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I'm looking about 2 hours away north of the SF Bay Area. The houses I'm looking at hover around 320k. There is some that have sold for 280-300k. My 80k salary might be a little on the tight side though. I would be putting down a 10% down-payment.....looking at mortgage payments of around $1800 a month, including taxes and insurance. That should eat up a about a third of my income each month.
It makes no sense in "putting down" 10%. It only matters if you're putting down 20+%. (Unless, you're VA.) You might as well put down 3% as money is very cheap (altho, do it soon, as the 10 yr T-Bill is showing signs of moving up.) You might be able to relieve yourself of PMI during your next re-fi, but again, your rate may be higher, so choose wisely.
The old formula of "No more than 1/3rd of your net income should go to housing" is ridiculous. Leaving 2/3rd's on the table every month is crazy. (Unless you like to travel to Europe/Asia every week, for the helluvit. Or, a $1000/day coke habit.) There's just no reason to have all that extra cash doing nothing for you. (Of course, you can do some day trading/gambling with it, I guess.)
Are you looking in the Napa/Calistoga/Middletown/Lake County area? Mt. St. Helena is quite nice. (Redford still has property at the base.)
Here's a nice one... https://www.zillow.com/homedetails/1...19100145_zpid/
A famous economist once said, "nothing is either good or bad save the alternatives make it look that way."
$80K is a low salary for California. Many people wouldn't consider moving TO California even for $180K.
$320K for a house a few hours north of SF? There's a REASON it is only $320K and not triple that, and it probably has something to do with the commute. While you're not commuting to SF, I'd double check your expected commute - especially during the winter with inclement weather. Are you moving into an area that is subject to California's severe firestorms or mudslides? By definition, you're moving into a seismically active area - check on the availability of earthquake insurance.
1. I'd think twice about making the move for such low compensation (low for California) unless you see this as a strategic move, positioning yourself for substantial increases in compensation going forward.
2. What are your alternatives? I understand the desire to move out of living with your in-laws, but is this the right career opportunity? The economy is really starting to pick up according to all the macroeconomic indicators; it is reasonable to expect you'll find many other career opportunities over the coming 9 months. Is this likely to be among the very best?
This decision is sometimes called "The Streetwalker's Dilemma" in academics. Google it. Do you take the current offer (less than you'd like), or wait for a better one with a risk you won't get a better one?
Scrutinize the commute heavily. With growing kids, are you prepared for leaving before they rise and getting home after sunset? It is going to be easy to rationalize the commute as a sacrifice for better schools and a cheaper payment, but something different in practice, especially after a few months.
Some folks have the resiliency and composure to make long work commutes. I've personally done it 4 years over a 30 year working life. My kids were grown when I had those long commutes, so I did not miss time with them, per se. But one hour to drive 30 miles (2 years), and one hour to drive 25 miles (2 years) got old fast. If traffic congestion is in the commute equation, it might grind you down over time. In my last job (long commute) I would get home and be a complete grouch. It would take me 30 minutes to get my attitude in check. I got sick of it, so I resigned.
My reference to growing kids is more about how my profession and demand of my time took a toll on my family life--it was not traffic, but other work demands. I remember quality time with my kids, but I also remember leaving before they woke up and coming home with them both in bed on a school night.
If it doesn't bother you, cool. I know lots of DC beltway commuters that do fine with it.
Be wary of being told you can afford more than you really can. Look at the taxes, call insurance agents to see about the cost of insurance and make sure it can be insured for fire, find out actual cost for water/sewer/garbage. Find out if the property is on city sewer/water (way better than dealing with wells or septic systems - been there), figure cost of commute, have money put aside in case of major repairs - what if the HVAC system dies, what if you need to repair the roof, are the fences in good shape, cost of gardeners - there are so many costs associated with home ownership.
Also mentioned is PMI - good to find out how much that will be on top of payment.
I'd look into FHA financing and put the minimum down, so you can keep that extra cash for emergencies, and when you can, put extra toward the mortgage to work towards getting out from under PMI. There used to be FHA loans, anyway, where you could just put down around 3% and they'd wrap the closing costs into the loan.
FHA will let you refinance later on, too, if you want to.
So, talk to a lender who knows about FHA financing. And be really conservative about what you can afford. I remember right before the 2008 crash, bankers and realtors telling people they could afford way more than they should - and using the "are you careless with your money?" angle to convince people they could afford more than they really could.
So, really learn about all the costs, get out your calculator, find out about FHA loans and wrapping closing costs into it and the lowest down you can get away with and be conservative. I wouldn't buy a fixer-upper, unless it's just cosmetic like paint or new cabinets that you can do yourself or that can wait.
Talking from experience here, for myself and my daughter. Then, after you get into the house and maybe discover you can afford to throw more money toward the mortgage, great. But, be sure and keep an emergency savings account to cover major repairs. Pipes burst, water heaters die, fences blow down in storms...
I personally don't think the homeowner warranty insurance policies that cover appliance breakdowns are worth it, by the way. They're usually a huge hassle and they make you wait forever to get approval to hire anyone to fix things like the water heater.
But, if you get into something you can truly afford, it's sweet to be a homeowner. And, by the way, sometimes a commute can be a nice break - gives you time away from kids, time to wind down after work, time to listen to educational podcasts, etc.
Be wary of being told you can afford more than you really can. Look at the taxes, call insurance agents to see about the cost of insurance and make sure it can be insured for fire, find out actual cost for water/sewer/garbage. Find out if the property is on city sewer/water (way better than dealing with wells or septic systems - been there), figure cost of commute, have money put aside in case of major repairs - what if the HVAC system dies, what if you need to repair the roof, are the fences in good shape, cost of gardeners - there are so many costs associated with home ownership.
Also mentioned is PMI - good to find out how much that will be on top of payment.
I'd look into FHA financing and put the minimum down, so you can keep that extra cash for emergencies, and when you can, put extra toward the mortgage to work towards getting out from under PMI. There used to be FHA loans, anyway, where you could just put down around 3% and they'd wrap the closing costs into the loan.
FHA will let you refinance later on, too, if you want to.
So, talk to a lender who knows about FHA financing. And be really conservative about what you can afford. I remember right before the 2008 crash, bankers and realtors telling people they could afford way more than they should - and using the "are you careless with your money?" angle to convince people they could afford more than they really could.
So, really learn about all the costs, get out your calculator, find out about FHA loans and wrapping closing costs into it and the lowest down you can get away with and be conservative. I wouldn't buy a fixer-upper, unless it's just cosmetic like paint or new cabinets that you can do yourself or that can wait.
Talking from experience here, for myself and my daughter. Then, after you get into the house and maybe discover you can afford to throw more money toward the mortgage, great. But, be sure and keep an emergency savings account to cover major repairs. Pipes burst, water heaters die, fences blow down in storms...
I personally don't think the homeowner warranty insurance policies that cover appliance breakdowns are worth it, by the way. They're usually a huge hassle and they make you wait forever to get approval to hire anyone to fix things like the water heater.
But, if you get into something you can truly afford, it's sweet to be a homeowner. And, by the way, sometimes a commute can be a nice break - gives you time away from kids, time to wind down after work, time to listen to educational podcasts, etc.
This is fantastic, thank you for this valuable information.
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