House budget

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Mar 3 47 Comments

Household TC 750k+ (30%+ in rsu)

No kids yet. Maybe in a couple of years.

My question is the following :

I'm looking for a sfh in south bay. Most houses are 2m+. Realistically based on commute I'd want to be in mountain view, Sunnyvale, Santa Clara. Maybe even Cupertino.

Mountain View is really out of range. Most good sfh in good mtv areas are 2.6,2.7+. Sunnyvale houses in good areas (94087) are all 2.2-2.3+ for older houses 1500-1600 sq ft. Cupertino is similar or even higher. I'd rather be somewhere around 2m or less. But since I can't have anything realistically here, I'm now considering town houses in MTV. Folks who have been in similar situations -
Would you pick sfh over town home in mtv?
Would you be OK paying more now (2.3-2.4) to get a SFH in these areas?
What TC makes sense for such high price properties?
What expenses should one account for kids down the line?
A mortgage of 12-13k/month, and on top of that 3-4k of utilities and personal expenses - is that a fair and realistic estimate?
How much do you aim/target to save/year?
Did you see any unexpected costs which made you regret having such high mortgage?
Any general advice?
Would you rather reduce 1k/month in mortgage if you have to tradeoff the house features (e.g older house vs new, etc)?

Help me strangers!

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TOP 47 Comments
  • Pinterest / Eng TNFG44
    750k tc worrying about house price. Seriously GTFO op
    Mar 3 1
    • Facebook hyper
      OP
      Do you own a house? 750k doesn't translate to unlimited money. 2m+ is a huge investment. And not like I've been minting money forever. I'm starting to save now and it helps if you plan your investments. Esp large investments like a house.

      If you aren't in this situation it's hard for you to understand and provide any constructive advice anyway. Unless you are the one who has to spend this amount, or have already done so, it always seems doable from where you are.
      Mar 3
  • Facebook / Eng
    fb2017

    Facebook Eng

    PRE
    Google, Oracle
    BIO
    worked at Oracle, then Google, now Facebook.
    fb2017more
    His tc is 750k, why would he worry about 2.x M house ?
    Mar 3 1
    • Facebook hyper
      OP
      Why not?
      Mar 3
  • Oracle tamatar
    Are you new to the US? 12-13K mortgage is crazy anywhere. Houses were 500k-1m in 2012. If you lose your job, could you pay the mortgage for 6-12 months?
    Mar 3 3
    • Facebook hyper
      OP
      Not new. If I could I'd go back in time and buy in 2012. Lol. But anyway, today that's the prices we are looking at. And hence the mortgage payments. Sad I know.

      For your question - do you mean funds NOW? After down payment and closing? Yes. I have reserves in rsu for 12months+. Also, over the near year or so, I expect or target to save 200k/year (post tax).
      Mar 3
    • Oracle tamatar
      So, why the concern? You seem to be doing quite well.
      Mar 3
    • Facebook hyper
      OP
      Yeah but lot of unknowns. Hence the list of questions.
      Mar 3
  • Workday rrthvj
    Is it good to wait as little bit more? Seems like house prices or on downward trajectory, more investory, and houses on market longer
    Mar 3 2
  • Quora forxnnxe
    https://www.zillow.com/homedetails/142-Azalea-Dr-Mountain-View-CA-94041/82957754_zpid/

    3bd, 3.5ba, 1844 sq ft, mv, 1.85M listed (although idk how much it’ll actually sell for; most homes sell for something like 25% over list I think)
    Mar 3 2
    • Facebook hyper
      OP
      Its actually like a townhouse. I've seen this property.
      Mar 3
    • Quora forxnnxe
      Hm ok, haven’t seen it in person but from the pictures looks technically free standing to me. Neighbors are close but don’t share a wall

      If you want a larger yard though, then yeah, this isn’t great
      Mar 3
  • Facebook nasa
    What are your current monthly expenses? Do you have an extra 10k/month left over? What kind of life style changes will you have to make? Are you okay with that?
    General rule of thumb is housing should cost 30-35% of salary PRETAX. Yes, you could do 35% of TC, but I would strongly recommend against relying on RSUs for your mortgage payment. It puts you in a bad place if the stock suddenly drops, or you want to switch jobs and suffer a 1 year cliff.
    Also, you said household TC, I'm guessing that means your SO works too. Are you both planning on working for the next 5 years? Would you be able to afford the payments on just one of your incomes?
    Mar 3 1
    • Facebook hyper
      OP
      Since we have dual income, the mortgage is less than 30% for sure. Even if we exclude rsu.

      Based on our calculation we want to save 10k/month household from take home pay. But then unfortunately we need additional 24-36k which we planned on using rsu for. We could avoid that by saving less from take home. But good point about the one year cliff.

      We are both planning to work for the next 5 years. Our goal is to save around 200k/year for the next 5 years. But nobody knows the future. Unlikely that we won't be working, buy also unrealistic to expect we can afford mortgage plus living expenses in the south bay on one pay. But as it stands now, even with 12-13k mortgage we could do that with one pay. But then little to no saving after personal expenses.
      Mar 3
  • Facebook iamreal
    750k tc, m2?
    Mar 3 3
    • Facebook hyper
      OP
      Household
      Mar 3
    • Facebook iamreal
      Dual income no kids must be amazing
      Mar 3
    • Facebook hyper
      OP
      For now maybe. Who knows what will happen in the future. That's why I'm asking these questions.
      Mar 3
  • Google 1234-/:;(
    Why are you buying near your current employer? You wouldnt work there for the next 20 years! Find a place that has a decent commute to clusters of employers and offices. Who knows if fb might just move you to fremont and you’re stuck because you bought near your current office!
    Mar 3 1
    • Facebook hyper
      OP
      Right. That's why I think south bay is a good place to be in. It's near to every other place
      Mar 3
  • New Colby-1
    I’m in a similar situation to you with salaries totaling about 490k and recently relocating from NYC to the Bay Area. Our plan is the following: rent a SFH for 12-18 months (while we figure out where we want to be and not simply where we can afford to be) in between SF and the South Bay, then we will buy something that needs a full overhaul (this is a personal preference as we don’t want to pay for someone else’s bad renovation).

    All the indicators point to a softening housing market in the Bay Area through 2019 and into 2020 (correctly so considering how quickly it appreciated since earlier this decade). You are already starting to see metrics supporting this (just google it). We’ll then look for a home between 2.5 and 3m — banks looks for a 36% debt-to-income ratio, but you should use just your salaries and bonuses to calculate this. Banks will flex on this if you are a high income earner and you shorten the term of your loan — which is a great way of long term saving. We have no other debts and intend to do a 15 year loan rather than 30 so we accumulate equity quicker than we are paying interest.

    Look at areas that have great school districts if you want to have children and if you can’t fathom spending 2m+ for under 2000 sq ft then consider the east bay.
    Mar 3 5
    • Intel rewt
      I dont think 2.5 - 3 is doable with 490k tc. How much is stocks in that?
      Mar 3
    • New Colby-1
      @rewt as I said that’s not our TC, that is our cash comp. 36% of that is 14,700/month. A 2.1M mortgage payment will be about 10,300 at current rates.
      Mar 3
    • Intel rewt
      Dont you also have to take tax into account? Coz what you pay for mortgage is after tax. 14.7k after tax is something like 8.8k..
      Mar 3
    • New Colby-1
      @newt no debt to income is calculated on a pretax basis, easily verified thru google. I’ve owned several homes in NYC.
      Mar 3
    • Amazon yacht 🛥
      Wow paying $10k+ per month on mortgage is crazy
      Nov 17
  • Nvidia monolith
    How about buying a place with much lesser mortgage in a bad schooling district and sending your kids to private school?
    Mar 3 3
    • Facebook hyper
      OP
      We are also considering that. If I stick to less than 2m budget that might be the only option. I think I want to from people about the case of 2m+. Mostly want to hear from folks who've walked this path before. Hence the list of questions.
      Mar 3
    • Nvidia monolith
      Facebook and netflix?
      Mar 3
    • New Colby-1
      Most private schools in the areas are 40+ per child. Assuming you’ll have two, I would rather take the extra 6-7k and put it toward a house in a better school district (there are many just as good as private in the area). Also, as a kid who went to a mixture of private and boarding schools prior to college, I don’t think it better equipped me than my classmates in college that went to public schools.
      Mar 3
  • Honeywell / Eng that1guy
    What’s your position, spouses position?
    Mar 3 3
    • Facebook hyper
      OP
      Position? What do you mean?
      Mar 3
    • Honeywell / Eng that1guy
      With that much TC - I’m asking what title you each hold. SWE? PM? Director? Etc
      Mar 3
    • Facebook hyper
      OP
      SWE.
      Mar 3
  • Intuit Sasanite
    RSUs are not the same as cash savings. I’d recommend actually having that money saved in a liquid account. This would require you to make the behavioral changes needed to accumulate savings before you make such a large investment. Saying you’ll save in the future is everyone’s goal. You need cold hard cash stockpiled first. Stock could change tomorrow and you can’t always access it immediately if it were a time of crisis. Change your spending behavior and then determine if you have enough.

    TC: 425K, $500M in RSUS, $175K saved, married with kids, homeowner since early 2000’s
    Mar 3 3
    • Samsung WinterCame
      425K TC @ Intuit? What do you do? What's your title? I know stock has gone up significantly but $425K? What's the split?
      Mar 3
    • Facebook hyper
      OP
      I don't understand what you mean? I do have down payment on cash + some extra cash for now. I mean if I have to pay upto 500k down. I still have some liquid cash in reserve, not counting the rsu. Do you mean that liquid cash should be significantly higher? Why not just liquidate the RSUs then. Or sell the new vests that I will get soon?
      Mar 3
    • Amazon yacht 🛥
      $500M in RSU? Are you a CEO of Intuit?
      Nov 17
  • New / Design Yesterday-
    If you go to SJ / Willow Glen you can get a nice SFH closer 1.5. It may not be the forever home but it would mean having a house, and not throwing away cash.
    Mar 3 2
    • Oracle now@google
      That’ll be 1-1.5 hour commute to Facebook one way.
      I live in the area and like it a lot, but the commute has gotten really bad in recent years. If I were making 750 TC, I’d definitely move to MTV.
      Mar 3
    • Oracle tamatar
      Fix your commute hours instead of some expensive solution.
      Mar 3
  • Uber uberusr
    Why not consider some of the cheaper areas of Menlo Park west of 101?
    Mar 5 1
  • Apple Dlmsq7
    Check out good neighborhoods of Santa Clara. Zip code 95051, south Homestead, east Lawrences, north Stevens creek and west San Tomas. Schools are comparable to Sunnyvale, you can find below 2M there.
    Mar 3 0
  • Illumina g6gta65
    Going through a similar thought exercise now at 1/2 your numbers in SoCal. Why even buy? Personally I would just keep renting until you need a home. What would a nice/close rental cost? 7k? 9k? Are the plans to stay in SFB long term, post kids?
    Mar 3 0

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