Thinking of buying first house. Kind of scary.

[disneysteve]

his net is actually just going to cover the house payments. We will have to "live" off my income.

What happens when one of you loses your job?

I don't think a couple earning 120K can afford a house costing 700K no matter how big your downpayment is. There are the taxes, insurance and upkeep to consider which raises costs even more. You'd be putting yourself in a perilous situation if a job loss occurred.

[disneysteve]

Prices are the most affordable that it has been in a while.

That is not a reason to buy something that you can't afford.

[graceful]

Have you considered moving to a non-HCOL area? Is that an option? With the money you've saved, you could live in a great school district and buy a great house for cash in most areas of the country.

What's a non-HCOL area?

Unfortunately, moving away is not really an option right now. I have golden handcuffs. I have a job that requires that I am on-call 24/7. So, anywhere I more, I have to be accessible - ideally within 30 minutes away.

No, I can't change jobs. I work specifically for my parents. I handle all their personal as well as business interests and in particular their real estate portfolio. They are "semi-retired."

That is why I travel so darn much - it's to get away from work - My parents have to stay put and sit on the golden egg while I am gone.

It is a blessing and a curse.

Sorry to go on and on, everyone. I am very blessed - esp. in this economy. Just frustrated I guess.

[feh]

What's a non-HCOL area?

Unfortunately, moving away is not really an option right now. I have golden handcuffs. I have a job that requires that I am on-call 24/7. So, anywhere I more, I have to be accessible - ideally within 30 minutes away.

No, I can't change jobs. I work specially for my parents. I handle all their personal as well as business interests and in particular their real estate portfolio. They are "semi-retired."

That is why I travel so darn much - it's to get away from work - My parents have to stay put and sit on the golden egg while I am gone.

It is a blessing and a curse.

Sorry to go on and on, everyone. I am very blessed - esp. in this economy. Just frustrated I guess.

HCOL = High Cost Of Living.

[graceful]

What happens when one of you loses your job?

I don't think a couple earning 120K can afford a house costing 700K no matter how big your downpayment is. There are the taxes, insurance and upkeep to consider which raises costs even more. You'd be putting yourself in a perilous situation if a job loss occurred.

Yeah that is certainly an added concern and stress for my DH. His job is pretty secure considering this economy. He actually got a promotion recently that put him in charge of his entire department.

However, you never know. His main concern actually is that the entire company is really dependent on the boss. If something happened to the boss, he is positive that the entire company will just shut down maybe after finishing up their current projects.

If we don't buy a house, if anything happened to his job, he could stay home and be a "house husband" if he couldn't find a new position right away.

He could never work for me - we would kill each other.

I can't lose my job. Heck, I can't even quit.

[graceful]

That is not a reason to buy something that you can't afford.

Very true.

I have about a year to make a decision or win the lottery.

Going to try to see if there is anything out there that we CAN afford. I got all excited a while ago when I saw a decent looking house for $499K in a good school district. Called the realtor and found out there were MAJOR foundational problems. So, the half million got you the LAND and you still had to demolish the house and re-build something.

The good school district means higher taxes and higher home prices, unfortunately...

Still stressing about the kids' school so I am determined to find a way to do this AND be able to sleep at night...

[graceful]

HCOL = High Cost Of Living.

OK - thanks.

[zetta]

We've had a similar income and mortgage for a few years now without feeling pinched, but our property taxes are only a third of yours.

After thinking about it some more, I want to retract this statement of mine. We had an income of about $120k and paid PITI of about $2700/mo for only two years while I was a SAHM -- we dropped DH's 401k to 6% in order to do this. Our retirement savings at that point were at least $300k.

Given your age, your income, and the amount you've saved so far for retirement, I don't think it's a good plan to spend $4k/month on housing.

Some alternatives to consider:
* Research the private schools -- perhaps there are some good ones that cost significantly less that $20k/year.
* You could use the money you've saved in the house fund to pay for private school. 2 kids x 7 years each x $20k = $280k. This leaves you $100k to put on a downpayment for a cheaper house in a lesser school district.
* The subsidized rent you're getting is a great deal financially. If you can continue to live there while the kids go to middle and high school, you can focus your financial efforts on providing them a great education.
* Are you planning to pay for part or all of your kids college? Would the money be better spent on college tuition rather than middle/high school? Perhaps pay for tutoring and after-school enrichment to make up for deficiencies in the school day?
* Could your parents business buy an apartment block or complex in a good school district and give you the rental break to live there?
* If you don't have an ownership stake in the family business, are they really paying you market rate for the services you are providing? How much would the same position pay elsewhere?
* Since you are taking care of so much for your parents, would they be willing to help out with the cost of either private school or renting a studio to qualify your kids to attend the better school?

[LivingAlmostLarge]

Zetta interesting prospects! Excellent suggestions.

I like the private school suggestions. I have heard that from a lot of people who live where I live. They live in crummy school districts but cheap rent and instead send their kids to private school for less.

[Seeker]

Prices are the most affordable that it has been in a while.

We had actually never planned on buying in the NE at all. We thought it was a unattainable dream. We were just going to make due with our situation and were (sounds horrible) just waiting for the day my family no longer needed me and we could move anywhere.

Now that our oldest is going into middle school in Fall 2010, we need to make the decision now. Even to send her to the best of the worst public middle school in our area, we will have to either buy or rent the cheapest condo/coop/apt we can find to get her into that zoned school. The schools now need more stringent proof of address for the kids to get in.

Where we live, we are zoned for a middle school that was FAILING a few years ago. It has improved slightly - it is just above passing. DH refuses to send the kids there. The other middle school in the next zoned area is much better but still not that great - like I said the best of the worst.

If we rent in that school district, I would spend a minimum of $1000/mth on a place I wouldn't live in. I would still live where we are - I work in the building, the train is 2 blocks away and our apartment is huge. To rent an apartment in the other district that is comparable would be over $3000/mth.

Our original plans were to maybe buy a studio apartment in that district to get the kids into the school and then rent it out after the 8 year old is registered into the school.

But honestly, I'm trying to get out of the Landlord business not add to it.

At the end of the day, we are still not happy with the schools there. With the housing price drops, we feel that we can finally get the kids into some excellent blue ribbon school districts.


So, we can't do nothing. Either we buy in Westchester a home we live in or we have to buy an eventual investment something (probably outright for under $150K + coop/condo fees) in order to get the kids OUT of the middle school they are zoned for. Other option would be to rent something for around $800/mth for at least 3 years. We would NOT actually live there.

Given all the info posted, I'm tending to think one of the two options above would satisfy your current requirements.

Your job (managing your folk's properties) is not going anywhere, but your husband's concern of his job relying on one man in order to retain that job, is precarious at best. If that's the literal truth about his situation, then I'd not plan on being able to spent $4k month indefinitely for a house/home in your high cost of living area. Realizing that your "salary" is all over the place, makes it extremely difficult to "budget" as well.

For your children's sake and your own peace of mind, I'd choose one of the above and just continue living where you do. $100/month rent, cannot be beat.... and even buying or renting one small "empty" residence will satisfy the school requirement and not take a majority of your savings and put you and yours in a precarious situation.

[graceful]

Thanks for all the responses! Lots for us to think about.

We will need to do a more in depth analysis of our REAL financial picture to see what we can or can not do. No way will we make such a big financial decision without knowing actually what we will be getting into and making sure that we can handle it and be able to sleep at night. A back up plan for the worst case scenario would also help too.

I'll let you know if there are any further developments.

[Joan.of.the.Arch]

Around here just renting a place to claim residency for school attendance but not actually living there is illegal. Would you have to teach your children to lie about where they live? I live in a very bad school district and chose not to send my kid to those schools. People made that same suggestion of renting "a closet" in the nearby good district. I was surprised how easily people suggested that. It made me doubt their honesty in other matters.

[graceful]

Around here just renting a place to claim residency for school attendance but not actually living there is illegal. Would you have to teach your children to lie about where they live? I live in a very bad school district and chose not to send my kid to those schools. People made that same suggestion of renting "a closet" in the nearby good district. I was surprised how easily people suggested that. It made me doubt their honesty in other matters.

It really was a LAST resort kind of option - one that we are leaning far away from. It IS an option, so I listed it here. But I doubt it is an option we would really choose. Sometimes, it is not just about numbers.

If we didn't buy a house, we would probably seriously entertain the idea of buying an apartment locally in the better district.

Even then, I feel weird. So, I am going to examine our numbers and see where I can squeeze the money so that I make the best decision for my family.

[Seeker]

Around here just renting a place to claim residency for school attendance but not actually living there is illegal. Would you have to teach your children to lie about where they live? I live in a very bad school district and chose not to send my kid to those schools. People made that same suggestion of renting "a closet" in the nearby good district. I was surprised how easily people suggested that. It made me doubt their honesty in other matters.

I understand your feeling Joan, but I (having seen this in action) do not agree that this "dishonesty" necessarily imparts to other areas. Nor would I pre-judge the people whom have done so in my own neighborhood.

I actually live pretty close to two community colleges. I attended the one I was supposed to (a long time ago of course), however my neighbor in recent years, stated that their daughter lived with her grandmother in order to attend the community college in the other school district.

We pay property taxes to a particular school district, yet our neighbors send their daughter to another. Is that wrong? Is choosing the best option for your child, really wrong?

What is the point of the educational district/student restrictions? To keep a handle on population? Is that really in the best interest of each child?

There are certain laws/rules/restrictions that IMO, should not exist. This is one of them.

The schools that cannot maintain a good reliable record of teaching, should not be allowed to continue just because students in the area do not have a "legal" choice about where to get the education they are after. Just my opinion.

[graceful]

Sort of an update:

We are in no rush to actually make the home purchase right now. I was jumping the gun earlier and stressing about it because there were 2 houses that I kind of liked. $720K and $695K respectively and taxes around $18K. I felt an "urge" to move quickly but was not ready financially, emotionally or pyschologically.

Those 2 houses are in contingency already within 8 and 30 days so now my "urgency" is over. There is nothing else I am interested in.

Still looking at houses but aiming for the end of the year in order to take advantage of the $8k tax credit. Or closer to summer of next year. If the timing and the house and the money is not all aligned then even a tax credit of $8K is not worth it.

Every month we delay will be a savings of $4K and more $ for the EF and down payment.

We are expanding the search to an area that is about 45-50 minutes away from where I work instead of the 30-40 minutes I was hoping for. About an increase of 30 minute for DH - from 50 minutes to about 80 minutes. We can get more house for the money - or better yet a lot less money for the same house. Most importantly the taxes are much lower - a range of $8K to $13K instead of the $15K to $20K. And the schools are still good.

We spoke with both sets of parents and they are all encouraging to continue the house hunt. DH's parents offered to "help us" if we needed it. Not exactly sure what they mean but I know they "helped" DH's 2 siblings when they bought their houses. We would prefer to do it on our own if possible so we didn't ask for any details but it is nice to know that there is help available.

My parents are also telling us to "go for it" if the right house comes along. If something ever happens to DH's job, they feel that the business can afford to increase my pay to fully support us temporarily until DH gets new employment. Obviously, the business is not a limitless fountain of money but it is profitable enough and has excellent cash flow.

As I said, we want to do this entirely on our own and NOT have to rely on the parents. But if the worst ever happens, we have a viable, reliable, and available back up plan.

DH has his performance review coming up next week. So, we will see what his pay increase will be. It may be minimal but from his boss' comments, there will be something.

So, against the advice of most that warned me not to get in over our heads, I think we are definitely going to purchase a house in the next 12 months. But we will delay the purchase as long as possible, look in an area farther away with lower taxes.

Based on what I have seen on the internet, it looks like we will still be spending around $650K to $725K for the house. It will have more room and lower taxes to compensate for the longer commute. So, we will be looking at around $3500 a month for P&I and taxes & HOI.

I am still working on our budget if we buy. And we are going to tighten our belts in the next few months to save as much as an EF as possible and to get use to how much discretionary income we will really have eventually after we buy.

I will keep you updated as things progress and if I have any solid numbers. I'll probably start a separate thread though since this one is so complicated.

Thanks to everyone for your input. It really helped my realize I was in no way ready NOW and so I wasn't as disappointed when the 2 houses I liked got bought by other people because the timing and the money just wasn't there.