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Started By
Message
In the market for a house...
Posted on 5/8/24 at 9:38 am
Posted on 5/8/24 at 9:38 am
Just got married and now the next big step is looking for a house. Total household income is $160k. Looking at things below 500k in our area. That gets us about 1500-2000 square feet with a decent yard and usually an unfinished basement. We don't have any debt or car payments but obviously that won't last forever. No kids yet but they're obviously coming. We are big savers so most of our money goes to retirement/savings/investments. Currently paying $1950 a month for rent at our townhouse.
I think we are doing well and generally good savers, but even still it seems like a massive mountain to climb to afford a home. We really don't have too many extravagant expenses to cut out and even then, it feels like we're looking at close to $3500-$4000 a month in payments when you factor in insurance, mortgage, taxes, etc...
Any advice on how to go about this or if we are greatly overestimating how much home we can afford?
ETA: Should add as far as savings, we both max out a Roth and an HSA. We also have 401ks. 20% of our gross salary goes to retirement. 5% goes to the HSAs. Then we save/invest another 20% on top of that in high yield savings and non retirement investments.
I think we are doing well and generally good savers, but even still it seems like a massive mountain to climb to afford a home. We really don't have too many extravagant expenses to cut out and even then, it feels like we're looking at close to $3500-$4000 a month in payments when you factor in insurance, mortgage, taxes, etc...
Any advice on how to go about this or if we are greatly overestimating how much home we can afford?
ETA: Should add as far as savings, we both max out a Roth and an HSA. We also have 401ks. 20% of our gross salary goes to retirement. 5% goes to the HSAs. Then we save/invest another 20% on top of that in high yield savings and non retirement investments.
This post was edited on 5/8/24 at 9:43 am
43
Posted on 5/8/24 at 9:39 am to jlovel7
quote:
Just got married
Pics motherfricka
quote:
Any advice
Wait until rates come down next year if you're lucky.
Posted on 5/8/24 at 9:42 am to jlovel7
quote:
greatly overestimating how much home you can afford
JMHO.
Posted on 5/8/24 at 9:42 am to jlovel7
Move this to the money board for serious answers. Otherwise, Mills/Zs and Boomers will turn this thread to shite.
Posted on 5/8/24 at 9:44 am to jlovel7
You should probably look in the $300K range.
Posted on 5/8/24 at 9:44 am to jlovel7
quote:
Just got married and now the next big step is looking for a house.
pick a nice house for her and jodie to live in, after the ink is dry on that purchase she is set for life and no longer needs you, sad reality is, you are buying her a house, not both of you a house.
Posted on 5/8/24 at 9:47 am to jlovel7
quote:
Total household income is $160k
quote:
lose to $3500-$4000 a month
Fast forward a few years. Cars are wearing out. House needs work. A kid shows up and the wife wants to take time off work. Daycare. Someone has a medical issue.
You can't afford it.
Posted on 5/8/24 at 9:49 am to jlovel7
Only advice is to live within your means, do not stress yourself so thin on a mortgage payment that one incident or emergency could bankrupt you
Be ok with living in a modest home with the things necessary for your family. Don't seek perfection and stay grounded and realistic. I would avoid looking at homes on the fringes or just outside of your price range and risk falling in love with a home that perhaps puts you in a more precarious situation
Be ok with living in a modest home with the things necessary for your family. Don't seek perfection and stay grounded and realistic. I would avoid looking at homes on the fringes or just outside of your price range and risk falling in love with a home that perhaps puts you in a more precarious situation
This post was edited on 5/8/24 at 9:50 am
Posted on 5/8/24 at 9:51 am to jlovel7
quote:
I think we are doing well and generally good savers, but even still it seems like a massive mountain to climb to afford a home. We really don't have too many extravagant expenses to cut out and even then, it feels like we're looking at close to $3500-$4000 a month in payments when you factor in insurance, mortgage, taxes, etc...
Probably going to have to move to a lower cost area or buy smaller. I don't think the math works out for a $500k house on a $160k income, especially at current interest rates. I would lower that search criteria to $350k at most.
We bought a $240k house in BR on a $130k household income a couple of years ago and that still feels like we're stretched on how much of our salary goes to mortgage/escrow.
The real kick in the nuts is that the houses that you're looking at probably would have been easily affordable 5 years ago, at $400k and 3.5% interest.
eta: Any option to buy land and build? Though that's an entirely new set of issues/time, and isn't necessarily cheaper unless you put in a ton of work yourself.
This post was edited on 5/8/24 at 9:58 am
Posted on 5/8/24 at 9:56 am to jlovel7
What area are you looking?
When we were first looking at what we could afford, we started with our set budget based on take home pay (after insurance & retirement). We used our set known expenses that would not change with the new house (TV, cell, car payments, student loan, food...), then figured out what size house we were considering. Spoke to a few people we were close with in the area (Family & close friends) to get a ballpark of what they were paying. Factored that into the budget and determined how much we could afford for the monthly mortgage payment. With that, we backed into how much house we wanted to buy. This kept us from greatly overestimating our range and set us up for the sticker shock when they show you your estimated mortgage, insurance, utilities...
Best thing we did when we decided to buy was find a neighborhood we wanted and buy there. We bought a house that needed some work that we were comfortable doing ourselves and planned to sell it in 5 years for a house that fits us better depending on where we are in our lives. 10 years & 3 kids later, we are still in that house and are now looking into renovation loans to add-on the sqft we feel we need because we love the area and realize the market is ridiculous right now and outside of a new build we'll still be compromising on something.
When we were first looking at what we could afford, we started with our set budget based on take home pay (after insurance & retirement). We used our set known expenses that would not change with the new house (TV, cell, car payments, student loan, food...), then figured out what size house we were considering. Spoke to a few people we were close with in the area (Family & close friends) to get a ballpark of what they were paying. Factored that into the budget and determined how much we could afford for the monthly mortgage payment. With that, we backed into how much house we wanted to buy. This kept us from greatly overestimating our range and set us up for the sticker shock when they show you your estimated mortgage, insurance, utilities...
Best thing we did when we decided to buy was find a neighborhood we wanted and buy there. We bought a house that needed some work that we were comfortable doing ourselves and planned to sell it in 5 years for a house that fits us better depending on where we are in our lives. 10 years & 3 kids later, we are still in that house and are now looking into renovation loans to add-on the sqft we feel we need because we love the area and realize the market is ridiculous right now and outside of a new build we'll still be compromising on something.
Posted on 5/8/24 at 10:01 am to jlovel7
quote:
Just got married
Keep in mind that right now is the least amount of money you will be spending. Once kids come along it gets ridiculous. 90% of the money I spend now is for someone else.
Posted on 5/8/24 at 10:05 am to jlovel7
quote:
Then we save/invest another 20% on top of that in high yield savings and non retirement investments.
You may need to lower or eliminate this temporarily until you can refinance to a lower rate in the future. Otherwise, your new investment is your house.
Posted on 5/8/24 at 10:16 am to jlovel7
What city?
Posted on 5/8/24 at 10:19 am to jlovel7
quote:did you sign a pre-nup?
Just got married
Posted on 5/8/24 at 10:20 am to jlovel7
quote:
Total household income is $160k. Looking at things below 500k in our area.
Good gosh I hope so. At that salary, with your savings plans I wouldn't feel comfortable spending over $335ish and I definitely wouldn't wait. Use some of your savings to put down down a decent down payment to avoid mortgage insurance and refinance in a few years when interest rates dip again.
Posted on 5/8/24 at 10:24 am to jlovel7
quote:
Total household income is $160k
quote:Ouch. You're clearing about 8-9k per month once investments are accounted for? That note is a chunk once kids come along.
it feels like we're looking at close to $3500-$4000 a month in payments when you factor in insurance, mortgage, taxes, etc...
Posted on 5/8/24 at 10:24 am to jlovel7
I couldn't imagine having a $3500 house note on $160k income. It simply isn't enough these days. Like someone else mentioned, this is the cheapest years of your life. Cars will need replacing and kids aren't cheap. And once the kids come, your wife will have a credit card attached to every online childrens boutique available.
Posted on 5/8/24 at 10:25 am to jlovel7
If no one else tells you the truth, I will because you honestly need to hear it.
At $160k household income you CANNOT afford a $500k house. You will completely ruin your financial future attempting that long term; and that's even if interest rates fall in the future and you refinance.
How did you even land on that number?
At $160k household income you CANNOT afford a $500k house. You will completely ruin your financial future attempting that long term; and that's even if interest rates fall in the future and you refinance.
How did you even land on that number?
Posted on 5/8/24 at 10:25 am to jlovel7
Don’t listen to these boomers saying you can’t afford etc. These guys can’t afford to buy the house they currently reside in. 160 after tax is 100k or so, what’s your down payment and take home? Market is fricked and even if rates went down prices would go up which would mean larger down payment anyways. I would wait since renting is much cheaper vs house on par. If comparable rental is sub 50% id rent
This post was edited on 5/8/24 at 10:27 am
Posted on 5/8/24 at 10:28 am to jlovel7
quote:
otal household income is $160k
quote:
$3500-$4000 a month
I will tell you, you CANNOT AFFORD THIS MUCH!!!!!
You want, if you can find it a 250-300k house with your income. Smaller is better with just 2 people. Sell that house when the time comes and upgrade.
You will 100% regret purchasing a house with a $3500 note as your first house
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