is december right time to buy a home

Dec 15, 2019 45 Comments

I currently live in an apartment, I see that many homes in Fremont, Dublin, San Ramon were like starting $1M. I am planning to buy a home but my friends are saying there would be a downtime next year by June.

my wife doesn't work currently and I have 2 kids and can I really afford $1M home or shall I downgrade to below 800k. or drop the idea of buying home and move to different cities like Austin.

my wife is forcing me to move out of the bay area but I am scared to survive there because of fewer opportunities than here.

I am trying for the FAANG companies but even if my TC would become 400k, I see that base is only 200k and the rest of it are RSU's and bonus where Uncle Sam will take half of it.

please advise. no trolls please as I am already feeling depressed by looking at the homes they built which cost like $2m and when my kids ask me about when can we move to a bigger home. I keep telling them small homes are best but I felt that I am not providing sufficient security and opportunity to grow bigger.

TC: 250k

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TOP 45 Comments
  • Amazon / Eng SEAFreeze
    Move out of the bay area
    Dec 15, 2019 13
    • Oracle CloudWarri
      OP
      Can you step out of Google and be in my shoes and can you say the same to yourself. If yes, I applaud you, I honestly can't think like you since I have a family to feed not only here, in India too. Yes I am supporting my aged parents.
      Dec 15, 2019
    • New svl564
      Unfortunately the reality is if you are single income (non working spouse) in the Bay Area, be prepared to live in a townhouse (for $1M) or in a larger house in the boonies like Mountain House. Townhome is not a bad idea - you can get a decent one for under a million in a decent school district.
      Jan 17
  • McAfee ktFU67
    Scenario 1:
    Purchase Price: $1,000,000
    Downpayment: 150,000
    Mortgage Amount: 850,000
    Interest rate: 3.375 (Could be higher or lower)
    Mortgage Payment: $3758
    Property taxes: $1200
    PMI: $350
    Misc Expenses: $300 (Things break)
    Home Insurance: $80
    Total Expenses: $5688
    Tax Deduction: $300 (Total Interest Paid for 750k + 10k Property tax - $24.5k) * 33% tax bracket
    Net Total: $5388

    Purchase Price: $800,000
    Downpayment: $150,000
    Mortgage Amount: $650,000
    Interest rate: 3.375
    Mortgage Payment: $2874
    Property taxes: $960
    PMI: $350
    Misc Expenses: $300
    Home Insurance: $80
    Total Expenses: $4564
    Tax Deduction: $200 (Total Interest Paid for 650k + 10k Property tax - $24.5k) * 33% tax bracket
    Net Total: $4364
    Net Total after PMI: $4014

    Realistically, you will save $1374 a month if you went with an 800k house which is a lot and could fund your trips to India or vacations.

    Somethings to keep in mind:

    1) With current finances, you might not qualify for a 1m$ home as you don't have a 20% down payment. Also, they expect you to have a year's worth of payments in cash.
    2) Given that you're on H1B, you need to make sure that your home should be easy to give for rent if you have to suddenly leave for India due to unforeseen circumstances. You will likely breakeven with rent in Scenario 2 than Scenario 1.
    3) Selling a home would cost 5% of the total current value. In the case where there is a downturn and if the home value were to drop 15% and you are forced to sell the home, you would lose the entire principal. Therefore it's important you live in your home or have the financial stability to keep the home forever.
    Dec 15, 2019 3
    • McAfee ktFU67
      Thanks! I wish I had this knowledge when I wanted to buy the home.
      Dec 15, 2019
    • Gilead Sciences / Mgmt
      TKEr26

      Gilead Sciences Mgmt

      PRE
      Syneos Health
      TKEr26more
      Very detailed👍 in addition to that above, don’t push hard on yourself. If you are looking for 800k then stick to it otherwise you will end up wit deep stress
      Dec 22, 2019
  • This comment was deleted by original commenter.

    • Dropbox / Eng EnTaroDrew
      She just needs to start and not procrastinate too much. It won't take a year of LC to get into Google on L3.
      Dec 15, 2019
    • Oracle CloudWarri
      OP
      With 2 kids and a family to feed, I won't bother her if she takes more than a year. I don't see any boot camp which will just focus on data structures and algorithms. I think the engineering guys who cracked all the leetcodes should start a boot camp for 3 months to train people on the topics, not the online ones actual classroom sessions.
      Dec 15, 2019
  • Bank of The West twoPTzero
    Don’t speculate the market. You don’t know what the future holds and, frankly, nobody else does. Buy when you need to. You can buy in San Ramon, which is a great place for raising a family, for less than 1M for a 3/2.

    Also, don’t compare yourself to others - that’s a recipe for disaster.
    Dec 15, 2019 1
    • Oracle CloudWarri
      OP
      I am not comparing, but after joining Blind when people post like 400k, 500k TC. I feel like I am not doing enough hard work to earn like that and keep my family in better place. I saw a guy who does leetcode for like a year and landed at 350k TC. So I am just thinking why not me.
      Dec 15, 2019
  • Salesforce _mojojojo_
    I would strongly suggest moving out of bay area. You could get a much bigger house even in Seattle for the same 800K tag. (Which honestly is still a stretch for your finances)

    But if you are adamant about Bay area for some reason have you considered Mountain House? Try and work remotely for 3/5 days.
    Dec 15, 2019 0
  • PayPal iforgott
    Go with WF for your mortgage if you decide to buy. They don’t require PMI and love IT customers
    Dec 16, 2019 0
  • Atlassian / Eng
    Schnorlaxe

    Atlassian Eng

    BIO
    I may grow old, but I'll never grow up
    Schnorlaxemore
    Actual taxes (not withholding) are exactly the same on RSUs and bonus as regular salaries. Only ISOs get favorable tax treatment and only aome of the time (depending on when you can exercise.)
    Dec 15, 2019 0
  • McAfee ktFU67
    OP: Can you list your current expenses? That will help give us an idea of your affordability.
    Dec 15, 2019 6
  • Cornerstone infstone
    I'm in the same boat, don't give up. Lifestyle is way better here.
    Dec 15, 2019 4
    • Salesforce _mojojojo_
      Oil in foods
      Dec 15, 2019
    • Yahoo FFnl47
      Wow. How about useless spending? And showoffs ? Would you consider them as lifestyle too?
      Dec 15, 2019
  • Tax on RSU’s and bonus is the same as on base salary. You are confusing withholding with what you will actually end up paying.
    Dec 15, 2019 3
    • McAfee ktFU67
      You will get the money back when you file tax returns.
      Dec 16, 2019
    • Atlassian / Eng
      Schnorlaxe

      Atlassian Eng

      BIO
      I may grow old, but I'll never grow up
      Schnorlaxemore
      If you're in California, you have 10% (give ot take) state tax as well

      As ktFU67 noted, the withholding is fixed and if your overall tax bracket including state is 30% you will get it back when you file. For a lot of ua in higher brackets, it works the opposite - they take a fixed rate and we have to send the difference in quarterly or overwithhold the regular salary.
      Dec 16, 2019

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