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Old 12-18-2020, 09:00 PM
 
10,220 posts, read 19,136,971 times
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Quote:
Originally Posted by CaptainNJ View Post
what rates are you guys getting? my brother has done really well this year with his investments and wants to borrow as much money as he can from his house to put into investing.
Sounds like a real Texas Hedge.
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Old 12-19-2020, 12:30 PM
 
Location: NJ
31,771 posts, read 40,541,828 times
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Quote:
Originally Posted by nybbler View Post
Sounds like a real Texas Hedge.
i hadnt heard of that term before but i just looked it up and i wouldnt say that this qualifies. its not unusual take take on debt in order to invest it to earn better returns than the cost of the debt. the lower the interest rate on the debt, the less risk there is of this being a bad idea.
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Old 12-25-2020, 08:47 PM
 
2,660 posts, read 2,075,467 times
Reputation: 3678
Quote:
Originally Posted by CaptainNJ View Post
i hadnt heard of that term before but i just looked it up and i wouldnt say that this qualifies. its not unusual take take on debt in order to invest it to earn better returns than the cost of the debt. the lower the interest rate on the debt, the less risk there is of this being a bad idea.
The only caveat is that there is no guarantee that investing would necessary bring any good returns. That is why most financial advisers recommend investing money that are not needed for at least five years. I don't think they would approve borrowing money against the primary (I assume) residence...
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Old 12-26-2020, 09:48 AM
 
Location: NJ
31,771 posts, read 40,541,828 times
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Quote:
Originally Posted by DefiantNJ View Post
The only caveat is that there is no guarantee that investing would necessary bring any good returns. That is why most financial advisers recommend investing money that are not needed for at least five years. I don't think they would approve borrowing money against the primary (I assume) residence...
Anyone who takes a mortgage while still investing is doing that.
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Old 12-26-2020, 12:16 PM
 
Location: Bergen County, New Jersey
12,025 posts, read 7,806,291 times
Reputation: 9995
Quote:
Originally Posted by baycurious123 View Post
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'.
I'm frugal as all hell, but Id go in the range of 600-800k, over 1 million. Then you can put 30-35% down on the home and your monthly payments are cut in half.
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Old 12-26-2020, 02:49 PM
 
88 posts, read 89,751 times
Reputation: 47
Quote:
Originally Posted by baycurious123 View Post
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'.
OP, do you mind sharing which town(s) you’re looking in? I’m surprised new construction is priced that low.

We are in a similar income bracket, 320K/year. Key differences are that it is my single income with my wife taking care of our two toddlers and I have an NYC/midtown commute. I’d love to find a million dollar home(4 bed, 3 bath) with 25K taxes. All the usual suspects we looked at have both numbers much higher - Maplewood, South Orange, Millburn, Summit etc.
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Old 12-27-2020, 01:34 PM
 
8 posts, read 10,225 times
Reputation: 10
Check out Nutley NJ

https://www.zillow.com/homedetails/2...38723821_zpid/
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Old 12-27-2020, 03:53 PM
 
1,387 posts, read 4,005,614 times
Reputation: 929
Quote:
Originally Posted by Ducofnewyork View Post
That house is kinda dated and the property taxes are horrendous...
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Old 12-28-2020, 12:55 AM
 
3,882 posts, read 2,348,688 times
Reputation: 7440
Quote:
Originally Posted by baycurious123 View Post
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!'.
Mortgage companies are in the business of selling loans. The bigger the loans the more money they make. It is the same effort for them to sell you a $200K mortgage as a $1M mortgage loan. Given that, I wouldn't go by their advice because they don't know your monthly obligations and goals.

You what to know what you can afford? Use a spreadsheet and put in your monthly expenses, obligations and goals including saving for emergency fund and retirement (401(k), IRAs) and see what is left over. What's remaining is the max you can afford a month for Principal + Interest + Property Taxes.
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Old 12-28-2020, 08:04 AM
 
213 posts, read 347,217 times
Reputation: 225
Quote:
Originally Posted by pramre View Post
OP, do you mind sharing which town(s) you’re looking in? I’m surprised new construction is priced that low.

We are in a similar income bracket, 320K/year. Key differences are that it is my single income with my wife taking care of our two toddlers and I have an NYC/midtown commute. I’d love to find a million dollar home(4 bed, 3 bath) with 25K taxes. All the usual suspects we looked at have both numbers much higher - Maplewood, South Orange, Millburn, Summit etc.
OP is probably looking for new construction homes in New Providence from RWB Homes. 3k sqft and 1mm. In my opinion expensive for its size, and this would be the base price, when you add various upgrades, add another 100k to 200k to the price.
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