Buying 400k house 2 years after school

[uc3]

Living at home while saving for a down payment and paying back $60k in loans. Currently working retail (salary~$130k.) Significant other making $40k a year. Would buying a $400k home 2 years out of school be a bad move?

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[PharmtoCS]

Your combined gross income isn't bad. To get a better idea, how much do you plan to save for a down payment, and how much will you be paying toward loans (assuming you have them) each month when you plan to buy?

 

[PumpkinSmasher]

Will you be able to put 20% down? What percentage of your net/take home income have you decided that you can afford for mortgage/insurance/property tax/hoa/utilities? figure out those rough numbers and you will have your answer. also consider if your spouse eventually wants to be a stay at home parent, can you afford the payments without spousal support?

Those are the things my partner and I considered, also how long you plan to stay in the area.

I recommend if possible keeping housing costs including utilities at less than 30% of take home income. depends on your situation, I like the freedom of extra cash for investing, college savings, vacations, emergency, peace of mind, etc.

It all comes down to what you can comfortably afford. Financial stress can be a major cause of depression, stress and marriage issues, so make good choices now....

 

[sosoo]

what he says, financial stress can lead to marriage issues. that 40k from spouse is a bonus but not a 30-yr commitment. how many relationships do u know lasts that long? LoL.

 

[Amicable Angora]

Please don't file for a 30 year mortgage

 

[uc3]

Definitely all good things to consider, thanks!
I was planning on saving $60k for a down payment which would be 15%. An estimated mortgage I expect is near $2400 a month with taxes and other fees included. I would pay $2200 of month for mortgage/utilities and spouse would cover the rest. Taking that from a monthly pay~ $6500 I would use the remaining toward loans and lifestyle.
And definitely would have spouse contribute until loans are paid off. After that could become a stay at home mom with children eventually.

 

[uc3]

I don't love the idea of a 30yr mortgage but I feel for the first few years I'd use this until I get a cushion then go after paying off the house.

 

[Momus]

Nothing's wrong with 30 yr mortgage. I pay it as slow as possible when I can pay the mortgage balance in full because I make more putting it in stocks. Invest the difference and make an extra 5% of your money. If you don't have the investing discipline of saving and investing like 90% of population, pay it off fast and make only 3% saving in interest. Your choice.

 

[Momus]

Definitely all good things to consider, thanks!
I was planning on saving $60k for a down payment which would be 15%. An estimated mortgage I expect is near $2400 a month with taxes and other fees included. I would pay $2200 of month for mortgage/utilities and spouse would cover the rest. Taking that from a monthly pay~ $6500 I would use the remaining toward loans and lifestyle.
And definitely would have spouse contribute until loans are paid off. After that could become a stay at home mom with children eventually.

6500/mo take home, it looks like you don't max your 401k. I'd consider maxing retirement accounts on top of saving for a downpayment. You can do both.

 

[wagrxm2000]

Make sure you make a budget first before doing anything. Don't forget about the high cost of children and whether you will help with their college education. While I'd prefer more, at least save 15k (so 10 k plus 5 k match) per year to get you around 2 to 3 million in 40 years. Your going to want to take some nice vacations and at some point buy a nice car (think age 40).

After every possible cost, if it works out, I'd say go for it.

I hope you have a secure job for when a recession occurs and there are job cuts.

 

[waiter]

$60k extremely low amt of loans which can be paid off in a few yrs

 

[BenJammin]

The thought of buying a house honestly freaks me out. I don't want to be under water in a house to where I may have to take a loss just to move. My household income is $240k so I could afford a nice house but what if I decide to move to a better location? What if I want to start or buy a pharmacy? I don't think I can buy a house, a new car, and start/buy a store. Not until I'm 40 or 50 and even then, I don't really want to wait that long when I have the cash in the bank right now.

 

[Lexington2012]

Save up for a nicer house. Unless you live in a rural area 400k won't buy you anything you can be proud of.

 

[BidingMyTime]

I would recommend getting a more serious commitment than "SO" before you buy a $400,000 house together (marriage, handfasting-haha, whatever ya like.) Obviously more of your salary will be going towards the house, so in a break-up you will be the bigger loser. More people break up from SO's, then people who get divorced, so you are at a bigger risk of losing investment. Bottom line, if you aren't ready to permanently commit to someone in marriage, then you aren't ready to buy a house together. (I assume you are putting the house in both your names, if just in your name, then no worries, unless you live in a common-law marriage state, which most states are not.)

 

[awval999]

Save up for a nicer house. Unless you live in a rural area 400k won't buy you anything you can be proud of.

FYI the whole world doesn't live in coastal California or NYC.

$400k would get a house "one could be proud of" in most of the country.

Your elitism is showing.

 

[genesis09]

$400k will get you a fairly nice house in Milwaukee. As long as you don't want to a block or two from the lake, you can find a house in the fanciest of areas. Even in Chicago, you could find a nice house in a middle class area for that amount.

 

[confettiflyer]

$400k is a decent down payment here in Silicon Valley


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[Muse600]

I added all that up before...didn't equal financial independence...

solution everytime - "just marry a rich cougar"

 

[gwarm01]

$400k will get you a fairly nice house in Milwaukee. As long as you don't want to a block or two from the lake, you can find a house in the fanciest of areas. Even in Chicago, you could find a nice house in a middle class area for that amount.

You could get a nice highrise condo in downtown for $400k in Chicago.

 

[ldiot]

Nothing's wrong with 30 yr mortgage. I pay it as slow as possible when I can pay the mortgage balance in full because I make more putting it in stocks. Invest the difference and make an extra 5% of your money. If you don't have the investing discipline of saving and investing like 90% of population, pay it off fast and make only 3% saving in interest. Your choice.

I'd consider myself very aggressive in terms of allocation but lets me honest it'd be pretty tough for anyone to pass up a guaranteed 3-6% guaranteed ROI combined with the increased cash-flow and piece of mind you get when the loan is paid, especially with interest rates rising.

What would I do if I were the OP? First I'd pay the 60k, it shouldn't even take a year. Then buy whatever house you want on a 15 year fixed with the payment not exceeding 25% of your take home income.