Related Posts
Time to buy SQQQ / TTT / TZA?
Thoughts on the new Chase Freedom Flex?
Can't register for binance or bittrex 😮
I’m an SC but have no MBA. At this point (29, married and expecting kids, have a house) is it worth it for me to pursue an MBA? I have a lot of family responsibility coming up so not sure if I can afford losing income for 2yrs and take on 100k+ in debt. Am I thinking too short sighted? Will having an MBA have a dramatic impact on my career here at Deloitte? Figuring this out is my New Years resolution next year.
If I leave big law for ADA will I get canceled?
Subject Expert
More Posts
Which is good to join..Publicis sapient or LTI?
Hows wlb and projects of HCL Singapore?
Bowl Leader
Just watching YouTube
Additional Posts in The Real Estate Bowl
Visual Storyteller
Coach
New to Fishbowl?
Download the Fishbowl app to
unlock all discussions on Fishbowl.
unlock all discussions on Fishbowl.
If I took a 50% paycut, I could still make my mortgage payment. That’s enough comfort for me.
It only gets better as you make more money. Plus you will eventually be able to refinance for a better rate. I suggest make one extra payment a year if you can (I split it out over 12 months) and add the extra to principal . They say it shaves off 7 years.
Coach
Sexist, as a woman in my 40s with a crazy morgage, we also can't sleep!
Guys is unigender, if it helps!
The sounds of waves crashing against the Pacific coast help me from waking. It's beautiful to hear the natural currents from an open window living that California dream that's been peddled to us all.
I don't live anywhere near the ocean though...thanks to sleep machines I can pretend 👼
Look at your savings. Think about just how long you’d have to be unemployed for you to be behind on your mortgage.
I’ve got a $600k mortgage and $300k in brokerage/savings. Monthly is $4k. Monthly discretionary spend is $2k.
That’s 50 months to find a new source of income
Reallocate to more stable allocations?
Mentor
We had just bought a house and my wife was 4 months pregnant when my employer went out of business. Since there was a few months of foresight, I stopped contributing to my 401k and cut spending to the bone to increase our emergency fund. At the time I figured that I could still make ends meet on about 60% of my income. All worked out and I had a job quickly. To help you feel better, I think that salaries in consulting typical peak in the mid to late 50s. Unemployment among highly educated population is very low. Real estate prices typical increase (although there have been times of the opposite, banks took a lot of the loss when borrowers just walked away). If you are buying a home in your 40s, I would probably try to have it paid off faster than 30 years. My goal is to have my house paid off by 60 so that I can retire without a mortgage.
hmm... that's tight tight!
alls u gotta worry about is the monthly payment, which is a lot less than ur monthly income.
unless if u got ARM, in which case u might not sleep as good
I don't think the fear is weird - I think it's legitimate! What's your motivation for wanting to buy a house? Have you followed Ramit Sethi at all? He might have some good tips for you to understand if buying a home makes sense for your situation. I do enjoy his podcasts, too. One thing he said that stands out to me is '"rent is the maximum you'll pay, but your mortgage is the minimum you'll pay." That doesn't mean I'll NEVER buy a house but he really recommends running the numbers before making such an expensive purchase. Good luck!
Half million? Try more than a million. I sleep because half of it is getting paid by my MIL as rent. Use your debt in your favor.
Ok.
Mortgage is not keeping me from sleeping at all…1.6m purchase price, still owe 1.1m at sub 3% rate. Mortgage, taxes, insurance ~7k, but 3k goes to principal…$4k is all it costs me to live where I do, it’s a steal. I could rent my place all day for 7-8k. If I were to buy my house now, mortgage/escrow would be 12+k per month.
Have over 2m in loans on other rental properties. All-in-all I think I pay $70k in principal per year, that helps me sleep well. The interest I pay is (mostly) tax deductible
I guess I don’t understand the crazy aversion to debt, especially if locked at low rates. If you haven’t purchased yet and are concerned about taking on debt at todays high rates, I get it…that said, I think it’s likely that once rates start creeping down at some point, prices will shoot up again due to demand, and so many people unwilling to sell homes in current environment…so if you do buy now, you will have a good chance for equity.
If you are that worried, it’s likely you can’t afford the house you want. Buy within your means, upgrade as your career advances. There are plenty of online tools that can help you figure out what you can afford. I see too many people try to keep up with the Jones, buying luxury cars, watches, jewelry, vacations, big houses…etc, and not saving enough for a rainy day.
If the numbers come out OK - you can budget and safely afford it, then I would realize this is primarily a mind-set / psychological issue. People's attitude's towards money and debt is strongly affected by their upbringings and financial education at a young age, etc. If you think you have a hang up that is keeping you from making the right financial decisions, I would try address that. People dropping a lot of logic below, but I think the real Q is what would make you psychologically re-assured, which is a you question.
If you make $2000/month and your mortgage payment is $1500/month, you're probably not going to sleep well at night.
Not sure it's the size of the mortgage but the ratio to your income/wealth.
Whats the problem with a million dollar mortgage if you are clearing 20 million a year? I'd sleep like a baby with thst equation.
If I made $250k/yr and had a million dollar mortgage, I'd be sweating (and probably wouldn't have been approved to begin with).
It's your job to balance your p&l, not the banks. They care only about their own risk. Not how well you sleep at night.
What you’re worried about?
If your mortgage is fixed rate just based on normal inflation 20 years from now it will seem a lot lower relative to your earnings. Depends where you are, but in a lot of areas it's pretty safe to bet that rents and house prices will go up in that kind of a time period.
Let the #s do the talking…my assumption is you haven’t taken on a mortgage that you cannot afford…crank the #s and lay it out as part of your budget
OP, if you anticipate it going DOWN, aggressively pay off as much as you can until you reach that point..again DO THE MATH on what that looks like and how much more you can pay down in the meantime
Subject Expert
The value of the mortgage shouldn’t matter as much as the percent of your current salary and the overall value of the house.
I have just under $500k on my mortgage at age 40, but a low mortgage rate (thank you 2021 rates!) and the house is worth well over $900k, so if push comes to shove, I know I’ll still come out ahead.
I’m 25 and about to sell my life away being house poor for the next 12 years 🤡
I wish I could have been house poor at that age! I probably could have been and just didn't realize it. Plus at the rate of equity gain right now you won't be house poor for long!
You don’t own it, the bank does. If you can’t afford it you sell it.
Subject Expert
This is such a stupid saying that really should go away.
The bank has a lien and in order to do anything with your house, they have to take court action.