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Hi everyone, Household TC - 385K My husband and I are looking to buy our first house this summer in the greater Boston area. We toured a house that we love in our dream town. We want to submit an offer for $1.15M, but we want to be careful not to overextend ourselves. 20% down + closing costs would leave us with a $25k nest egg. Current situation: - Mid 20s - 230k for down payment (20% down) - $385k household TC (280k base) - $400k in combined assets - We have $45k combined in student loans left to pay. Other than that we have no debt(car paid off) - Our credit scores are 760 + 800 - The house wouldn’t need much, if any, work - no kids but would eventually like 2-3 - 7% interest rate - $7000 Monthly Payment(mortgage+taxes+insurance) Do you think a $1.15M home is feasible given this information? Appreciate any insight! #mortgage #housing #boston
Anything under my 5x of your sustainable family income is affordable
What’s monthly post tax income, what’s monthly house payment?
Don’t become house poor.
I personally feel it is a bit of a stretch. This is my personal calculator : one should only buy a house which is double your household TC + stretch goal can be additional 10-15% of your household TC. In future you don’t want to be house poor as your expenses will grow over time. Btw: which area is this house ? I am in boston area as well. And is the house brand new construction?
Appreciate the write up. It’s a suburb in the metro west(30-40 min commute into Boston). Top school district which is something we value as we hope to have kids.
Not brand new. House is about 50 years old
Buy till 1 million if want to avoid risk. Else 1.15 looks fine. Btw bidding wars are on so list price makes no sense
Yup - 1.15 would be above asking. Definitely a crazy market rn
Pay off debt before buying a house. $7k/mo is steep if you’re not factoring property taxes + utilities + maintenance.
Yeah so the 7k/mo is including property taxes but does not include utilities+ maintenance. Also, we have no interest in paying off our 3% interest rate student loans early. So that will be a debt we have for a long time
Go for it. It’s not like rates are going to be this high forever. Boston housing market just shows no signs of slowing
25k nest egg is too low. No matter if a house is new or old you need money to actually furnish it. That’s a lot more money than you think. If you had say 80-100k left over I would say do whatever makes you happy.
The $25k nest egg concerns me a bit. In theory you can afford the monthly payments, but I’d want to have a bit more liquidity just because I’d want more wiggle room to deal with closing costs and unexpected costs that come with owning a new home
Not no, but hell no. You don’t want to be dependent on a $385k salary which is far higher than average in America. You would make yourself a slave to your employer. Only do this if you don’t mind calling someone “massa”.
The household TC isn’t dependent on just one TC it’s on two which helps mitigate risk Also this seems par for the Boston area and not as expensive as you might think. I’d aim for a 900k house but I wouldn’t say this is an outright terrible decision. Just average and it seems like it would make them happy. They’d definitely be a bit house rich and income poor in the next five to ten years but if they go into it with that expectation it could be okay
Yeah definitely hear you there. 900k is definitely ideal from a savings perspective. however we figured to stretch for 1.15M might be worth it for our dream town. Especially considering both of us are young in our careers with lots of career progression left. As a long term play it would start out tighter than we’d like, but it still seems “affordable” given our current salaries. This dream town would be end game from us as if we moved to a 900k town/house, we would have in the back of our mind to eventually move into this town.