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I just wanted to get some thoughts from the knowledgeable people on this forum. My partner recently accepted a position as a professor in a low-cost state. He will be earning $96,000, plus an additional 9% 401k contribution. As part of his acceptance package, the university has also offered me a temporary position for a maximum of one year at $60,000. I am an attorney with two years of experience, but this temporary position will not be practicing law. I will have to take a second bar exam and then apply for permanent positions in this state. Prior to this move, I have been making between $60 and $70k. We have about $130,000 in cash savings and about $25,000 in retirement funds. I have $356 in monthly student loans and a $204 monthly car payment. We are under contract for a house costing $174,500. We will put 20% down, with the seller contributing $4,500 in closing costs. It is a historic home; though it is in good shape, we can expect higher maintenance costs and likely higher utility costs. Property taxes are $2,100, and insurance is $1,044/year. We will have all the other normal bills (car insurance for 2 cars, cable, internet, heat, etc.) We do like to travel and eat out more than most people, probably. There is a possibility that I could be unemployed after this temporary position is over, so we need to make sure we can afford this house based on my partner's income alone. It is our first home purchase. I am fiscally conservative, so while I'm pretty sure we can afford this, I just want to hear other's thoughts. Thanks!
Last edited by Jordan475; 09-27-2011 at 10:44 AM..
I just wanted to get some thoughts from the knowledgeable people on this forum. My partner recently accepted a position as a professor in a low-cost state. He will be earning $96,000, plus an additional 9% 401k contribution. As part of his acceptance package, the university has also offered me a temporary position for a maximum of one year at $60,000. I am an attorney with two years of experience, but this temporary position will not be practicing law. I will have to take a second bar exam and then apply for permanent positions in this state. Prior to this move, I have been making between $60 and $70k. We have about $130,000 in cash savings and about $25,000 in retirement funds. I have $356 in monthly student loans and a $204 monthly car payment. We are under contract for a house costing $174,500. We will put 20% down, with the seller contributing $4,500 in closing costs. It is a historic home; though it is in good shape, we can expect higher maintenance costs and likely higher utility costs. Property taxes are $2,100, and insurance is $1,044/year. We will have all the other normal bills (car insurance for 2 cars, cable, internet, heat, etc.) We do like to travel and eat out more than most people, probably. There is a possibility that I could be unemployed after this temporary position is over, so we need to make sure we can afford this house based on my partner's income alone. It is our first home purchase. I am fiscally conservative, so while I'm pretty sure we can afford this, I just want to hear other's thoughts. Thanks!
You will make 156k for the next year combined, and you are buying a home for 174k-20%down = 139k. I would say the house is easily within your budget. Typical recommended home buying ratio limits are 3x yearly income and you are less than 1x. Even after a year, when the temp position finishes, you will still be at less than 2x your income if you don't get another job. That is without running all the numbers but just from the house price vs income I would say it makes sense.
I would focus on getting rid of the debt, what is the total student loan amount left?
Thanks for the reply! I have $26,500 left on my student loan payment. I am waiting to see how buying the house goes, and then will likely pay off most, or all of the loan.
Negative prediction alert: You will be moving in under 2 years, deciding the maintenance is not exactly what you were cut out for........underbuying is probably one of the top (if not top) mistakes buyers make. But don't let me ruin your fun. You will certainly have the income(s) to fix the home up into a stunning showplace, or, you can certainly absorb any loss from deciding to sell not long (under 2 years) after you buy. Don't overthink it and enjoy! I hope one of you is a gardener........Historic homes cry for green thumbs.
What do you mean by underbuying? I would say the house is in excellent condition. It has a brand new roof, new energy efficient windows, a new wrap-around porch, and relatively new wiring and plumbing (10-15 years old). It is a very old house, though, built in 1902. We honestly liked it better than any other house in the city (Norman, OK).
What do you mean by underbuying? I would say the house is in excellent condition. It has a brand new roof, new energy efficient windows, a new wrap-around porch, and relatively new wiring and plumbing (10-15 years old). It is a very old house, though, built in 1902. We honestly liked it better than any other house in the city (Norman, OK).
I think he is implying that since you make so much compared to the home price that you are likely to move within a few years for a bigger or nicer place. He is right if that's the case, it generally doesn't make sense to buy for only two years, but I didn't get that impression from your post at all.
The one other thing I would consider if you are new to the city, it might be wise to rent until you know where you want to live. I think it's hard to make such a big purchase decision by just visiting a town.
I would spend some time in historic housing forums.......I'm sure they are around. I'm not implying the home is falling apart, only that the maintenance is well documented to be more than the average home. as any home of age would be. Additionally, if you are in a recognized historic district, anything done to the exterior of the home must be reviewed and approved by an architectural committee. They will always rule on the side of historic integrity over cost.
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