Just put an offer in on a house. Single income: 127 + 10-30% bonus. Promo to M this June. Price: 705k w/ 20% down. 2.75% interest. Remaining assets outside of house = 280k

I never thought I could actually afford this much house, but my numbers seem to make it work. Internet strangers, how dumb am I?

likesmarthelpfulfunny
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Good luck - just hope you don’t become house poor...

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I agree on both of these points. My property tax went up a lot too the second year. Also apply for homestead deduction. Still increased $2300 or so annually the second year

I’m going against the majority here and I don’t think you’re crazy. Here’s why...

I bought a $675k house at 4.5% in LA when I was only making $100k and put zero down because I used VA. I didn’t have kids at the time and I knew it was a stretch, but I rented out one room ($1,100/month), refinanced a few times and now 3.5 years later I have $200k in equity just from appreciation, the mortgage payment is easily manageable since I’ve been promoted twice since then and the write offs have helped lower my taxable income significantly.

I understand some circumstances worked in my favor (appreciation in CA, VA interest rates, etc.), but not only did it work out well financially speaking, I was also 100 times happier in this house than if I had settled for something smaller, older and in a not so desirable area.

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To your credit- you decided to be flexible in having a roommate. Being willing to rent prolly covered almost half the mortgage. Cant speak to your specifics but my guess is it would have been hard to do this without the extra income at least at first.

Depends on the OPs situation. Some townhouses in HOAs dont allow renters

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Insane home price for $127k salary no?

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What’s your net take home pay after all taxes, insurance, 401k, etc?

I make $160k and just bought a house for $299k lol. Congratulations but those numbers would scare me

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Bain, I grew up in Naperville. A little strange seeing it pop up in this thread 😂

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People in this thread are stuck in the past, and don’t understand what a 2.75% rate can do on a 30 year.

If you have $280k in liquid, you should be fine.

likesmartfunny

Again, a lot of conjecture on here regarding the investment profile of the house.

OP, It depends on how long you intend on living here.

SD1– the valuation drawdown over a short term
Period is irrelevant if OP wants to live there for 10+ years.

If this is a strictly financial/investment decision in the short term (less than 5 years), it’s suboptimal. But for those of us who like to live in a nice place and don’t intend on moving...

Update: Offer was rejected my offer was 55k over asking, someone else came in cash offer 60k over asking waiving appraisal and inspection! Would love to know what they do for a living to drop that kind of cash with no contingencies.

Thanks to all the supporters and doubters! Appreciate the dialogue and perspectives of all.

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Actually, I believe prices will have an immediate impact of 2-4% and then Feds have to increase rates because it will push inflation higher otherwise. Because of rates being higher the demand will become more normal. You will slowly see the prices of houses fall by the 10x of the raise in interest rate.. for example a . 25% increase will reduce house value by 2.5%.

Not just the lower ends actually many mid tier and higher tier houses as well. The key reason value of houses are high is because people do not want to move out irrespective of what category the house fall into. This will change when things get normal as people who move out will be able to buy as well

I wouldn’t spend more than 2.5x of my income on a home.

I make 155k so that means no more than ~375k

likefunny

Haha thinking $375k is possible in LA. I’m sure A2 may be able to find something but no you do not want to live in LA in a $400k house.

likehelpful

While you can afford it, you’re hearing opposing opinions because you’re really stretching it. Your house in some ways would own you. Your life decisions, to travel or jump to a dream job or start a business or move cities, must now revolve around whether it impacts your ability to continue payments on your house.

Granted, everyone’s running their own race and you might be ready to settle down and/or you’re just in a HCOL. But with the numbers you’re presenting, you’re running at the cusp of what you can afford

likesmart

This is 100% right. Why there are opposing opinions.

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No comment besides a congrats!!! Home must be nice and enjoy it

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Congrats.

At this point, don’t worry about. Just keep an eye on your expenses and don’t lose your job.

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My only thoughts because I’m doing something very similar-

Resale value might not grow as quickly as you hope, given the current perfect storm of low rates, low supply, and high demand. 5 years from now if you look to sell you might not make much on it.

helpfullike

Since this is your first house, you should be aware that there are random costs you’ll have after you close to buy furniture, decorations, some maintenance related items and first time homeowner tools. I’d keep an extra 5-7K in the bank in case.

You can make this work, but it won’t be comfortable.

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Closing costs will end up being a bit more than just 20% so try to get an accurate figure on that. It sounds like it will be fine though. Worst case you find out you have cash flow problems once you’re 5 months in, you reevaluate if the promo can offset that, and if not, rent out a room.

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Dude you’ll be fine. Ignore the boomers on this thread living in places where homes go for 200-300k. Enjoy the house, you can afford it.

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It’s going to be tight but with a raise op will be fine. He bought enough square footage to stay put for a long while if he needs to ride out a downturn.

Congrats OP! Don’t listen to all these haters... they’re afraid of their own shadow. Your career (and income) will continue to grow and you will look back on this transaction in 15 years when you still own it as a rental property and laugh that you were even thinking it’d be a stretch.

Best of luck to you! Keep crushin it!

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🤔 you sure don’t know me lol

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I am in the similar boat when it comes to compensation and the net worth outside my income.

I am looking at $400K house. There are two main variables that hold me back from buying something more than 400K.

1. Being single 2. What if I lose my job

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Is the $705k before or after the 20% down?

If it's after, and you're financing $564k on $127k comp, that sounds reasonable in a HCOL.

As a point of reference, back in the day we financed our $400k mortgage for a starter TH in our HCOL on my ~$90k salary at the time.

likeuplifting

Yup. City is Denver. 705 is total home price, loan is 564k. House payment including taxes and insurance is ~2800/month

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As an Internet stranger - you have my approval, I don’t think you’re dumb. It might be a little tight to begin but 2 years from now you’ll prolly love it and be super comfortable.

likesmart

You work in consulting. If you can reasonably project your income going up and don’t mind being house poor for the first year or two, I don’t see why you should not. The interest rate is low. It costs time and money to get a dingy house and then try to move to a nicer one soon after. You should buy something you can be happy with for the longer term.

I paid 700 for a house in OC back in 2016. I earned 140. Now my income is 250 and my house is 1M. Had I rented or bought a townhome that didn’t appreciated, I’d be in a far worse situation now.

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No comment on the house, but 10-30% bonus at Deloitte? That seems crazy high but good for you

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Not as crazy in certain groups. I got 24% as an SC in Cyber couple years ago. While back there were Ms/SMs in Cyber getting 30-40%.

Your all in payment is true for what you write for mortgage but doesn’t represent your all in cost. I dunno...this sounds like house poor to me.

I bought at 680k, also in the midwest. A ton of factors, but “rule of thumb” is 1% of home value for repairs is 7k a year which if anything understates my annual spend and I’m quite handy. Add another 2k for utilities and 1k for lawn care (most hoa you have to cut every 2 weeks.

Just on the above plus the 2800 monthly you are at 44k a year without buying a stick of furniture. Running some quick calcs, your take home is roughly 100kish without doing anything for retirement

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If you’re paying 7k a year for repairs it’s time to find a better home

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