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You can do it but it’ll be tight every month. Many people use their homes as their ‘retirement fund’ assuming appreciation / good neighborhood so that seems like it could be fine, but having such a restrictive budget would really make daily spending a chore, even grocery shopping and eating out. I would personally prefer some more breathing room every month, but if you’re not afraid to dip into the emergency fund on high spend months - like if there’s a ER visit for the kids, holiday present shopping, small weekend vacations - and you guys are strict about budgeting & free activities then maybe it’ll work. Our grocery and eating out every month is probably already $2k…
Mentor
"Doable" yes but definitely not smart. You're going to be cash poor for a long time.
Mentor
Your take home after taxes is what, 10k a month? You're going to spend 70% of your post-tax paycheck servicing your debt? Jezzus
It’s a bit much but do able. Have enough reserves saved up
This is not wise, especially with 2 kids. $6.1k mortgage at current rates is like a $1M home, no? Absolutely no way you need a home that costs that much.
700k house with high property taxes. Top 5 best school districts in my state.
Do it while you can.
With each passing year, your incomes will grow but your mortgage payment will not (by much). Accounting equity in your home can also serve as retirement savings (assuming downsizing after kids are out).
Subject Expert
Not terrible, as long as you can stick to a budget for your other spending. Rates should drop in the next few years, which should help with the interest side of the payment, but property taxes might continue to rise which could offset that
Subject Expert
I think most economists agree that 7% rates aren’t likely to stay forever, due in large part to how it has stifled buying activity.
I’m not saying we will see 2% or 3% ever again. But even a drop to 5.5% or 6% would be a pretty significant savings.
Too tight for me. I like more freedom with budget. Things happen like what happens if family can no longer watch (eg., they get sick, something else comes out, you and them disagree on parenting style). What happens if you get sick? Laid off? If taxes increase? If insurance increases? (My home insurance increased 20% with no claims!), also with a house there’s more maintenance expenses.
Also how do you budget in enjoyment? Kids bday party, travel? Activities?
Not doable. We do 6.8k on 450k and still find it hard. 2 kids.
We just purchased a $770k home and bought our interest rate down to 4.85%. Pulled pymt down to $5064. We bought it down from 6.1%
Mentor
When did you close? What lender is giving 6.1%
Subject Expert
Yes it’s fine. Might be tough depending on savings
After the house. It's what we would be left over.
We have a 6.1k mortgage on a 550 HHI and we feel poor once we allocate for retirement accounts and pay for other expenses.
After expenses, saving for retirement, etc. how much cash would you have on hand if you go with this mortgage?
Assuming you will pull half of the 4.9 into retirement, you will be left with 2.5k. IMO that’s low. There will be other unplanned expenses (housing related, vacations, etc) which will come up that you will need need to account for. Personally if I were you I would not do it. You will feel the pinch very quickly at which point you won’t be able to do anything. Perhaps wait out a bit, less the interest cool down, collect more for down payment and revisit?