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I agree with SQL. While what you are proposing "may" be feasible, I don't see retirement savings or college savings in your budget. Are you able to set aside some funds for these future expenses? If not, it seems that you will devote so much of the salary to housing, with insufficient funds remaining to fund retirement and college (not sure if those are a priority for you or not, I'm guessing not? I'm not judging, just asking.) A second income could help immensely; double the $87K salary and you will be able to afford the housing you are seeking, save for retirement, and not have to live on a shoestring budget.
I would not attempt to support three people and buy a home with that income in HR or Parker. Also, $10K seems like a very small emergency fund. If a general rule of thumb is to spend 1% of housing price per year on maintenance, that's a minimum of $3,200 that you don't seem to have in your budget. While these are generalizations, another rule of thumb is to have 6 months of expenses in an emergency fund and it does not appear that you are achieving that target. I really feel for first-time home buyers; it can be very difficult to afford housing in Douglas County with a single income.
I do appreciate the cautious opinions as well as the ones that feel it is doable. I'd like to think about this from all sides and figure out what we're comfortable with.
We do save for retirement. Luckily, my husband's job has pretty good benefits I think. It seems companies have been cutting benefits in the past few years. Including their match, we save about 15% of our income for retirement. I feel pretty comfortable with this for now. Do you think more should be saved? This is split between a 401k and Roth IRAs. This is also part of the reason our emergency fund is only $10k. We have about $10k we could pull out of our Roths as well if needs be in a true emergency. I figured I'd have the money working more while I don't need it. I have considered upping the cash fund to $15k, though. I also save a small amount to a car fund each month for repairs plus future purchases. I saved up the money to open the Roths and fund the emergency fund before saving for a house and before having any kids.
You are correct about college. We are not actively saving for that now. I was going to worry about that when we made more. I paid for my college with academic scholarships, so I guess I don't see that as a high priority. Not that I'm assuming my kids can do the same thing.
I am planning on saving $300 a month after the house purchase for home maintenance. What do you think? Too low?
So, for SQL and MoutainK, say I get a $295k mortgage after saving more for a down-payment. What salary would you feel comfortable with to get that mortgage?
Also, would I need more than $10k in addition to the down-payment for closing costs, etc? 2bindenver stated I could get a grant for closing costs. I assume that is because our salary is below a certain amount though for the county. I know in some places it is common to get the seller to pay closing costs. In Denver is it usually the buyer that covers it then? I guess with this market the buyer might not get any perks since there is so much competition.
I am planning on saving $300 a month after the house purchase for home maintenance. What do you think? Too low?
So, for SQL and MoutainK, say I get a $295k mortgage after saving more for a down-payment. What salary would you feel comfortable with to get that mortgage?
Also, would I need more than $10k in addition to the down-payment for closing costs, etc? 2bindenver stated I could get a grant for closing costs. I assume that is because our salary is below a certain amount though for the county. I know in some places it is common to get the seller to pay closing costs. In Denver is it usually the buyer that covers it then? I guess with this market the buyer might not get any perks since there is so much competition.
There are a lot of variables, so there are no easy answers I can provide. The rule of thumb is to pay yourself first, always. Set aside at least 10% of your income for retirement per person. It will also depend on how much home improvement your hypothetical new home will need. If it's a fixer upper, then be prepared to dump some money into it. If it's brand new, then it shouldn't cost much in terms of improvements.
Personally, if I were supporting three people on $87k, I'd be looking at the $250k to $325k price range. This would ensure that you could live fairly comfortably and also have enough left over for the essentials/emergencies. That's why I think a townhome would be a very good option for you at this time. You can find a decent amount of them in this price range throughout Metro Denver. Once you're able to start working again, you could more easily afford the bigger house and bigger yard. At the very least, expand your search outside of Douglas County. Maybe check out Arapahoe County.
What attracted you to Denver in the first place? was it a job or because you heard its a wonderful city(not knocking you if you did)? I dont know the right answer would be for you, have you checked out Arvada, Westminster and Lakewood for buying a house. they aren't bad neighborhoods at all(all be it lakewood has some rough areas, You can find out about that stuff on this forum) but they aren't the upper middle class like Douglas county. My friend lives in Westminster near the intersection of 92nd and Federal and it was safe enough for me to go walk down the half mile to go get a drink from the shell station late at night. Any ways whats the attraction to the south end of Denver that makes that where you want to buy a house there?
If your really questioning if you might want to stay, but are unsure because of the cost of homes going up then I'd either suggest looking into another suburb around Denver or consider moving to another city or state. but keep in mind any city that is popular will be more expensive than cities that are dead end cities and you'll pay for it in housing.
If you want to wade it out and see where the housing market goes in hopes that it goes back down you can do that and I've got news that relates to that. Denver is seeing a spurt of new housing developments going up around the metro area but sadly they are all upper end luxury homes that are selling for about half a million or more, But here might be a light in the dark.
If you want to wait it out then i suggest you look up(at your own cation) the news stories on the state of the global economy, just today there was an article this morning that the Deutsche bank is teetering on collapse as are many others. So while the bank is unrelated to Denver in almost every way possible it does have one impact on Denver(and the rest of the country) and that is it could upset the markets which could lead to jobs being cut which means people lose their houses which leads people to move out of state. And before the people on here jump in and say there wont be another housing crash, I would like to say that while the stock market might take a dive that doesn't always mean the housing bubble will pop but it could affect the jobs in Denver which would lead to a housing crash like in 08-2010. And while Denver was luckier than most, it still had a tone of foreclosures because of it. So why wouldn't it be the same this time. Just keep in mind that if the economy goes once again then you might lose your job and be FORCED to move, but if your lucky there could be lots of foreclosures that you could pick up at a deflated price. Yeah its a bit sad that that maybe the only way for some people to get a house in Denver but with the amount of new people constantly flooding in thats most likely the case at this point.
this whole thing about Denver going from a city that was getting more expensive but at a gradual rate, To a almost over night COL frenzy that has raged out of control for almost 4 years to rival that of the great cities of america where its hard for most people to live comfortably. Think of cities like LA, San Francisco, Seattle, Boston, San Diego,Washington DC and New York, now imagine Denver almost over night becoming as expensive as these cities. Its unnatural to become like that in just 3 1/2 years. I don't know when Denver will have its crash but it can't go on forever at its current rate and hopefully it wont be to bad.
We were transferred here for a job. We weren't even trying to move here, it just kind of happened. We have grown to really like it, especially Parker for some reason. That is the main city we are interested in. We actually live in Arapahoe County now, but very near Parker. We just feel drawn to it, and we usually never feel that way about a city.
I never considered the north or west parts of the metro just because my husband works in Aurora. I guess places like Thornton and stuff would be pretty close, but I've never felt drawn to it.
Thanks for the economy info. It is true there is a lot going on in the world right now. Who knows how any of it will affect the Denver economy. Even our own US election could lead to something unexpected economically. Just in Colorado, we're supposed to vote on ColoradoCare which could change the game as well. I think it is a good thing we have at least a 6 month wait before we really have to decide what to do for sure. Something might change by then and then the situation could be different.
We were transferred here for a job. We weren't even trying to move here, it just kind of happened. We have grown to really like it, especially Parker for some reason. That is the main city we are interested in. We actually live in Arapahoe County now, but very near Parker. We just feel drawn to it, and we usually never feel that way about a city.
I never considered the north or west parts of the metro just because my husband works in Aurora. I guess places like Thornton and stuff would be pretty close, but I've never felt drawn to it.
Thanks for the economy info. It is true there is a lot going on in the world right now. Who knows how any of it will affect the Denver economy. Even our own US election could lead to something unexpected economically. Just in Colorado, we're supposed to vote on ColoradoCare which could change the game as well. I think it is a good thing we have at least a 6 month wait before we really have to decide what to do for sure. Something might change by then and then the situation could be different.
That makes sense that you'd live in Parker if your husband works in Aurora. I like Parker, its a cool town that I wouldn't mind living in but I'd rather be near the mountains.
Kudos to you for saving for retirement. Personally, I think that is fantastic because I don't like to see people who are "house poor" due to high house payments. Particularly since you are planning a 30-year loan, saving for retirement is important because it's not a great idea to wait another 30 years, when the house is paid for to begin saving for retirement, due to the power of compounding the earlier retirement contributions.
I'm wondering if you've looked for housing in Aurora if your husband works there? I'm not an expert on that area (I'm sure others on this forum have expertise) but expect there would be more affordable housing in Aurora than Parker. Plus, a shorter commute is a real bonus in inclement weather.
Some things we didn't think about when we bought our first house:
- If you do buy, make sure you think about all of the things you'll need to spend money on in the first 10 years, and slowly save for those. Think little things like lightbulbs, leaky faucets/ plumbing, repainting a deck, trimming trees, etc. - and bigger things like a roof or resurfacing a driveway.
- There will likely be things you'll want to do during move-in, so it would be good to have money set aside for that also.
- You will likely need some new furniture to fit into your new space, if you're sizing up at all
With that being said, if you're comfortable with the monthly payment you'll lock in for the next 30 years, and you want your own home, and you want to stay in the area long term, go for it. In my opinion - and opinion only - there is nothing like living in an area you love, working to pay off a home (think of the equity in 30 years), and having the freedom to do what you want with it :-)
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