Home Purchase

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Home Purchase

Post by Deklon »

His Salary: 194k, 34 yrs old and just finished grad school
Her Salary: 98k, 33 yrs old
1 elementary school age child

Retirement Account Balance: 175k
Cash Savings: 75k

No debt.

Looking to see what the consensus is on if it is wise to purchase a home for 430k in a MCOL City.

Will do a fixed 15-year mortgage and continue to max his and her 401k, Roth IRA, HSA but would probably not have much if any to contribute to a taxable account.
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Re: Home Purchase

Post by leeks »

Wait until you have enough cash for
(1) emergency fund that could cover 6 months of expenses or unexpected home repairs
(2) closing costs
(3) 20% down payment
It does not seem that $75K can do it.
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Re: Home Purchase

Post by Cubicle »

Income seems to be decent. Give it another year or 2 to really build up an emergency fund, more of a general savings, & a solid down payment plus closing costs.

For clarity: Not wise at this time to buy a $430,000 house.
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Re: Home Purchase

Post by dsmil »

$300k income and able to get a 15 year mortgage while maxing 2 401k's, a Roth, and an HSA? I think you're in great shape to get a home. I still don't understand the need for 20% down that everyone seems to suggest here. Paying $50 per month in PMI for a few years isn't a big deal. I'd much rather be in your position than making half of your income and having 20% to put down. I think saving enough for your emergency fund, 10% down, and closing costs is fine. Add some extra for anything you want to do to the house or defer some retirement savings for a couple of months if you have to.
Last edited by dsmil on Mon Feb 10, 2020 11:56 am, edited 1 time in total.
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Re: Home Purchase

Post by Sandtrap »

How long do you expect to live in the new home?

Do you expect to have to relocate due to employment in the future?

Will a 430k home that you are thinking of allow for a growing family and provide for your needs over the longer term?
Great schools in this area?

*What does your spouse think of all this? (big one)

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Re: Home Purchase

Post by student »

Yes. You can afford it.
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Re: Home Purchase

Post by Nowizard »

Based on your income it would take approximately 1.5 years to pay off a 450K house. That is an excellent ratio, assuming your jobs are stable. Yes, there are other things to consider, but even 30 year loans are near historic lows. If it were a home that you loved in a location you loved that you planned to keep for a number of years, I would go for it. If your psychological comfort now is enhanced, that is worth considering. It is not a huge jump to say you can refi to a 15 year loan in the future if interest rates support it. You live in a MCOL area which further mitigates the risk. This will not be the typical response. From a financial perspective, purchasing a house is not ideal at the moment. However, that may be different if you are more focused on purchasing a "home."

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Re: Home Purchase

Post by chevca »

Pretty much $300k salary looking at a $430k house... yes, that's wise. Go for it.
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