Can we afford a house and which neighborhood?

[HB2HSV]

Originally Posted by CA4Now

And maybe you're the realtor or the loan officer.

LOL Touche

<Continues to play a Realtor online to convince OP spend all his savings....>
Let's say the OP and DW found a house they really love. It checks off all the boxes for them. However it's listed at $1M and the OP is concerned with depleting all his cash reserves of $200K needed for down payment.

I noted OP monthly income is spent on $2400 rent, $1000 into 401K and additional $4,000 into savings. I am assuming they also spend on food that's not listed.. They have no debt with perfect credit. In addition, they have $225K in their 401K account.

If OP is concerned with spending all $200K on down payment leaving no money left for emergency funds, I would take out a loan on the $225K borrowing against myself. Let's say borrowing $50K against the 401K, OP will be able to pay himself back in two year.

<adding Financial Planner to my title >

Edit to loan payback in 2 yrs

[capoeira]

Originally Posted by leolakers

So what we are looking for is a nice 4 bedroom SFH, no pool, but with a nice view of a city or a mountain or whatever from the living room or backyard. We'd like it to be a little nicer and bigger than a starter home. Preferably a neighborhood 30mins-1hour away from Downtown LA.

So I think we can put 20% down payment and buy a 750-800k house.

2. Which neighborhood?

750-800K + 4BR + nice mountain view + bigger than a starter home = Rancho Cucamonga

Here are a couple of example houses in Rancho

https://www.zillow.com/homedetails/1...17598709_zpid/

https://www.redfin.com/CA/Rancho-Cuc...1/home/4052204

Compare to Pasadena or Duarte or El Monte in a similar price range.

https://www.redfin.com/CA/Pasadena/1...4/home/7264072

https://www.zillow.com/homedetails/5...21622874_zpid/

https://www.zillow.com/homedetails/9...21614957_zpid/

There is a Metrolink train that goes from Rancho Cucamonga to Downtown LA in 73 minutes or 59 minutes for the express.

https://metrolinktrains.com/schedule...ernardino+Line

Rancho Cucamonga also has some good schools. They have 3 school districts - Etiwanda, Alta Loma and Rancho Cucamonga.

Rancho is also diverse with a 99 Ranch Market and a Seafood City supermarket.

It might be doable if you are working from home most of the time.

However Rancho is very very hot in the summer and is 40 miles from downtown LA.

[Veritas Vincit]

Don't let people talk you into buying a more expensive house than you feel you're comfortable with. I've noticed that a lot of people in this country like to spend to the extreme - the best car you can just about afford, the biggest house you can just about afford. And then they act shocked when that house of cards built on debt collapses..

[JohnG72]

Hi OP, may not hit all your wish list, and it will be Chinese dominated community and schools, but maybe Alhambra, Temple City, and San Gabriel. Not sure, you may be priced out there. Closest to DTLA that is possible I think.

If you go further out, you get closer on pricing. La Verne, Glendora, San Dimas, Covina might be doable. But it’s an hour plus rush hour drive to Downtown.

Lakewood/Long Beach may be possible but your budget is probably a tad light. Hour rush hour drive to LA.

Chino Hills/Corona/Eastvale/Norco are pretty far out too but you might get the best bang for your buck.

[TimTheEnchanter]

I haven't read the other responses so forgive duplicates. I'd start with Lakewood, then look at Placentia, Diamond Bar and then Tustin.

Your first house doesn't have to be your forever house. There are townhomes that can be good starter homes.

CA real estate will come back a bit I think at some time, unless we continue to get overwhelmed by foreign money. For all the silly laws that CA government comes up with you'd think they'd be looking at limits on foreign buyers.

[pathrunner]

Originally Posted by Veritas Vincit

Don't let people talk you into buying a more expensive house than you feel you're comfortable with. I've noticed that a lot of people in this country like to spend to the extreme - the best car you can just about afford, the biggest house you can just about afford. And then they act shocked when that house of cards built on debt collapses..

The old adage "buy something slightly more than you think you can afford" went out with the 60's. My uncle bought a home before it was built in La Mesa neat to Lake Murray (San Diego). $32K in 1963. It sold for $750K in 2008 right before the crash. His house payment in 1963 was $205 a month on a teacher's salary. They were horrified that they were spending that much on a mortgage. But 30 years later they owned it outright and 20 more years later.... yeah.

[DKM]

Originally Posted by Veritas Vincit

Don't let people talk you into buying a more expensive house than you feel you're comfortable with. I've noticed that a lot of people in this country like to spend to the extreme - the best car you can just about afford, the biggest house you can just about afford. And then they act shocked when that house of cards built on debt collapses..

With that mindset I would have stayed in the cheap city I moved from and maybe made 100k of equity in 10 years... Expensive cars are horrible investments and not the same financial result expected as buying a median priced house.

[Veritas Vincit]

Originally Posted by DKM

With that mindset I would have stayed in the cheap city I moved from and maybe made 100k of equity in 10 years... Expensive cars are horrible investments and not the same financial result expected as buying a median priced house.

That only works out if you can actually make your payments. Doesn't take much to get people who overextend themselves under water. Unexpected job loss (like during a pandemic?), serious illness, death in the family.

[FirebirdCamaro1220]

Originally Posted by Veritas Vincit

That only works out if you can actually make your payments. Doesn't take much to get people who overextend themselves under water. Unexpected job loss (like during a pandemic?), serious illness, death in the family.

If people were going to be that cautious, almost nobody could afford to buy

[BPt111]

Originally Posted by DKM

You can afford 1 million. That's enough to get you into decent enough house and (this will be really important soon) a good school district. A good local elementary school has a huge influence on your kids development and also will mean you live among neighbors of similar mindset about priorities in life. Buy as much house as you can, the rentals and what not can come later after you build up some equity. Low mortgage rates, tax advantages and inflation will all work to your advantage as time goes by.

I also recommend looking into houses that need some work. You can slowly upgrade and fix up an older home that gets you into a better area. This also doubles as an equity builder.

California home prices out of control and Pasadena was one top of 5 places looking buy home in within 5 years.