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I am not sure I follow... look for houses under 700K? I’ve been looking for houses under 850. Some are 900))). So how am I undervaluing houses?
I don’t want nj. Westfield is like the only town that doesn’t make me gag. Personal thing. But commute from Westfield is awful. Maybe we need to live in Brooklyn forever. I don’t think it is ok to pay $5-6K a month for mortgage and taxes while your net is 14-15K. But I am probably the minority in this thinking .
I meant don't negotiate with buyers. Don't offer less than the asking price even you think it is overpriced.
I was going to add something about NJ but forget it. You said the whole state of NJ is awful, but you can't find a house in Westchester?
My biggest problem with nj is nj transit. I like cranford and Westfield, they are nice and walkable and I would totally move there but then I think of transfers at Newark and penn station ... and I get cold chills.
I meant don't negotiate with buyers. Don't offer less than the asking price even you think it is overpriced.
I was going to add something about NJ but forget it. You said the whole state of NJ is awful, but you can't find a house in Westchester?
Well put! This is a winning strategy. Just find a house 20k+ under your desired price and bid on it with your full desired price. I think in that lower range 700-800k, you will find that you either give up on location (commute) or it's a fixer upper or no backyard, no parking or a combination of those things.
Regarding taxes, there are good (old) posts on this site about taxes. I think the gist of it is that taxes are around 2-3.5% of house price, depending on the town. So once you figure out the town's rate, you can then figure out what price you want to buy at in that town. For instance, let's say you want to pay max 15k taxes. In a town with 2.5% taxes, you can pay $600k. Whereas in a town with 3% taxes, you can pay $500k. Of course, you can find homes that are undertaxed and homes that are overtaxed. But be aware the undertaxed ones will go fast and they are few and far between.
Anyhow, if you want to pay 850k, you tax range is 17k (2%) to $29,750 (3.5%). I think you wanted closer to 17k, so then that means you have to stick to towns with 2% tax. Maybe 2.5% if your content with STAR deduction? I don't have a list of town tax percentage, so you'll have to do some research. One thing to note is that overtaxed homes are unpopular, but have a chance to be grieved and the tax reduced. I'm not sure how good that strategy is, I and everybody else prefer to find undertaxed homes!
To answer your question, no I would not live in lower Westchester on 14k/m with those parameters. Too much of a stretch with the amount you are spending on child care. I would rather see the housing payment closer to 3500/m. You could get there if you took out a 30 yr mortgage which is a fairly standard approach for those who have high childcare costs such as yours -refinance into a 15 yr when the youngest ages out of daycare
Well put! This is a winning strategy. Just find a house 20k+ under your desired price and bid on it with your full desired price. I think in that lower range 700-800k, you will find that you either give up on location (commute) or it's a fixer upper or no backyard, no parking or a combination of those things.
Regarding taxes, there are good (old) posts on this site about taxes. I think the gist of it is that taxes are around 2-3.5% of house price, depending on the town. So once you figure out the town's rate, you can then figure out what price you want to buy at in that town. For instance, let's say you want to pay max 15k taxes. In a town with 2.5% taxes, you can pay $600k. Whereas in a town with 3% taxes, you can pay $500k. Of course, you can find homes that are undertaxed and homes that are overtaxed. But be aware the undertaxed ones will go fast and they are few and far between.
Anyhow, if you want to pay 850k, you tax range is 17k (2%) to $29,750 (3.5%). I think you wanted closer to 17k, so then that means you have to stick to towns with 2% tax. Maybe 2.5% if your content with STAR deduction? I don't have a list of town tax percentage, so you'll have to do some research. One thing to note is that overtaxed homes are unpopular, but have a chance to be grieved and the tax reduced. I'm not sure how good that strategy is, I and everybody else prefer to find undertaxed homes!
Thanks, yeah, I have the information about the taxes based on town. Will look into expanding my list. I just hope the metro north is worth all my efforts!
To answer your question, no I would not live in lower Westchester on 14k/m with those parameters. Too much of a stretch with the amount you are spending on child care. I would rather see the housing payment closer to 3500/m. You could get there if you took out a 30 yr mortgage which is a fairly standard approach for those who have high childcare costs such as yours -refinance into a 15 yr when the youngest ages out of daycare
Thanks. I was looking into 3500-3700 and that is why we wanted to do a massive downpayment. But given Westchester taxes this may not work. Childcare expenses are huge but I assume that is what everyone faces given both parents work.
It’s not uncommon for finance professionals to put a bigger down payment. 1. Because much income is tied to bonus, so the real feel of your cashflow seems tight(er) 11 months out of the year, and you don’t want to feel stretched on base salary. And 2. It is easier to be a bit more frivolous by taking your bonus the year you purchase and tacking it on a bigger down payment. But mostly point #1 applies
As dual income with high child cost and one finance pro (total income is 50% her salary and his base, and other 50% is his bonus - we personally put a 37% down payment to back into specific monthly housing cost. And did some decent size reno over a few years using portion of bonus money. We now have maybe 50% equity into the market value of our house. And have a 5k monthly nut including tax instead of 7k. We decline more mortgage at a 3.375% rate. Why? Because we don’t want to be reliant on bonus money to live.
To use an example (not us- but maybe somewhat common in Westchester - a single income household, vp/director level banker makes 500k of which 200-250k is base salary, they wouldn’t want to have a 6,7,8k monthly housing cost (including tax) because it would feel like theyre living paycheck to paycheck 11 months out of the year. Or sweating it out, partially living in the red, watching your bank account slowly decline over the year until you could replenish and do all of your savings in February when bonus hits. So a bigger down payment solves that issue. While rates are tempting, it would drive me nuts to having an 80% mortgage in that scenario.
Although your splits between double base / bonus are more like 75/25 as opposed to 50/50. But making the point that big down payment is not necessarily a bad idea.
I don't necessarily disagree with putting in more equity to manage monthly cash flow. That's personal preference.
At the end of the day, cash is king, and every incremental dollar of down payment above 20% is locked up in a somewhat illiquid long-term asset. Flip side to a high down payment is a recessionary scenario where one/both spouses lose their jobs, and need to sell the home. Equity is first loss and the high LTV is no longer accurate.
I am not sure I follow... look for houses under 700K? I’ve been looking for houses under 850. Some are 900))). So how am I undervaluing houses?
I don’t want nj. Westfield is like the only town that doesn’t make me gag. Personal thing. But commute from Westfield is awful. Maybe we need to live in Brooklyn forever. I don’t think it is ok to pay $5-6K a month for mortgage and taxes while your net is 14-15K. But I am probably the minority in this thinking .
Spending ~40% of your take home on a mortgage is no big deal. The problem is how you live otherwise. Around here everyone is nuts for expensive after-school things for the kids (dance, tennis, gymnastics, skating, hockey, etc), $15k summer camps, $1k birthday parties, etc. If you live like a normal human being from anywhere else in the world, you'll have plenty left over. If you assimilate into the Westchester lifestyle, you'll be tight on cash.
Spending ~40% of your take home on a mortgage is no big deal. The problem is how you live otherwise. Around here everyone is nuts for expensive after-school things for the kids (dance, tennis, gymnastics, skating, hockey, etc), $15k summer camps, $1k birthday parties, etc. If you live like a normal human being from anywhere else in the world, you'll have plenty left over. If you assimilate into the Westchester lifestyle, you'll be tight on cash.
Good point))) thanks! We actually send kids to Europe for summers to spend time with their grandparents so luckily we don’t need to spend on camps. Just the tickets and some money in Europe to attend swimming classes which are significantly cheaper there.
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