Net worth 4M House 1.3M after deducting outstanding loan [175k] Vested RSU and Stocks 2.3M 401k 365K We (spouse and 2 kids in elementary )are very happy in our town home but recently started seeing houses and liked one. The house though is 3M Current house worth 1.5M Current EMI 2.5k out of which Interest is only 450 Considering selling current house and get a new mortgage of around 1.5M (some cash down) which will change payments to 9k at current rates. Hope is rates will settle and I can refinance. We will move from net +2500 every month to -5000 after considering new payments taxes etc. This can change as interest rates come down 🤞 But I feel I should be able to manage with some change in comp. Risk: Sole earner Pros: Much better, bigger and single family house. Possibility to support parents if need be. Better area and schools. Current TC 350k But I am due for a promotion which me and management have been working for 2 years and have confirmed I am on track for this OCT Expected new TC at-least 400k Would it be worth selling current house and buying and going into a better area considering the future or stay put invest in other places and spend more on daily needs. 10 years back I took a similar risk for my first house and it paid off well. But need some advise in current market and junction of life 🙏
If you think this home as a home adds value to your life, and if it’s a matter of being able to afford it, yes you obviously can. (As opposed to thinking about it just as a financial decision). Just have a bigger emergency fund (100k) so you have something to dip into if there’s any sudden job loss. But in the worst case scenario that you do lose your job, your net worth more than covers the house, you can dip in until you sell or find a new job. That’s the absolute worst case. Make sure to budget for maintainance and unexpected repairs.
Too risky. You are a single earner. 350k TC is not enough to commit to a 3M house. Also account for property tax
OP, you have a very decent savings. Even after 50% down you will have enough cash left to cover any risk of losing your job for a long time. Firstly, congratulations on your good financial state. Secondly, you should definitely buy a bigger home, for yourself, your kids and parents. It uplifts their lives, what else is money for. Both your kids and parents are with you for a limited time, you owe it to yourself to give them the best possible experience. Thirdly, a SFH is always a good investment. It seems a big decision, but you have bought a home before, you know it would be fine. Good luck and all the best!
I appreciate how you put it. Everything you wrote resonates with what we have been discussing and the reason we try to push ourselves. Having lived and being brought up in a humble background and using public transport we respect every penny we earn. So have never spend lavishly. We did not buy a new car until I bought my first house. And i still drive and am satisfied with my Honda. This should be it when it comes to materialistic need, since we are already saving for kids college. Been decent financially this is one thing I want my family to have. We may or may not get it but can keep trying. Thanks 🙏 again for putting it wonderfully well.
Definitely buy. Your only regret would be not buying sooner. Bay Area homes generally appreciate at 7% per year. So in 10 years you would have doubled your home value
Bay area homes appreciated at 7% per year in the last decade when fed kept interest rate at 0% and tech boomed.
Considering you're the sole earner, risky if something goes south. Way to minimize the risk is more down-payment if possible. Your kids ate going to Public elementary?
Thanks yes, trying to balance risk and not pulling into reserves. Yes kids go to public elementary.
Since you're looking at 3M house, it should be good schools so no extra expenses. You may be able to manage with a larger down-payment. You will have some stocks to sell if things go south, and you're not able to find a job quickly. You can find a job easily in the Bay Area anyway. I personally don't like to be house poor, but some are ok with it. So it depends on what your mindset is. Due to this, some buy 1.5+ home and use private schools.
How would anonymous people know better than yourself about what's best for your situation? We don't care, don't take our advice seriously.
Just came across an article AI-specific PhD grads base is close to $1M. What does that mean? There are fuckers who will afford homes in NorCal. Buy it and that will be your generational wealth
How old are you?
Keep current home, put it on rent and buy new home
Taking a risk with a family of four and the possibility of having to help parents isn’t the best. I would wait for the absolute certainty of the promotion and than take the risk. Also to me is not clear if the -5000 net is calculated based on the current salary or a projection of you compensation based on TC found online on sites like levels.fyi. Also i were you i would consider taking 10/15/20% of the invested money to get a smaller mortgage or wait to make this move in a more favorable period of time (possibly late 2024).
-5k is based on current Salary