Afford 5k month mortgage ?
Considering buying a house, monthly mortgage comes to be about 5 k including everything. Monthly paycheck is about 10 k , not including yearly bonus etc. Bonus will be upto 100 k . Don't have any other debts. Getting bit worried about it. Does this emi seems affordable with above paycheck. Edit: Have 100 k (cash + stocks) besides 20 % initial deposit . Edit 2: Currently renting for 2500. Have one 3 yr old, wife does not work yet. That might change, but not relying on that.
Do you have some savings outside of the down payment? Can you Airbnb/ rent out a room in the house you buy? (Actually, with 10k post tax deductions, you might be fine)
Bay Area?
Yes, market seems to be on decline, so thinking if it's right time to buy.
It might go downtown further in next 8-9 months
Spending 50% of you monthly net income on mortgage? Sign me up! I know people that pay 60% of gross salary on rent and still buying drinks all weekend.
That’s sad
That's me
Yes because 5 is less than 10 :) if you are worried house hack till you are comfortable.
Have a good liquid cushion before you start this (100k+)
The numbers don’t make sense. You cannot afford this home. Half your paycheck is going towards a mortgage and most of it towards the interest. This home will be a liability(not an asset) until you pay it off 15/30 years from now or until you sell it. Many home buyers in the US are used to being in debt and don’t think too deeply about the repercussions of signing up for such a huge liability. They believe that a home bought on a mortgage is an asset, which is absolutely not true. The bank owns the home until you have paid off the mortgage. And after you pay it off, you still have to come up with the property taxes. Many retired people realize too late that after working all their lives to pay off their homes, they cannot afford the property taxes and are forced to sell the home. If you don’t get rid of this $800K-1 million mortgage as quickly as possible, you will end up working your entire life for other people (the government, the people who rely on the taxes you pay, the bank, and etc). The property taxes and cost of maintaining your home will never go away, so a home is not an asset until you cash out and make a profit from the sale. Don’t count your bonus as it is not guaranteed and will be less after taxes. It is best to reinvest that chunk of money to your asset column so that the money can work for you to start building up your wealth. Next, it’s never “5K include everything”. You will have to have contingency money for whatever maintenance and “must-fix” repairs that may come up. Once you own a home, you’ll be a frequent Home Depot customer as well. You currently have no debt (kudos!), but with only 50% of your leftover income available for living expenses, you will have no choice but to start going into debt and buy the furniture, appliance, blinds, lawn equipment, etc. on credit. You have to be very disciplined about this or it could spiral out of control very quickly. Based on your incoming cash flow, you cannot afford this home. You could persist and hold on to the hope that you will be safe because your home price will appreciate, but be aware that you can only cash in when you can afford to sell this house and find another living arrangement that you can afford. If you upgrade in X years, then you would have made no progress towards your debt column and set yourself back X years to reset the clock all over again. If your life goal is to obtain financial independence, then you have to pay off this liability quickly or sell it early.
Great
OP, you updated your post with your savings of $100K. If you decide to go ahead with the home purchase, my advice is to be very disciplined about avoiding any further debt. Most importantly, don’t dip into that money to pay for the “wants” for your new home. That $100K needs to stay in your asset column. Instead, invest it wisely and when it generates $X amount of profit, you may then use that surplus to make the desired non-trivial purchase. This way, that $100K stays “working for YOU”. The goal is to keep that pile snowballing and working for you even while you are sleeping.
Do you have kids or want kids? Cause you’ll need more $$ to pay for childcare than you’ll have left after tax etc
Yes, I do have a kid 3 yr old kid. And wife does not work yet.
Not yet
You are there. If you have another 200k it will be more comfortable. To reach financially that solid will take another 5 years may be. If you can wait it is fine. But in my opinion your risk factor is less.
Just make sure you keep your income sources stable.