{ "media_type": "text", "post_content": "Cross posted from Personal Investment Chatter. Am I stupid for making an offer on a house with the following financials: Total comp ~$340k/ take home annually after taxes etc ~$188k. House is $830k, put $215k down. Monthly mortgage of $4040 inc. principal/interest/taxes/insurance. I have no other debt and liquid non-retirement savings of ~$240k after the down payment. The numbers seem to work but I am nervous.", "post_id": "60a11ac034ffb20029269c50", "reply_count": 34, "vote_count": 2, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting", "feed_type": "crowd" }

Cross posted from Personal Investment Chatter. Am I stupid for making an offer on a house with the following financials: Total comp ~$340k/ take home annually after taxes etc ~$188k. House is $830k, put $215k down. Monthly mortgage of $4040 inc. principal/interest/taxes/insurance. I have no other debt and liquid non-retirement savings of ~$240k after the down payment. The numbers seem to work but I am nervous.

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188/12= monthly take home pay of ~15.6 So you're spending like 25% on the mortgage? Even if you add in a 2% repair cost estimate, that's like a little over 30%. That's fine, so long as it isn't a fixer upper or you don't have or take on any other major expenses - get into credit card debt, plan for major renovations, anticipate buying another home, etc.

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No problem, OP! FWIW, always go for a little more house than you think you'll need. People are like goldfish and will fill the space available to them. I bought a little conservatively in an expensive area and am realizing we'll need to move in a few years when our toddlers get older. Congrats on your first home!

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You should be ok with the payment. It’s a solid down payment and you have no debt. Honestly the two things I’d consider are: 1. House maintenance - everything from having an emergency fund if something big happens (let’s say you have to replace a water heater) to things like lawnmower, planting flowers, security, trash removal, snow removal, etc. this stuff adds up fast. 2. Big one time expenses and whether you can cover them or delay them - moving, buying furniture, etc.

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Your TC is 340k, your mortgage would be 615k, and you’re nervous? 99%+ of people dream of your situation.

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My only concern would be if two incomes were necessary for the income. Make sure you have a 3-6 month emergency fund against new monthly spend. Also, get a 15 year mortgage. If you cannot afford that, you should not buy that much house. Congratulations on rocking your current compensation.

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Just one income! We are a single income family- spouse is a stay-at-home parent. We currently have around 15 mos. worth in savings but we definitely couldn’t afford to do the 15-year. 😬

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Why would you buy house with a 4K payment per month instead of just paying cash for a house that is around 215k? Or even buy a house for around 400k? What is the reason you want to buy a almost 1million dollar home?

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As to why I don’t pay cash for a $215k home - those don’t exist in my area and family circumstances tie us to a particular geography. Or even a $400k home- unless we want to live in a 700sf home built in the 1890s, that too isn’t available in my area.

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Have you looked into the escroe or is that included in the payment? Thought about setting aside money for maintaining the house? Lawn care and other stuff - all that adds up. Can you still afford it?

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Thanks. Escrow is included in that. I have my cash savings (not including 401k account) of $240k for the random stuff that comes up, but good point on the regular maintenance. I come from a HCOL city where I’ve been renting all my life and moving to the burbs so home ownership is new to me.

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Quick rule is 3x gross income. As long as you didn't include highly variable income in your TC number, should be fine. Can't speak to whether the price, rate, or term makes sense for house and location though.

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If you’re nervous about it then I don’t think you should do it. You have to feel comfortable with your decision.

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That's fine. Are you maxing out your 401k? I'm assuming you are because of your net pay and the below checks out. So you are good. Ideal number is 3X your gross ✅ 30% of net - you are less than that. ✅ 1% of mortgage for maintenance. ✅

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Thanks for input. Yes, maxing out 401k, plus another $3k/ month to various savings/investment accounts. And we have room to cut discretionary spending if we wanted/needed to for sure. For someone who’s made a rule of holding no debt ever it just makes me nervous.

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We have combined income of ~$250 and have a mortgage payment ~$3,600. You'll be fine. Houses usually appreciate (where I live) at 5-8% per year (yes, 2008 or or something), so you're still making an investment on your homes equity (i.e., spending money on mtg and not the market, you still get a return).

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Is this going to be your forever home? Otherwise, might just be me but I wouldn’t tie up all that cash in equity.

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Different philosophies out there but unless I ever planned to “pay it off” I wouldn’t put more than 10% down

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You’ll be fine, just will feel house poor for awhile. Some of these other comments are definitely coming from people who don’t understand HCOL areas and being tied their family reasons. We all make it work and for some of us getting an $800k house would be amazing! Enjoy and good luck!

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Hello from the DC Metropolitan Area, a top 5 cost of living area in the US. I am earning two thirds of what OP is (almost exactly) and my house cost two thirds of OP's house (almost exactly). You can absolutely make it work on that salary and not be house poor.

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I bought a condo for $750k when I had $150k total comp. you’ll be fine

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I think it was a good decision. The value has increased 20% in 4 years so not a bad investment. I don’t live there anymore and renting it out which covers the mortgage and tax. Now my comp is a lot higher and considering getting a second home.

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