Please sanity check my math and analysis, and poke holes in it if possible: Household TC from Fall 2024 onwards Total: 725K Combined base: 550K Per conventional wisdom, 25% of monthly base maybe directed towards mortgage, which for us is around $11.75K/mo. If all goes to plan, we will have $600K cash ready by EOY 2024. Plan to use this as - 450K DP - 50K closing costs - 50K small renovations - 50K emergency fund Won’t touch retirement stock accounts ($150K) Apart from this there will be some additional stock holding ($150K) as a necessary cushion. If interest rates cool down a bit to 6%, 450K DP and 11.75K/mo enables a $2.2M purchase by EOY 24. If we were to target summer 2024, I think we’d only be able to save up enough for 1.8M max purchase. We do not have kids currently, but want to have in the near future. We’d like to stick with Bellevue (Lake Hills, West Lake Sammamish, Cougar Mountain) for our purchase due to commute time, procimity to restaurants and places of interest, and Bellevue School District (tbh we mostly care about elementary schools right now). Home requirements: - 2500+ sq ft, 7000+ lot - 1970+ built - backyard - somewhat open floor plan - is not a fixer upper - not bordering freeway or major road Is this being too ambitious? Only a few houses match these requirements when I put them on redfin, and when a new home comes on market matching these, tends to disappear in days. Please advise. If these areas and budget will not work, then please suggest what may work. If it helps, both me and my wife will turn 30 next year.
Your savings are very low for your salary, which means your high TC is only recent. Consider that tech is very boom/bust, and we are headed into a down cycle. Many of my friends took 50% paycut after layoffs, and that was only with a mild tech pullback. If your TC doubled in a year, it can also go back down.
Thanks for your valuable suggestions. Yes I am in tech. My TC has grown steadily over the years — 2019 - 150K 2020 - 220K 2021 - 300K 2022 - 300K 2023 - 400K+ My wife is not in tech, and her job is supposed to be much more stable than mine. Her income is cash heavy. We plan to keep atleast 6mo of mortgage and expenses in a HYSA at all times. Important to note that we should be able to cover mortgage if one of us loses job, even though it will be hand to mouth at that stage. Must also note that we have likely not reached peak TC for us yet so it should first become more comfortable before it starts becoming difficult to pay mortgage. Thoughts?
Conventional wisdom assumes you'll have a stable income for 15/30 years while you pay the loan off. Are you going to be willing and able to work at your current pace for the length of the loan? Personally, I'm paying around 5% of my TC towards my mortgage. The long-term vision is to grow my assets until they can pay for a mortgage on an expensive place. Then I can stop working or find an easier job without worrying about losing the house.
Thanks for your suggestions. I shared what my TC growth looks like and some thoughts in the comment above. Ideally your plan to allow assets to grow so that they eventually cover mortgage is good. However, that means you miss out on living the life with amenities and luxury during those asset growing years, and we’re not sure if we wanna make that tradeoff.
You do you, but please do so with the understanding that it's not all or nothing. You can be prudent while living an above-average life, and you can have an above-average life while living in a house that is worth under $2M before you can truly afford it.
What renovation are you planning to do? Your 50k budget might not be able to cover it if you’re planning to redo the kitchen or bath.
Probably some repainting and floors? Not sure actually, as it will be case by case.
Closing costs are a few thousand, not $50k. What minor renovations? $50k is about enough to do the floors + paint the house. Given your requirements and the price point, I think it's fine. But if you squeeze a bit more into the $2+ mil mark you can have 3500+ sq ft and 14000+ sq ft. And reasonably houses in Bellevue in general don't stay more than 3 to 6 days, so be decisive when you see one.
I’m not sure our monthly payment will be sustainable if we go beyond 2M. We’re just 2 so we probably don’t need the 3500+ sqft for atleast 7-10 years right now. You’re on point for being decisive.
People only regret buying too small, no one ever regrets buying too big. We are also 2 people and have 3500+ sq ft, but already wished we had more space. If you look at the sold data, houses around $2 mil are much bigger than houses around $1.7 to 1.8 mil. Despite the 10 to 15% increase in price, the houses are often 30% to 40% bigger.
You want to start doing open houses right now, don’t buy until you’ve at least done 80-100 tours. You’ll have a better understanding of what you like vs don’t like. As for the math, seems to check out but would advise setting budget limit to 2m to give some buffer
We’re not in WA right now, but we have gone to quite a few open houses where we are right now. Agreed that we’d wanna do a lot more in WA before we decide to write an offer.
All seems reasonable. You won’t need even close to 50k for closing costs, maybe like 5k unless you are buying points. Your home requirements seem reasonable as well. Maybe take a glance out to Issaquah and South Sammamish to see what 2M gets you there with a few more mins of easy commute on I90.
Thanks for your input. Do you recommend buying points?
Also, whats your take on LWSD, BSD and ISD?