Am I FOMO-ing or am I making the right choice? (Boston: house, to buy)

[Johnduh]

Originally Posted by GeoffD

I dropped some numbers into a spreadsheet. Assuming you both max out your 401(k) and you'd be insane to not be doing that, I estimated your net pay.


$180k gross
$13,770 in payroll taxes
$39,000 in maxed 401(k)
$6,410 in state income tax
$17,000 in federal income tax


Your net after taxes and 401(k) is $103k and you probably have employee-paid medical/dental taken out.


Buying a house, 12 months of interest on a $550k 3.5% 30 year fixed loan is $19,081. Your State & Local tax is capped at 10k. Your Schedule A is only $5k more than the standard deduction. You're in the 22% bracket so the tax break is less than $1,000. Your take home pay doesn't change much at all.



Anyone here can tell you that owning a house has a bunch more expenses than mortgage, taxes, insurance, and utilities. Well more than half your net is going to the house. You're going to be much more car-dependent so you're looking at car payments and car depreciation & operating costs. You have to furnish a 3,000 square foot house.


Another way of looking at this is that people buying in Medford are W-2 buyers. They have to qualify for the mortgage. If interest rates go up, they qualify for a smaller loan. There are towns that are probably impervious to an interest rate hike but I don't think Medford falls in that category.



You don't need a house now. Maybe you could trade up a bit with your condo and have a small mortgage you could zero out quickly if you wanted.

Thanks for the detailed input!

We factored in the extra commute. I work at a facility that has free parking and I own the car out right. My wife would only need to go in twice a week. It's a Toyota so it's good on gas and cost of repair is pretty much just frequent oil changes and occasional tires. I used to be an auto technician for 11 years, so I not expense there other than parts. We will be using the furniture from the condo to the new home. My current job, I contribute to a pension and also a little into a Roth IRA, but not maxing out. I feel like we are in a good position and the time is now or never. There's was listing in Woburn for $1.4M and now it's pending. $1.4M!!!

[Johnduh]

Originally Posted by porterhouse

How long have you owned in Boston? I assuming you have made a lot of money on that property. With no mortgage, that is always a nice check to cash. You can afford the mortgage, but it's big for $180k income. It's all about what you are comfortable with. Can you buy down the mortgage principal a bit further?

I think cashing in Boston to invest in somewhere like Medford is a good thing in general. With inflation rising, real estate is looking like a better place to park your cash by the day, and don't let anyone tell you your primary residence isn't an investment. In this area, it absolutely is.

We've lived in Boston for 11 years now. We made a decent chunk of change from it. We feel like we will be comfortable with the payment. It's just a little scary going from near zero debt back to $3800/month. But, we gain our own bigger space with a back yard and 2 car garage. Two car garage is hard to come by in Medford, let alone one car. We have put down enough to have emergency funds left over if something bad were to happen. We rarely dine out and if we do, it's mostly take out. We mostly cook at home, we don't buy new clothes as that is the most waste of money. We shop at Market Basket even when we lived in Boston. We are pretty frugal. Yes, buying into a SFH near the city was also an investment in our eyes as well, but more so to start a family.

[BostonMike7]

Originally Posted by GeoffD

Sure beats $3,800/month for a house in Medford.

That was initially my first thought as well. I know Medford is up-and-coming, but when I think of cities I would drop $1mil+ on for a home, Medford is not one of them.

[LLCNYC]

Originally Posted by BostonMike7

That was initially my first thought as well. I know Medford is up-and-coming, but when I think of cities I would drop $1mil+ on for a home, Medford is not one of them.

Amen.

[porterhouse]

The green line extension will be done at one end of Medford soon, the other borders the same Fells that Winchester residents swoon about. With a short commute into Boston, Medford is up and coming. $1MM+ is at the top of the range there but people were saying the same thing about Arlington 10 years ago.

[airunxc]

Medford public schools are no where near close to worth $1M

[GeoffD]

Originally Posted by BostonMike7

That was initially my first thought as well. I know Medford is up-and-coming, but when I think of cities I would drop $1mil+ on for a home, Medford is not one of them.

Particularly on $180k combined income. What could go wrong?

[GeePee]

Have you ever thought of renting the condo and keeping your equity in tact? Not for everybody, but if possible could be a source of income paying into your new mortgage.

[yellowstatus]

Originally Posted by BostonMike7

That was initially my first thought as well. I know Medford is up-and-coming, but when I think of cities I would drop $1mil+ on for a home, Medford is not one of them.

When we were house shopping in 2016, our realtor convinced us out of a $1mm, 1,900 sqft sfh with a yard two blocks from Union Square because it was unimaginable to pay that much for something in Somerville.


In the end, I think living preferences and financial ability are most important. Timing the market is incredibly difficult. My humble opinion is to go for Medford. And this is coming from my general view that Boston prime urban locations are a great financial investment.

[Johnduh]

Originally Posted by GeePee

Have you ever thought of renting the condo and keeping your equity in tact? Not for everybody, but if possible could be a source of income paying into your new mortgage.

That was another scenario we came across, but we both agreed that just getting rid of it was the best choice and no headaches of being a landlord.