Buying a house in Seattle
Hello fellow blinders, Some help from folks in similar boat is appreciated. I am looking at buying 3M house. Looking to put in 1.2m down out of total 2.2M I have currently. That does put monthly emi at roughly 10K a month. Currently rent a place at 4.5k/month. Household TC: 700K, age: 36 Bit nervous about that much of debt and doubling of monthly payment on housing but wife and I could not settle on any good house which we both like and is in good school district. Your comments/advice from financial decision standpoint are appreciated. please do not judge our decision to look at the housing at higher end of price spectrum.
1. It’d make more sense to put 20% down, lock a fixed mortgage, and invest the rest. 2. What benefit do you get out of a $3 million house that makes it, with expenses, worth $10k a month more than rent. It’s not like the built up equity is going to cover the increased costs.
Ack on 20% down recommendation. Only reason I am willing to go for more is controlling monthly payment and keeping it under 10K. On benefits: with 2 young kids we are looking to get into a place we can call our own for next 10 years or so. Issue is when we are moving from renting (~2800sft) to buying (~4000sft) , we are looking to address some of our needs which requires updating. A house similar to one we are renting is approx 2M.
Understand the monthly payment but the difference between investing the higher down payment is more returns than saving the monthly down payment. More volatility sure but you shouldn’t be that close to your budget. Makes sense if you want a larger house just wanted to make sure you weren’t doing it for an investment
How’s your TC so high?
That's household, I make approx 500 and wife makes roughly 250.
Got it. Thanks
Spouse probably also works.
Yep, that's household TC (450+250)
I recently bought a 2m house on east side. Tc 850. I put down 20%. Let me tell you one thing. Houses in that price range requires a lot more monthly expenses on top of that mortgage, that you don’t pay or pay less in a typical sfh. Maintenance, lawn care, utilities, insurance, tax, cleaning, pest control, everything will be high. I am gladly paying them because I have a good tc cushion. Plus some rentals. I would be uncomfortable a little bit with your situation. But you can manage it. I will most probably retire a few years earlier than you though because I will be saving more than you. If I could retire in 55 instead of 60, that’s a huge win in my book for a 2m house, instead of a 3m house.
I definitely expect it to have some impact on our retirement plan. One additional thing to note is that we are considering this for next 10-12 years and will be scaling down when both of our kids are in college which means we will get some funds back towards our retirement when we are in late 40s. I wonder if people take that into account at all?
How long would you last in a 3M home if you lost your job and the market crashes? That's how I approached buying a house, but I grew up pretty modestly and don't need a very big home ($1m house at 450k household tc).
Motel let me know how I can help. Few of my clients bought homes around 2.5M recently. In premium location and good schools. Both of them work for Microsoft. Market will continuously go up.
Better to keep monthly payment low. I would stick to your plan.
Where are you currently renting? And which location are you looking to buy?
Some observations: Your are paying a lot on rent. Do not pay more than 20% down. Lock internet rate 2.5 or under and invest money elsewhere. 3M. It better be a good neighbourhood and place with good growth potential. At 36, this is probably the last good expensive house you will buy in this life. A house and home are two different things. You are buying a lifestyle not a house. Make sure you have saved enough for retirement. An expensive house will have more running cost. You pay a lot of property taxes, utilities and maintenance costs. Get a CPA to assess you situation.
Is a fixed interest rate 2.5 or under really possible? Any requirement to get that rate? I thought that we would get national rate which is around 2.85 now I heard. Planning to buy one as well, so want to learn this here too.
I got 2.5 APR months ago. Know a few more people who did. In OP’s case with 20% I see 2.8 APR today no points. It’s definitely under 3% still.
Is there a reason you’re putting so much down? With interest rates so low right now, wouldn’t it make more sense to put down 20% and invest the rest? Don’t take anything I say as advice btw. I’m just curious. I’m absolutely not an expert or good at this at all.
Primary reason trying to put a line in Sand regarding the monthly payment with 20% I am looking at 13k/month which blow my mind tbh.
Ok. Again. I’m totally not a financial advisor, or even a finance guy. But I’m assuming you have the money in investments. Assuming they grow faster than you’d lose money through interest, you may be better off with a lower down payment. It’s a scary amount of money each month, but that extra money upfront is money you can’t invest now. Now, I dunno how to calculate that off the top of my head, so I don’t know what ROI you’d need to break even. With this level of money I do recommend talking to a financial advisor. Your bank may actually have a free service for this.