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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 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!'.
Good -- great -- for you!!! You cannot live your life on a spreadsheet, on a calculator, or because some internet calculator tells you to! Great for you!!!
Quote:
Originally Posted by baycurious123
but I'm worried that those online calculators paint an overly rosy picture of what actually is 'affordable'.
You are right...they do!!!
Any reason why you wouldn't speak with a qualified, high-quality wealth management professional? If you find the right one -- again, qualified, high quality, and one where this is what they do, their scope, etc. -- this is exactly what they do!
You should be able to do it. BUT, new construction houses does have some costs, which may not be there for a little bit older house, e.g. you would like to spruce up the window treatment, interior paint, electrical appliance upgrades if you desire, landscaping upgrades, finishing the basement. As long as you have some ready cash for these you should be okay. I know plenty people where household have combined income of 300k-350k and own/shopping for million dollar homes especially with 30yr mortgage reaching 2.33 percent.
Sounds like you guys can afford it. Some issues you guys might want to account for are property rates increases and Democrats (Murphy or Biden) taking hits at your paycheck.
I'm laughing but really shaking my head in disbelief.
About 99% of people here wish they had your problem.
I would suggest you downsize your house plans and look for something about 500k, which is still big money.
That should also reduce in most cases your taxes.
thats what i thought. Someone thats showing off. If you have the talent or skill to make that type of money, do you really take advice from an internet forum? Lol but who knows!
thats what i thought. Someone thats showing off. If you have the talent or skill to make that type of money, do you really take advice from an internet forum?
+1
I think that this is what is known as a humble brag.
I'm laughing but really shaking my head in disbelief.
About 99% of people here wish they had your problem.
I would suggest you downsize your house plans and look for something about 500k, which is still big money.
That should also reduce in most cases your taxes.
When did I say it was a problem? I'm very aware of how lucky I am
Your response is exactly the kind that is useless, because you're reading what you think I'm saying, rather than what I'm actually saying. I'm asking an honest question, hoping for feedback from people who know the reality of that kind of upper middle class lifestyle.
For $500k, I'd be looking at some combination of an extremely small home, an extremely outdated home which would require work, or an extremely long commute. Fair enough if your general comment is that I should reduce my budget, but idea that $500k is 'still big money' shows you don't really know anything of the reality of purchasing a family home within a somewhat tolerable commute of NYC. I'm talking Summit or Chatham, even in not particularly desirable towns, $500k gets a very outdated 1700 sq ft 3 bed, at best.
I think that this is what is known as a humble brag.
It wouldn't make much sense to 'humblebrag' on an anonymous forum now would it?
As mentioned, in researching this on various personal finance sites, I've seen a pretty wide range of views and opinions. I know that I'm very fortunate and can afford this in a mathematical sense, but everyone talks about the cost of raising kids, the expenses you don't think about etc. I'm looking for actual experience, not snark to a genuine question.
I think that this is what is known as a humble brag.
I don't see it that way. A big increase in the value of the home you are purchasing from what you had can make anyone nervous. There are lots of online resources but you never know what to trust. Sometimes it's nice to just hear real people responding directly to you even though some may be idiots and some may just see that you earn more than them and respond in a jealous manner.
One thing I did when I bought a home worth almost double my previous home was make a spreadsheet with all current expenses and estimate how they would increase and what new expenses would show up. There are substantial costs with raising children but they are also pretty flexible. I don't perceive my children as a huge expense. My wife is a much bigger expense. That's flexible also.
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