House or wait forever
House or wait forever
Hi everyone,
My fiancee and I have a total of 700k in savings.
It's parked at VUSXX since we would like to buy a house.
Austin TX pretty much 2x in price and we can get at best a 6% rate.
What do you suggest? We were thinking using all of that as down payment so that the monthly mortgage is 1800.
We make a combined pre-tax 450k. We do all the 401k, roth ira, and ESPP.
I can wait a year but a baby is coming so I'm kinda stressed. House prices doesn't seem to reflect the interest rate.....houses in good school districts are like a million.
Thank you,
Issac
My fiancee and I have a total of 700k in savings.
It's parked at VUSXX since we would like to buy a house.
Austin TX pretty much 2x in price and we can get at best a 6% rate.
What do you suggest? We were thinking using all of that as down payment so that the monthly mortgage is 1800.
We make a combined pre-tax 450k. We do all the 401k, roth ira, and ESPP.
I can wait a year but a baby is coming so I'm kinda stressed. House prices doesn't seem to reflect the interest rate.....houses in good school districts are like a million.
Thank you,
Issac
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Re: House or wait forever
Hi Isaac,
Native Austinite here, who was forced to move from Austin before 7th grade to Round Rock, about 20 miles north.
Have you thought about the freedom you could earn by buying a much smaller and cheaper house? Your combined income is 450k?
Looking at realtor.com, I just saw a 2-story home in RR, 4 bedrooms, 1800 s.f. priced at less than 400k.
You could pay cash, and have no house payment ever?
Of course the sacrifice would be having to drive from RR to Austin everyday. Quite a hassle I am sure.
It's all about choices.
Good luck.
Native Austinite here, who was forced to move from Austin before 7th grade to Round Rock, about 20 miles north.
Have you thought about the freedom you could earn by buying a much smaller and cheaper house? Your combined income is 450k?
Looking at realtor.com, I just saw a 2-story home in RR, 4 bedrooms, 1800 s.f. priced at less than 400k.
You could pay cash, and have no house payment ever?
Of course the sacrifice would be having to drive from RR to Austin everyday. Quite a hassle I am sure.
It's all about choices.
Good luck.
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Re: House or wait forever
What exactly is the problem? You make $450k per year. Barring massive student loans or other debt, you should be able to afford a $1M home.
Last edited by texascrane on Wed Jun 07, 2023 12:55 pm, edited 1 time in total.
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Re: House or wait forever
+1 if you don't mind a little bit of a commute and the schools are decent enough in Round Rock. Otherwise, as long as your income is stable you have no issue affording a $1 million house. I would suggest only putting 20% down on the house so you're not nuking all your liquidity currently earning a healthy 5% in interest. You may also have the opportunity to refinance the mortgage to a lower rate in the future if / when rates come back down.AlaskaTeach wrote: ↑Wed Jun 07, 2023 11:36 am Hi Isaac,
Native Austinite here, who was forced to move from Austin before 7th grade to Round Rock, about 20 miles north.
Have you thought about the freedom you could earn by buying a much smaller and cheaper house? Your combined income is 450k?
Looking at realtor.com, I just saw a 2-story home in RR, 4 bedrooms, 1800 s.f. priced at less than 400k.
You could pay cash, and have no house payment ever?
Of course the sacrifice would be having to drive from RR to Austin everyday. Quite a hassle I am sure.
It's all about choices.
Good luck.
- Jimbo Moneybags
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Re: House or wait forever
Buying a house with your pregnant "fiancé" is fraught with pitfalls. Have you considered those? Putting that risk aside, you haven't shared enough information to opine.
Is your income earned by both or just one of you? What is your job outlook as far as stability? What are the plans for your "fiancé's" employment after having the baby? If she will work, how much will daycare be each month.
Do either of you have any debt? What are your ongoing monthly expenses, including taxes and healthcare, and how will those change after the birth of the child?
Finally, what is the price range of the house you are considering?
Things to consider:
1. School district quality doesn't matter for a newborn. It can change between now and when the child would attend kindergarten.
2. Have you actually looked at the available housing in and around Austin? I'm seeing over 1,200 houses priced between $400k and $600k within the Austin city limits. Over 900 of them are in school districts with schools ranked 8+ by GreatSchools. If you expand your search to include the areas between Round Rock, Lago Vista, Dripping Springs and Buda the number of available houses in that price range jumps to over 2,200.
3. There is no rush. A newborn can comfortably live with his/her parents in a one-bedroom (or even studio) apartment for a year or two (or more). So take your time and think this all through.
Is your income earned by both or just one of you? What is your job outlook as far as stability? What are the plans for your "fiancé's" employment after having the baby? If she will work, how much will daycare be each month.
Do either of you have any debt? What are your ongoing monthly expenses, including taxes and healthcare, and how will those change after the birth of the child?
Finally, what is the price range of the house you are considering?
Things to consider:
1. School district quality doesn't matter for a newborn. It can change between now and when the child would attend kindergarten.
2. Have you actually looked at the available housing in and around Austin? I'm seeing over 1,200 houses priced between $400k and $600k within the Austin city limits. Over 900 of them are in school districts with schools ranked 8+ by GreatSchools. If you expand your search to include the areas between Round Rock, Lago Vista, Dripping Springs and Buda the number of available houses in that price range jumps to over 2,200.
3. There is no rush. A newborn can comfortably live with his/her parents in a one-bedroom (or even studio) apartment for a year or two (or more). So take your time and think this all through.
- climber2020
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Re: House or wait forever
huh? what's with the quotes and change in gender? I don't get it.Jimbo Moneybags wrote: ↑Wed Jun 07, 2023 11:56 am Buying a house with your pregnant "fiancé" is fraught with pitfalls. Have you considered those? Putting that risk aside, you haven't shared enough information to opine.
Re: House or wait forever
The world has changed. If you are secure in your near term employment and are confident you'll remain in this metro area for some number of years into the future then you are well positioned to compete for a home.
- Jimbo Moneybags
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Re: House or wait forever
Just my error in spelling, I unintentionally omitted the last letter when I added the accented character.erp wrote: ↑Wed Jun 07, 2023 12:39 pmhuh? what's with the quotes and change in gender? I don't get it.Jimbo Moneybags wrote: ↑Wed Jun 07, 2023 11:56 am Buying a house with your pregnant "fiancé" is fraught with pitfalls. Have you considered those? Putting that risk aside, you haven't shared enough information to opine.
Re: House or wait forever
Is there any specific reason why you think you couldnt afford a house in Austin? From the looks of it you could do that quite easily.
Re: House or wait forever
Nobody should buy a house with a person until they've been married for at least seven years. The risk of divorce and financial catastrophe is too high! /s
The OP didn't ask for feedback on their relationship. Also, I also found it strange that people made assumptions about the gender of the OP's fiancee and put "fiancee" in quotation marks. It's not relevant and comes across as a little judgemental.
OP, you didn't provide much info, but I'd agree with the others that, barring large debts or uncertain income, a person with $700k in taxable and who earns $450k a year should be able to comfortably afford a nice house in Austin. You might not want to pay the prices people are asking, but that's a separate decision.
The OP didn't ask for feedback on their relationship. Also, I also found it strange that people made assumptions about the gender of the OP's fiancee and put "fiancee" in quotation marks. It's not relevant and comes across as a little judgemental.
OP, you didn't provide much info, but I'd agree with the others that, barring large debts or uncertain income, a person with $700k in taxable and who earns $450k a year should be able to comfortably afford a nice house in Austin. You might not want to pay the prices people are asking, but that's a separate decision.
“I am losing precious days. I am degenerating into a machine for making money. I am learning nothing in this trivial world of men. I must break away and get out into the mountains...” -- John Muir
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Re: House or wait forever
so many questions....
with a 450K income (provided it's not variable or irregular or one of the earners will become a stay at home parent) a 1mil house should be doable.
The total cost of the house will be a little more than 2x your household income - and in theory your household income will continue to go up as time goes on (while your "mortgage balance" goes down as you make payments).
Why the focus on having a low mortgage payment? Why are you considering putting more than 20% down on a house?
In general, taking a mortgage helps you build wealth because it's the cheapest money you can buy and because it becomes a "fixed" expense (the Taxes and Insurance changes over time but not your PI payment). That stability lets you save and invest more of your income going forward. It's not so much a paid off house that creates the wealth... it's the ability to save/invest more of your income going forward (for 30 years) that builds wealth.
A house that's 2 to 3 times your household income should be doable and not a bad way to build wealth.
If you will be dropping to a one income family - then you may need to buy a less expensive house rather than put down a lot of money to give you a smaller mortgage payment. Houses have a lot of expenses beyond the mortgage. And big expensive houses usually have bigger day to day expenses beyond the mortgage.
with a 450K income (provided it's not variable or irregular or one of the earners will become a stay at home parent) a 1mil house should be doable.
The total cost of the house will be a little more than 2x your household income - and in theory your household income will continue to go up as time goes on (while your "mortgage balance" goes down as you make payments).
Why the focus on having a low mortgage payment? Why are you considering putting more than 20% down on a house?
In general, taking a mortgage helps you build wealth because it's the cheapest money you can buy and because it becomes a "fixed" expense (the Taxes and Insurance changes over time but not your PI payment). That stability lets you save and invest more of your income going forward. It's not so much a paid off house that creates the wealth... it's the ability to save/invest more of your income going forward (for 30 years) that builds wealth.
A house that's 2 to 3 times your household income should be doable and not a bad way to build wealth.
If you will be dropping to a one income family - then you may need to buy a less expensive house rather than put down a lot of money to give you a smaller mortgage payment. Houses have a lot of expenses beyond the mortgage. And big expensive houses usually have bigger day to day expenses beyond the mortgage.
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Re: House or wait forever
Definitely wouldn't buy a house with a non-spouse. Others do and have no problems. YMMV.
I don't see why a new baby means you need to rush to buy. That baby won't need a school system for another 5-6 years.
If you want to buy because you've decided you want to buy a house (which is primarily a lifestyle decision), then buy a house when you find one you like in your price range.
I don't see why a new baby means you need to rush to buy. That baby won't need a school system for another 5-6 years.
If you want to buy because you've decided you want to buy a house (which is primarily a lifestyle decision), then buy a house when you find one you like in your price range.
Re: House or wait forever
Presumably you are living with your fiancee now?
There’s no need to make a major decision about purchasing an expensive home when you are preparing for imminent parenthood.
Defer the decision. Waiting for a year or two isn’t “forever.”
There’s no need to make a major decision about purchasing an expensive home when you are preparing for imminent parenthood.
Defer the decision. Waiting for a year or two isn’t “forever.”
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: House or wait forever
Assuming you've been actively searching for quite some time. You know what you want & you know what you need.
Hate to say it: but but the biggest house you can "afford." Don't completely stretch your budget, but buying something smallish will just mean a sell then a move in 3 - 5 year when little Johnny gets a little sister and the dog is running crazy circles in the back yard.
That whole home selling / buying and moving thing is a cost burden. RE fees are criminal IMO.
Hate to say it: but but the biggest house you can "afford." Don't completely stretch your budget, but buying something smallish will just mean a sell then a move in 3 - 5 year when little Johnny gets a little sister and the dog is running crazy circles in the back yard.
That whole home selling / buying and moving thing is a cost burden. RE fees are criminal IMO.
Re: House or wait forever
I would look at a mortgage in relationship to state and federal tax deductions before landing on a figure of up to $700k. How you file your taxes will determine the maximum mortgage for federal. Since you are in TX, I do not think they have income tax so that may not matter. Titling the property and mortgage will be something to discuss and determine with your partner. It will have impacts on things like exempt future profit allowed on future sale and what should happen if you decide to not be together.
As for waiting, I live in a HCOL area and people who did not get in the market during the 2010 foreclosures have been waiting for a price decline since than, meanwhile prices continue to increase and interest rates increased. There is a chance the market will decline but Austin is a desirable place to live with a strong economy so it is not an unreasonable risk to jump in.
None of us knows what will happen next, economy, relationships, health, etc. If you are saving for retirement, have a stable job, and are building a family, then buying a home seems like a natural move. I would agree with some comments, that the upper end of the market often holds unnecessary risk compared to a modest house in a nice neighborhood.
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