Can I afford a ~750K house ?

New
Goople

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Goople
Mar 21, 2019 36 Comments

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 🙁

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TOP 36 Comments
  • New / Mgmt
    VSwf01

    New Mgmt

    VSwf01
    No, you can't.
    Mar 21, 2019 0
  • Rough rule of thumb is 3x your salary
    Mar 21, 2019 3
  • Google
    kbshknc

    Go to company page Google

    kbshknc
    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
    Mar 21, 2019 0
  • FICO
    nsy

    Go to company page FICO

    nsy
    I would say go for it if you can accumulate 20% down. The max loan you can get from 401k is 50k provided you have 100k(you do) unless you break ur 401k. Do not break 401k as distributions incur lot of taxes at ur highest tax level and 10% penalty. So you only have 120k in cash 70+50. Avoid PMI at any cost. you will need atleast 160k-170k to close. So 10-15% down with rest in heloc might be your only option. Check how much you will save in your tax returns with mortgage interest and property taxes. You might pay around 25k in interest and depending on locality 7.5k to 15k in property tax. 1% to 2% range. Please look up and compute all this for ur locality and then decide. Your taxable income will definitely go down with a primary residence mortgage. You are paying 3k anyway on rent. Other point is include payment of around $500 per month back to 401k. You are actually paying yourself that interest except loan management costs. If you change jobs, loan becomes payable in full with a 60 day window. Good luck.
    Mar 21, 2019 1
  • Hell no. Keep cash for next downturn.
    Mar 21, 2019 0