My current salary is around $400k including RSU (without accounting for stock appreciation). Wife earns $150k but she is going to go back to school in a couple of years , so don’t want to count her salary atm. If I sell all my investments (except 401k) + cash = I will have about $600-700k. Online calculators suggest that I can borrow $1.5m with this income and afford something around $1.8m assuming I put $350k down (hence leaving about $350k as shelter) ... does that look financially sound? We don’t have kids yet but will have in an year or two.
Come with a number, if you are renting then move the difference of potential mortgage per month - rent to a different account and see if you can make do with the money you get :)
That would be super conservative. 1.8 would only cost you ~8500/month. Well below your ~20k take home per month minus your wifes ~7.5k. No need to blow the full budget but pushing a but higher will get you a much nicer house and location.
You could comfortably afford 2m+ as long as your job is secure
if tech goes down or there is a bubble burst, most tech jobs in Bay Area will be in jeopardy. Apart from that FB seems relatively stable and I have been doing decently well so far, no danger of getting fired due to performance etc
Yeah, it's the age old issue. Risky to buy and risky not to buy. I wish I had bought more in the beginning. But I did not know my comp would take.off.
IMO better to be conservative considering your situation. When calculating affordability use only base income, and then move DTI between 36-39%. If that doesn’t get you the house you want, consider investing outside the housing market until it does. Lenders generally dont include RSUs unless they’ve been delivered for years at a steady $.
^ This. Very well said.
Work with a mortgage broker. They’ll do calculations based on your liquid and paper assets, then tell you how much you can afford.
For jumbo I think you go better getting several quotes from banks. Brokers can't touch the rate I got.
Disagree. Broker was able to get us a jumbo from a credit union when big banks declined us. All bc we had high debt to equity ratio since we wanted to keep first condo as rental. We eventually refi’d with a big bank. If it wasn’t for our broker, we wouldn’t have gotten our second place with a jumbo. Third party independent mortgage broker that has relationships with all banks is best
Those limits sound reasonably good. I could have bought a lot more than I did when I had the chance, but I wanted to be really conservative and not overextend myself. But being conservative priced me out of the top zip codes I wanted to live in. Location location location. In hind sight I wish I extended myself further to get into my ideal location. I would have been house poor for a while, but my income would have grown to make it more comfortable. My point is focus on the budget to get into your top location. Your TC will grow unless you feel like you’ve hit your terminal level already.
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Yes, that is fine. But you should pay down over time and have the bank do a recast in a few years
You mean refinance in a few years? Not sure I understand, what would be the benefit of that?
No, recast amortization. It is not well known but most banks can do it. Google it.