Pro
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Made it to 104’, bottom about 115’-120’
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Rising Star
Music recs for deck building please
I am tired!
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Life is short.
Go for it, if it’s your dream house. These kind of things happen few times in life. Don’t snooze and lose.
Rising Star
Personal I think you’re losing money if you don’t. There is only a set amount of land, there is no more being “created”. And on that set amount of land they have to find places to build houses, and there’s no more places thus the push to multi-family homes. You get a single family home, that value only goes up. As a buyer I wish that weren’t true but it’s a very sad fact of life. People will no longer be able to afford a house of their own a few decades from now unless the govt does something to stop investors like Blackrock and Citadel buying them all up, and you already know with the amount of lobbying going on that’s never gonna happen. Buy the house you want bc it’s the only chance you’ll get
Rising Star
Yea this rationale is the California housing market in a paragraph. But it applies anywhere people will always want to live, that’s already built up. Prices only go up from here
2022 is currently the worst time to buy a house. What was the house worth a year or two ago? If it has appreciated 20% YoY, it would have been around $950K in 2020, with mortgages available at < 3%. That would have been the time to buy even if your current home equity and liquid savings pool was smaller. I know hindsight is always great and perhaps leaves a bad taste in the form of a missed opportunity but this is the truth. Waking up to lake view will wear off after a few months. Instead, if you constantly feel uneasy about over-leveraging throughout market volatility and continued recession in 2023, the lack of mental peace will drain you off. There’s always a better house than the one you will ever have.
I went through the same situation 16 years back. Income of 210 K and house of 1.1 M. And I was on immigration visa with green card in limbo. The location was HCOL and set for price increase in future. Anyways, I took plunge. Paid 30% down borrowing money and have to take line of credit etc. as bank account depleted. I paid mortgage from my salary for only 4 years. The thumb rule has been refinance with cash back which can pay mortgage for next 4 years. The cycle is going on. The property value is now 4.3 M. I have loan of 1.5 M but I have taken cash back many times. I took cash back 300K a year back with 2.1% interest refinanced mortgage. I’m covered for mortgage almost 4 years. The minimal 3% appreciation gives me back 140 K in appreciation a year next 4 years and the mortgage pays back apps 40 K principal. Plus 10K saving in tax from mortgage interest. So net gain is appox 190 K a year. Less 30 K maintenance annually. So basically I’m not paying anything from my salary, living kind of free in house, appreciating value etc. with almost 3 M in equity.
It may not work that way for everyone but that’s my experience. In long term, if housing is purchased at a right location and if nothing unexpected happen then one can live free and also earn money from house.
Rising Star
How much do you have in savings and other investments? I’m a bit concerned you may be setting yourself up to be house poor. Can you afford major repairs if needed? How solid is your job?
This kind of leverage gives me a tremendous amount of heartburn. I’d hold off until you have more equity or money to bring the mortgage down.
Pro
Yeah a bit worried about being house poor too. In super liquid accounts (brokerage + savings acct) I have around $250k. I could dip into this to up the down payment too.
First of all good for you making $320K as a manager. Wow!
Pro
Lol thanks - my company severely undertitles to be honest.
Rising Star
Have you looked into renting the lake house? As in, buy it, keep your current place, and renting out/Airbnb the lake house to help with payments for a bit. Once you’ve paid off a few years of the lake house, sell (or rent) your current place, recast your loan, and move over?
Pro
Obviously the pause is my mortgage jumps from like $2900/mo to something closer to $7k all in.
Yeah y’all, rates have basically doubled in a couple of months. Fastest jump since 1994. They are not coming down anytime soon, only going to go up. The ones who spent big $$ on a home with a low rate are going to see their home value significantly decrease this year, and many will be underwater. Unrelated to OPs post but the loan market is changing rapidly.
Chief
Do a budget. Can you make the payments? Will it make you happier than other things you could do with the money? If yes, go for it. I'm a bit house poor at the moment, but no regrets.
Pro
Yeah I ran it and can do it, just cuts the savings quite a bit. The flip side is lakefront property appreciates very quickly because it is truly finite amount of land in my city vs suburbs keep expanding.
How much of $320k is your actual base salary? Are you counting yearly bonuses and stocks in it?
Is 320k salary? If so go for it. Otherwise maybe think about it. Our hh salary (not incl bonus) is around 400k and we’re able to afford a $7300 mortgage without too much trouble.
Chief
If you love it, go for it! It’s not a huge stretch
Honestly not that bad of a thought process you have going. But that 30 yr mortgage rate on the loan amount makes my eyes widen a bit lol
Pro
I know - I have sub 3% right now and wouldn’t be surprised if it were doubled.
Which LCOL market?
Yolo
Look at buying 2 or 3 houses to have vacation homes and other places to spend time throughout the year.
People pay this much in DC making less..you’re fine
Is it?
Are you willing to be cheap about other parts of your life?
Personally, this amount of debt would give me anxiety, but it's not crazy. Your overall payment is about 40% of your time home pay, which is a little high (ideally it would be around 25%), but 8-8.5k a month should be plenty to live and save on.
Go for it! You may not get the house anyway and if you don’t try you will always wonder what if.