Household TC is ~700K , savings ~500K , currently own a townhouse and want to upgrade to single family + better location close to work (Sunnyvale/Cupertino) Planning to stay long term at least 7-8 years. We both are on H-1B , 1 Kid. After the sell of townhouse will have some emergency reserves. Not much concerned about the returns on this house we are thinking to buy. We feel moving to new place will improve quality of life ( commute, community, schools, day care etc) All the SFH in the desired location are being listed 2M+. Psychologically feeling like a burden and big responsibility owning such an expensive house and making a huge investment (mortgage + property tax would be around 11k monthly) We put offers on couple of them , but got cold feet immediately and both wished that the offer get rejected. After it’s rejected, we feel bad about the fact that we missed it. Also worried about the current market situation, no one knows how 2019 will play out. Some say recession is on the way, others say it’s just correction. Housing picked up again in Bay Area. Anyone in similar situation? What’s your thought process? Would you consider it as a huge risk? Thanks!
How do you save 500k when 40% tax takes away 280k already?
My rule of thumb: No spending more than 15% of your pre tax income. You may consider increasing house prices as a investment thesis. You may also consider potential earning increases down the line through promotion etc. Those things are hard to predict so probably shouldn’t factor them.
Why not rent that unit for less than half the cost?
Yes, we are also considering renting as an option, just it’s hard to go back to rent now that we are living in owned house for over 5 years now
I would never do it on H1B, considering how shitty the immigration has been.
+1
+2
No.
11k a month expense when you take home 35k/month. Sure why not. Happiness is priceless.
How did you come to 11K/month? Assuming you are putting in 20% down, even at 5% interest rate, the monthly instalments including property tax would not exceed 9K.
From a metrics, KPIs and quantitative perspective stop reading, otherwise: Will that make you happy? Will your life improve? Will you feel more significant after you do so? Will you wake up everyday feeling good and a happier person? If so... then yes, go ahead and buy whatever you can afford. The upside of a $2M house is that if you fight with your spouse you should have plenty of rooms and bathrooms to use without crossing paths with your SO
How many kids. What would mortgage look like
Updated post. 1 kid, mortgage+ property tax would come out ~11k monthly
We’re in a similar situation. Definitely feel your pain - Hard to take the plunge on a house that expensive. Have you considered the private school route?