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Don‘t.
Get a mortgage you can afford even if you never get those raises. If you do, either prepay that thing or refi to a shorter term
I like how you assume your pay will go up CONSIDERABLY
A bank will not lend to you based on “predicted future earnings” and you shouldn’t take out a loan with that criteria either. Buy what you can afford on your current salary. If your pay goes up that much, you can always sell and buy up in the future.
Why not just do it based on current income and be extremely comfortably within your means in 5-10y? That's what we did with a 15Y and have been thrilled with the outcome.
If you don’t have a family this is probably unwise - don’t fall for all the hype that you need to buy right now. - when you rent you aren’t paying interest, maintenance, property taxes, more furniture to fill up said house etc etc etc
Buy something much smaller than you will want in 5 years that will rent well. Have a comfy mortgage now and an income property later
P1 I mean from being new to the firm versus the amount of time I'd be in the house? I feel like considerable is a fair expectation.
I remember when i felt like this. The year was 2007. Very glad i didn’t “buy up”.
OW1 I get not spending money I'm not sure I'll have, but multiple years of renting as I wait to buy seems like a worse financial decision in the long run.
Not till you hit partner. Pay increases are usually less than 10% a year (often less than 5%). Bigger bumps usually require jumping firms. Then 20% isn't unusual, but not always something you will get, either.
Agree with Accenture 2...- taxes + maintenance + interest + closing costs can easily add up to rent. Remember you don’t get equity until all those things are paid and then you also have to assume your equity in the place increases and doesn’t decrease.
I’ve been patiently waiting for doing a home too and it’s frustrating but all financial advice says to only buy what you can currently afford (and then less), and to stay there for a number of years. I’ve decided to keep my location flexibility, save for larger downpayment, wait for salary growth, and save lots of time not caring for a home.
Good luck 🏡!
BCG 1 is exactly right. Buy something easy to afford that you can rent later. Moving isn’t that hard and you can upgrade after all your considerable increases in pay
Go w a no doc no money down. Everyone did it in the early 2000s and I don’t recall anything bad ever coming from it
Don't buy if you're planning on moving in less that 5 years.
Don't buy a house you can't afford on current salary forever.
If you can't afford the house you want right now, rent and save the extra now until you can afford it or income goes up. Easier to save money than to just make more money.
D1 I'm new and in an expensive city. Getting a mortgage on this years salary would be possible but would mean choosing whatever house is the cheapest option instead of one I want to be in for 10 years.
M1- what firm are you at? If you aren’t averaging 8%, including promo years then you’re doing something wrong. Industry is 2-3%
EY1 do you realize while you’ve been patiently waiting, rates have been increasing?
EY2, Yes valid point but housing in my area has also been decreasing while I waited. Net net I’m better - but to each their own. We did as BCG1 suggested and bought condo that we rent and earn money on and have been able to flexibility transfer between jobs without a mortgage to keep us put that over 3 years have doubled our income.
That is a bad appproach