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don't make yourself "house poor"....keep you mortgage payment under 30% of your monthly take home income....and don't rush into buying anything. Stay away from PMI if you can wait and save......even if you are both working, it is really best to buy a house that you can afford with one income, in case one of you get laid off.
even if you are both working, it is really best to buy a house that you can afford with one income, in case one of you get laid off.
Does this mean with under 30% of one income, or just that we would be able to tighten our belts and float for a few months to a year after a job loss even if it covered a larger portion of our incomes? We try to maintain a nest egg of around 6 months expenses (which despite my wife's ideas, I am insisting we keep separate from our savings for the down payment).
This is anonymous, so I don't mind putting my numbers out there. Right now we're around 135k combined income, though that should be around 170 or so when we buy. She's in a good field for the area (healthcare IT) and I'm clinical faculty, which means I may take an income hit or fail to grow but shouldn't ever "really" be unemployed barring a disabling injury or something like that. That said, we're both just starting our careers, so would hope to grow at least somewhat in the coming years - at least to pace inflation, if nothing else. Zero debt, though we may need a new car before we manage to get the house - otherwise nothing.
I thought I was being conservative about what we would buy. The online "What we can we afford" calculators gave me such an outrageously high number I couldn't even begin to take them seriously, so I did my own math. Am I still overreaching?
Does this mean with under 30% of one income, or just that we would be able to tighten our belts and float for a few months to a year after a job loss even if it covered a larger portion of our incomes? We try to maintain a nest egg of around 6 months expenses (which despite my wife's ideas, I am insisting we keep separate from our savings for the down payment).
This is anonymous, so I don't mind putting my numbers out there. Right now we're around 135k combined income, though that should be around 170 or so when we buy. She's in a good field for the area (healthcare IT) and I'm clinical faculty, which means I may take an income hit or fail to grow but shouldn't ever "really" be unemployed barring a disabling injury or something like that. That said, we're both just starting our careers, so would hope to grow at least somewhat in the coming years - at least to pace inflation, if nothing else. Zero debt, though we may need a new car before we manage to get the house - otherwise nothing.
I thought I was being conservative about what we would buy. The online "What we can we afford" calculators gave me such an outrageously high number I couldn't even begin to take them seriously, so I did my own math. Am I still overreaching?
banks/lenders will give you more than you can really afford....I live in reality.....I say under 30% (25 is ideal) of one income (the higher one)--because I have only had one income for almost 20 years; maybe there is another point of view about having 2 incomes.....my wife is a SAHM...If you had children are you both going to continue to work? We chose for my wife to stay home,and I believe that is a personal issue which there is no right or wrong answer.
The reason why I ask that (you may not want children at all) is I know 2 couples who didn't talk about that before getting married and that was one reason that contributed to both couples divorcing.
Last edited by fvncresident04; 04-15-2016 at 05:47 PM..
We are on the fence about having kids, but might have one. If we do, we are both pretty certain she will continue to work. She had about a 6 month period where she wasn't working before (immigration time) and nearly lost her mind being home all day so I don't think it's viable long term. We both have pretty generous leave, I have fairly flexible scheduling and are hoping we will have family help (at least during that first year).
Regardless, we are moving forward planning on two incomes.
start small and get your feet wet as your price point is high especially if you don't have 20% as I am afraid you are overextending. do you have savings in case one of you lose your job as I can tell you my company is going to a freeze soon for new hires in midst of the good times. You will need a reserve for repairs as well... a house is a privilege not a right.
Hrmm okay. I'll take another look at our numbers. My armchair calculationa came out around 2500/month for a 400k mortgage once I factor in tax, which seems manageable (heck we are around that now when you add our rent and our down payment savings and that is before the promotion). We are meeting with a financial advisor soon anyways, so this is obviously something I'll be discussing with them too. We have about 35k savings separate from the "down payment" fund right now, but are building that up concurrently. Id ideally like at least 50 before we buy and the long term goal is a full years expenses in reasonably liquid savings. That said, if we need to drop to the 300s there are still plenty of awesome places! Might just push us a little further out.
obviously 20% of 400k is 80k down......right now houses are inflated, and while everyone thinks this will last, it won't. So if you don't put 20% down, there is a chance in 5 years ( just a guess) that you will owe more than your house is worth-not a good position to be in.
Don't take this the wrong way, but no one needs a 400k house. (sure the houses are very nice in that price range) Buy less, pay it off sooner or pay it down. Don't try and keep up with others. Buy what you can afford.
-Do not trust online calculators for how much you can borrow, nor the banker, nor the broker, nor the real estate agent . All of them will make more money if you buy a more expensive house. Note aside, I do not say all of them will push you hard to go over some reasonable limit. I say that all of them will make more money if what you buy is more expensive. Now make your own judgement about the people you meet and work with to buy a home
- Trust online calculators to factor in insurance, property tax and other related expense in addition to your mortgage expense
- The newer the house the less maintenance cost, the older the more. The way the house are built and the local weather (hot, humid, yellow explosion) make house maintenance cost not cheap. Whichever paint you use outside, the sun, the rain, the humidity will beat the paint to death in a few years. Color will fade as an example.
- Plan for extra cost to maintain your yard, treat for spider, termites, or some other stuff like that. Ask your rental office where you live or your landlord what they do on yearly basis to maintain the dwellings.
- Check the HOA cost, and if brand new neighborhood not finished, how it might change when the builder leave and stop subsiding the HOA. Some do, some don't.
- If you plan to have kids, you will see that they cost a lot during the first years especially if both of you work. You might end up burning a full net salary on day care depending in your work schedule. As someone says, plan on one salary, the biggest, if you plan for kids as one of you might end up stay at home for the first few years.
-Check the school were you buy, especially if the school is caped or not. You have really good public schools here, and private school are not cheap. Public schools are paid with property tax, as far as I understand. So, if you go private you pay 2 times.
-All financial instrument where you pay only interest and no principal has been created to go over the limit imposed by the regulator or the "semi private mortage agency" (Freddi Mac and Fanni Mae). Those limit has been created to reduce the risk or protect the borrower. Yes, some are successful with such loan as they can buy something they do not qualified for. Some are also lucky and win the lottery. Make your own judgement, or how much you want to leverage yourself. The more you leverage the riskier if things go south, the better your life is things do not go south. Or I should say you have a bigger house that costs more to maintain if things do not go south.
If you plan to have kids, you will see that they cost a lot during the first years especially if both of you work. You might end up burning a full net salary on day care depending in your work schedule. As someone says, plan on one salary, the biggest, if you plan for kids as one of you might end up stay at home for the first few years.
Yowza - how much is daycare here!?? We were figuring around $1000-1200/month (maybe a bit more in the first year, though I hope our family will be able to help in that period). Am I that far off base?
Wife and I talked it over and checked some local sites late last night. Not sure how accurate prices are on things like Zillow/Trulia/Realtor relative to what they actually go for, but I assume it works for ballpark figures. We're now leaning towards going a little further out from DT and dropping into the mid 300's. Looking at the numbers, I think we could do that with plenty of room to spare. Plus, we love the idea of some extra greenspace and that is obviously easier as you move away from DT. We're finding a reasonable number of things that suit our taste both further south (e.g. Woodcroft area) and north (bunch of neighborhoods near Eno). Thanks to you all for the help and guidance.
You are assuming you will only have 1 child in daycare at a time? That means you wil have to space them 4 years apart.
I WISH someone had sat me down and told me the following:
1. You won't want to put your 12 week old in daycare. It will kill you to leave them there (note: this is a touchy subject, this is only my very personal experience and does not imply judgment about anyone who felt differently).
2. You will want another one immediately after the first. 2 kids in daycare at the same time!
3. You will then want to spend all your time after work and weekends with your children and will get into the slippery slope of outsourcing cleaning, yard work, and buy more takeout and restaurant meals.
All 3 of these will make you wish you had bought a house on 1 income and had the absolute luxury of working part time or having a longer maternity leave or staying home for a couple years.
Again, just my personal experience that I never thought of prior to having children. I know many people who absolutely thrive with 2 careers and have wonderful children as well. It's just nice to have a chance to figure out which one you are before signing up to a mortgage that takes away your choices.
Best of luck!
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