Cash in bank 70K. 401K has 200K. TC is 185K all cash. Married (spouse does not work) with a kid. Should I even think of a 750K house ? Either I will have to pay <20% and pay PMI - Or lend significantly from 401k. Thoughts ? If I go for it, should I go the PMI route or the 401K route ? I live in a very high cost location and my rent is close to 3000 🙁
I was in very much similar situation (including the TC and house price). I did it but only because I could find a housemate. (I’m single, no kids). So to your question, I’d say “probably not”, if you want to maintain the same live style . Also think about the long term interest it’d cost you if you were to take the 30 yr mortgage
No, you can't.
Rough rule of thumb is 3x your salary
I think it'd be a stretch of you were single. Add in supporting your spouse and child and I think it's a clear no. Suggestion for when the time is right, try and find an old school bank that services its own loans. I found a local savings bank that would do 10% down and no PMI.
I agree for putting more down is locking your money in a single assert. However removing PMI, will remove a good portion from your monthly payment, which will allow you to have a comfortable payment for your mortgage. So think about 80/10/10 loan. Take first loan for 80%, put 10% down from your cash, and 10% from second home loan.. Hence no PMI plus you had down of only 10%. No PMI.
Hell no. Keep cash for next downturn.
Go ahead and buy it if you have 12 months reserves to support monthly payments and your family. I did it
Assuming 600,000 of loan amount, you would need to pay an EMI of roughly 3000 at 4% for 30 years . Is this amount anywhere near to the rent you are paying ? If yes, then only question you should be asking is how to get that 80k extra. If this is double or triple of your current rent, forget it.
My rent is close to 3000
You also have to account for taxes and any renovations. Some states has insane taxes.
Forgot to mention a very important fact ! I live in a very high cost location and my rent is close to 3000 🙁
Mind sharing the location?
New York
You probably want to talk to a financial planner because there are multiple other factors to consider. By moving your money from your 401k to your house, you risk losing that money if the housing market drops. PMI may cost more, but it allows you to keep your investments diversified, rather than concentrating your wealth into a single asset (your house).
any recs on a financial planner?