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Started By
Message
Too much house??
Posted on 1/3/17 at 11:26 pm
Posted on 1/3/17 at 11:26 pm
Wife and I are in the process of building. I make 175k annually and my wife makes 50K.
We are Currently living in a house worth 300k (no mortgage). We also own our lot outright worth 210K.
For most of want we want, the total cost of building including our land would be approx 850K.
So, house and lot: 510k - 850k = 340k mortgage if I decide to not put any liquid reserve into the new house.
We have been living pretty modestly in our current home the past 12 yrs. I'm getting a lil cold feet after finalizing things with the architect. Still not totally convinced that this is the best idea but we both love the lot/ area and would plan to be in this house the next 20+ yrs.
I'm pretty set with investments. Both in mid 30s with one kid. What does the MT say? Thx.
We are Currently living in a house worth 300k (no mortgage). We also own our lot outright worth 210K.
For most of want we want, the total cost of building including our land would be approx 850K.
So, house and lot: 510k - 850k = 340k mortgage if I decide to not put any liquid reserve into the new house.
We have been living pretty modestly in our current home the past 12 yrs. I'm getting a lil cold feet after finalizing things with the architect. Still not totally convinced that this is the best idea but we both love the lot/ area and would plan to be in this house the next 20+ yrs.
I'm pretty set with investments. Both in mid 30s with one kid. What does the MT say? Thx.
9
Posted on 1/4/17 at 12:42 am to Odinson
How much is the 340k mortgage + taxes + insurance of your take home monthly income?
That a lot of home and I struggle to know why you would need something so extravagant just because you can probably afford it. You literally have an early retirement starring you in the face with a home already paid off.
That a lot of home and I struggle to know why you would need something so extravagant just because you can probably afford it. You literally have an early retirement starring you in the face with a home already paid off.
Posted on 1/4/17 at 5:08 am to lynxcat
How old are you? 340k mortgage isn't a big deal at that salary. How big is the house and do you have children. My cousin just got finished building a 500k house (not including lot) and I originally thought he was an idiot. He has one kid and never plans to have more. To be honest, I doubt he makes nearly as much as you, but his family is absolutely loaded so I don't think money is ever an issue. I still thought it was unnecessary and stupid. I actually helped make the plans and shook my head the whole time.
That is until I went in his house an realized how much nicer it was than mine (~315k). He's not much bigger. The difference is in the quality. My house is cheap and falling apart. His is built with top of the line finishes. As I build more equity and net worth, I certainly see myself striving get for the same. And if that's what it costs, I see no problem paying it if one can afford it (your salary dies in this case, his family money does in his). Now if you are just building a 5000 square foot cookie cutter house built with cheap, unskilled Mexican labor (not racist, just live in Houston and not naive), then run from that fast.
That is until I went in his house an realized how much nicer it was than mine (~315k). He's not much bigger. The difference is in the quality. My house is cheap and falling apart. His is built with top of the line finishes. As I build more equity and net worth, I certainly see myself striving get for the same. And if that's what it costs, I see no problem paying it if one can afford it (your salary dies in this case, his family money does in his). Now if you are just building a 5000 square foot cookie cutter house built with cheap, unskilled Mexican labor (not racist, just live in Houston and not naive), then run from that fast.
Posted on 1/4/17 at 6:08 am to Odinson
Nah you're fine assuming all those numbers are correct. A 340k mortgage for a couple making 225k is actually low. There is no way I would put all that equity back into my new residence with money so cheap, a hedge would be taking the 417k max for conventional financing. But always do what makes you feel best about decision.
She's going to want new furniture. I just went from 3100ft2 to 4800ft2. Luckily our house looks like something Joanna Gaines would furnish and I can build furniture, but still about to drop 10k on living room sofa and chairs.
Edit - would love to see specs of project as poster above mentioned, you should be getting primo everything unless for 850k you want 7000ft2
She's going to want new furniture. I just went from 3100ft2 to 4800ft2. Luckily our house looks like something Joanna Gaines would furnish and I can build furniture, but still about to drop 10k on living room sofa and chairs.
Edit - would love to see specs of project as poster above mentioned, you should be getting primo everything unless for 850k you want 7000ft2
This post was edited on 1/4/17 at 6:21 am
Posted on 1/4/17 at 6:13 am to Odinson
No way. What's driving the cost of the house, size or quality? Did you suggest a budget to the architect? Cause those guys sure can suggest needlessly expensive items, finishes, etc. For example, a build using non standard window sizes can drive up costs.
I'd hesitate, simply bc I'd rather travel than have, say, an outdoor kitchen and radiant heat in my bathroom floors. We built 3 years ago and focused on quality but in a cost conscious way.
I'd hesitate, simply bc I'd rather travel than have, say, an outdoor kitchen and radiant heat in my bathroom floors. We built 3 years ago and focused on quality but in a cost conscious way.
Posted on 1/4/17 at 6:31 am to lynxcat
quote:
How much is the 340k mortgage + taxes + insurance of your take home monthly income?
Lazy math says 340k at 4.25 is about 2k a month all in. 225K salary at 35% tax/investments about 150k take home which 12.5k/monthly. Assuming i'm in hemisphere about 17% take home pay.
Having the house you want with 10k/month disposable income after mortgage should not affect your lifestyle whatsoever.
Posted on 1/4/17 at 6:33 am to lynxcat
quote:
You literally have an early retirement starring you in the face with a home already paid off.
I guess it all depends on the stability of that income and potential for growth, or contraction. Mid 30's making 175 might mean making 250 by 40, or it might mean a wife strongly hinting that she'd rather stay home and raise kids.
quote:
That a lot of home and I struggle to know why you would need something so extravagant
Where I live anything over $120/sqft is considered extravagant, but OP didn't say where he was building. There are plenty of cities where $850k barely gets you enough space for a family of 4.
This post was edited on 1/4/17 at 7:18 am
Posted on 1/4/17 at 8:11 am to Odinson
If the math works out, and it looks like it does, go ahead with the house.
Just understand that a big house comes with big bills. Your water, landscaping, lawn, power, etc bills will all be going up.
Mid 30's making 175k?
to you!
Just understand that a big house comes with big bills. Your water, landscaping, lawn, power, etc bills will all be going up.
Mid 30's making 175k?
to you! Posted on 1/4/17 at 8:24 am to crazycubes
quote:
Just understand that a big house comes with big bills.
Yeah, my in-laws just put in an HVAC system for their downstairs that would've bankrupted me. I got an entire new system last year for $5k - being poor has its upsides.
Posted on 1/4/17 at 8:48 am to Odinson
quote:
Still not totally convinced that this is the best idea but we both love the lot/ area and would plan to be in this house the next 20+ yrs.
Make sure the design of the home, and the exterior material used make for minimum upkeep. You don't want a bunch of rot on a 2 story home, roof designs that lead to leaking, etc...
Posted on 1/4/17 at 9:33 am to GaryMyMan
quote:
Yeah, my in-laws just put in an HVAC system for their downstairs that would've bankrupted me.
but you drive a Porsche and have single watches worth more than peoples houses?
Posted on 1/4/17 at 10:45 am to ItNeverRains
Thanks everyone for the constructive responses. I'm feeling less apprehensive regarding the process.
Since we are planning to stay in the new house long term, I'm okay with sinking the money into it. It will be a very quality built custom home that's inline with the neighborhood. ~4k sq/ft. There's actually a house down the street breaking ground that will be >7k sq/ft.
Since we are planning to stay in the new house long term, I'm okay with sinking the money into it. It will be a very quality built custom home that's inline with the neighborhood. ~4k sq/ft. There's actually a house down the street breaking ground that will be >7k sq/ft.
Posted on 1/4/17 at 11:28 am to Odinson
i personally wouldn't do it, although you didn't say how much you have in savings for other things. But 510k is a buttload to sink into a house. Sure, this gets your payment down, but you are just moving $$ around.
I think a big question is how much $$ do you have outside your house. You don't want all of your personal wealth to be tied up in a house, as it limits flexibility down the road.
I think a big question is how much $$ do you have outside your house. You don't want all of your personal wealth to be tied up in a house, as it limits flexibility down the road.
Posted on 1/4/17 at 12:11 pm to Odinson
Sounds fine. Big question is.
What will you be cutting in your budget to cover the ~2k increase in monthly cost? Have you planned for that?
What will you be cutting in your budget to cover the ~2k increase in monthly cost? Have you planned for that?
Posted on 1/4/17 at 12:22 pm to Odinson
quote:
~4k sq/ft. There's actually a house down the street breaking ground that will be >7k sq/ft.
ETA: Nevermind I see you meant total square foot I thought you were talking $/ sq ft.
You just have to realize that utility bills can be huge with large houses with tall ceilings. I have family in 6,000-9,000 sq ft homes that have electric bills that hit $1000/ month. To sell a house like that requires it be in great shape also, and keeping nice houses in good shape is $$$ too. Property taxes can be extreme too, I mean it could mean $10,000 more a year depending on where you live.
You can certainly afford that so I wouldn't sweat it too much, you just need to feel comfortable that you won't have as much money for other things.
This post was edited on 1/4/17 at 12:25 pm
Posted on 1/4/17 at 12:59 pm to barry
quote:
Sounds fine. Big question is. What will you be cutting in your budget to cover the ~2k increase in monthly cost? Have you planned for that?
his take home monthly is roughly 13k and his house payment will be around $2500. What would you cut if your monthly disposable income went from $13,000 to just over $10,000 a month?
Posted on 1/4/17 at 1:02 pm to ItNeverRains
If he is maxing his 401k, his take home is most certainly under $10,000 a month. Just an FYI for the debate.
Posted on 1/4/17 at 1:08 pm to ItNeverRains
At $225k total income his take home is less than $13k/month after taxes, insurance and 401k.
Posted on 1/4/17 at 1:11 pm to Hermit Crab
quote:
but you drive a Porsche
I bought my Porsche. Your mommy bought your Tahoe.
Edit: Sorry, trustfund, not mommy. My bad.
This post was edited on 1/4/17 at 2:41 pm
Posted on 1/4/17 at 1:13 pm to Janky
quote:
At $225k total income his take home is less than $13k/month after taxes, insurance and 401k.
That too.
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