you to stay in same type of good neighborhoods.
Do take into account renovation and repair costs (at least be ready for it).
Go for it. I assume that payment includes a minimum of $1k per month principal pay down and if the interest payments push you from a standard deduction to itemized, you would potentially have tax savings as well. Cash costs will definitely be higher upfront, but the economic cost is not very different. Assuming conservative 2% annual appreciation, would offset the remaining cost differential.
Coach
$350k HHI and we paid $900k. Larger down payment and monthly expenses are around $4k.
It’s very manageable
Coach
2.75%
Depends, being a home owner has downsides and doesn’t necessarily have your money make money. Some can be a money pit.
Buy if you are going to be in the area for 3 years atleast and if not then rent.
One more point re the above. Your house is a liability, unless it cash flows and pays for itself... Just remember that. We are also at the high end of the housing market, so more appreciation might be considered wishful thinking.
You should always think about what % will your mortgage be of your take home pay. If you want to get ahead financially, make it under 30% as you still need to factor in food costs and maintenance of the house (i.e. lawn care, repairs, etc)
Now, here is another way to get around that. Does the home have a cottage on the property or a separate basement with easy access doors to enter that is separate? You can rent on Airbnb or rent long term. I built a luxe bathroom in my basement and brings in $2-3,500 a month. Just make sure your partner is ok with it 😊 Problem solved..