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$50-75k?? The lot size is .29 of an acre, so I was expecting in the region of 10-15k for a fence, and just holding off on landscaping until next year. When you say 50-75, are you talking very large lot size?
Price it out. Just trying to be helpful based m experience. Sprinkler system, lighting, nicer specimen trees, fencing...
Personally, I would leave my wife's income out of the equation if I were buying a house. That's just me. I am a lot more "risk-adverse" than you.
This would be one reason for me not to buy. While OP can do without his wife's income, they can't do without the OP's income. If OP loses his job, they will come under a lot of pressure. In contrast, if OP were earning say 200k and his wife 150k, if one of them should lose their job, they can make do indefinitely by stopping retirement savings and cutting all unnecessary expenses.
Hi, I have a 'can I afford this' question, but a little more nuanced than usual. I know that if I type numbers into a Mortgage Website calculator, I'll get a 'Yes', but they don't really take into account the reality of raising a family, so I'd like some feedback from people with lived experience, not just an 'of course you can afford it!'.
My wife and I recently moved to NJ, and we have 1 year old twins. We have seen a house in a town in Union County (well, it's a new construction that hasn't been built yet, but it's from a reputable developer and we've seen basically the same house one town over), and we've had an offer accepted on it. It's walking distance to a train, so the commute to Jersey City is pretty reasonable.
The house is $1m, and taxes are expected to be around $25k per year. Insurance won't be much, so based on a 3% mortgage rate, the monthly is around $5500 per month. This is higher than we wanted to pay, but we're willing to pay a premium for a house that won't need any work, plus all equipment and the house itself, under warranty.
My income is $290k per year. $235k of that is salary, and the rest in guaranteed cash bonus. That's an approximate 'take home' of $12500 per month salary. If I include my bonus as income and spread it across the year, that's around $15k per month. My wife works, and has a 'take home' of around $3700 per month. Overall, our HHI is around $350k per year. Our only debt is an $800 per month car payment (I know, it's excessive, but it's a lease, and we're just going to live with it). We can afford to put down 20% and will have around $80k left over as an emergency fund.
I know that on paper, these numbers look good, but I've read all different takes on this. Some people say you should have an income of at least $500k before contemplating a $1m house with typical NJ taxes, some people say it can be done on less but we'll be 'house poor', but I can't tell if they're being excessively conservative. I don't want to be 'house poor', but I don't really want a house that will require constant work, updates, or a 2hour commute to get to work. We'd also rather just get our long term home, rather than a starter that we'll want to move on from in a few years.
Does anyone know what income level the typical $1m with 2+% taxes buyer usually falls in? I don't want to be too risk averse, but I also don't want to end up regretting it. Everything about the location seems almost perfect, but I'm worried that those online calculators paint an overly rosy picture of what actually is 'affordable'.
Do you have to have what you are seeking?
Do you actually need what you are seeking?
Can you live more frugally, be happy, and save up a great nest egg instead of incurring high annual expenses?
This would be one reason for me not to buy. While OP can do without his wife's income, they can't do without the OP's income. If OP loses his job, they will come under a lot of pressure. In contrast, if OP were earning say 200k and his wife 150k, if one of them should lose their job, they can make do indefinitely by stopping retirement savings and cutting all unnecessary expenses.
But by that logic, that means we basically shouldn't buy any house. If we use her income as the cap, we probably couldn't go above 250k purchase. I get what you're saying, but there isn't really a scenario where me losing my job would be OK for us. Of course it would be great if our income was more evenly balanced, but it's not, and that's not really going to change.
Last edited by baycurious123; 12-15-2020 at 08:18 PM..
I think he was talking about how things add up fast. The price to fence your backyard can vary a lot depending on materials. I agree that a new construction can come with a bunch of expenses. Make sure you think of as many of them as you can.
I wouldn't buy the house with that income but everyone is different. My brother has become friends with the guy that built his house. He asked him about what he thinks the people who buy his homes earn. His answer was basically that he assumes that they spend the maximum that the bank will lend them
Yeah, we're working on that at the moment and dividing it into stuff we'll need asap (i.e. a fence) and stuff that can wait until next year (i.e. everything else).
Ha, I'm not quite at that point. I spoke to a lender, and we're pretty far below the maximum we could borrow. I think using their ratio, a $290k income works out to be something like $1.3m, and if we include my wife, it's even higher.
But by that logic, that means we basically shouldn't buy any house. If we use her income as the cap, we probably couldn't go above 250k purchase. I get what you're saying, but there isn't really a scenario where me losing my job would be OK for us. Of course it would be great if our income was more evenly balanced, but it's not, and that's not really going to change.
Buying less house would make risk more manageable. If you bought a 500k house instead of 1m, that leaves you with a 180k emergency fund and a much smaller monthly mortgage. You could get by with just your wife's income while taking a smaller hit to your savings. You could settle for a lesser paying job if needed.
Ha, I'm not quite at that point. I spoke to a lender, and we're pretty far below the maximum we could borrow. I think using their ratio, a $290k income works out to be something like $1.3m, and if we include my wife, it's even higher.
If a $290k yearly income only works out to be approved at $1.3 million then you definitely need to find a better mortgage lender because that's substantially low for your income level either that and you must have a lot of debt currently.
Last edited by possibleyou; 12-15-2020 at 10:40 PM..
You definitely need to find a better mortgage lender either that or you must have a lot of debt! Debt to income ratio is taken into consideration in the mortgage process. 1.3 million still seems very low for 290k yearly income. You should easily be approved for atleast at the minimum 1.5 million. I was approved to buy up to a 1.2 million house a few years ago with jumbo loan when I was showing only half as much income as you so something definitely doesnt add up here. You don't provide much information. But I guess I'm the only one here who thinks it's insane that someone who makes $290k is only approved to buy a $1.3 million home... it should be way more at that income level! Trust me, find a better mortgage lender.
You may be the only one here. I think that's insane.
You may be the only one here. I think that's insane.
That IS absolutely insane. Going off the general rule of a mortgage approval thats 4-5x your annual income its between 1.15m and 1.4m which is what he is indicating. I think thats a little high for my comfort but thats usually what they say.
Possibleyou thinks 9-10x your income is normal which is insane especially considering taxes in nj
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