Can I afford to buy a house?

[ESMonitor]

*currently working on a plan to reduce living expense by enforcing a strict budget

You might want to study up on Tibetan monks....hang out for a week with Seal Team Six...spend a month training with Japanese Ninjas....I guess what I am trying to say is it is easier said than done...because life itself will want to bust out of your budget parameters like Mike Tyson punching his way out of a wet paper bag...it's going to happen so you must prepare for it.

So you need to get into the mindset...and get ready to take the hill

Without the budget laws in place it can be a slippery slope. Here are some quotes below from some grizzled vets....




There are no short cuts to any place worth going.
- Beverly Sills

The good Lord gave you a body that can stand most anything. Its your mind you have to convince.
-Vince Lombardi

Respect your efforts, respect yourself. Self-respect leads to self-discipline. When you have both firmly under your belt, thats real power.
-Clint Eastwood

The good Lord gave you a body that can stand most anything. Its your mind you have to convince.
- Vince Lombardi

The most important thing in the Olympic Games is not winning but taking part; the essential thing in life is not conquering but fighting well.
-Pierre de Coubertin

It is necessary to try to surpass ones self always: this occupation ought to last as long as life.
- Queen Christina of Sweden

Mountaintops inspire leaders but valleys mature them.
- Winston Churchill

I think the guys who are really controlling their emotions … are going to win.
-Tiger Woods

We are what we repeatedly do, excellence then is not an act, but a habit.
-Aristotle

Keep away from people who belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.
- Mark Twain

Talent without discipline is like an octopus on roller skates. Theres plenty of movement, but you never know if its going to be forward, backwards, or sideways.
-H. Jackson Brown, Jr.

Mastering others is strength. Mastering yourself is true power.
- Lao Tzu

Be swift to hear, slow to speak, slow to wrath.
- James 1:19

Mental toughness is many things and rather difficult to explain. Its qualities are sacrifice and self-denial. Also, most importantly, it is combined with a perfectly disciplined will that refuses to give in. Its a state of mind-you could call it character in action.
- Vince Lombardi

Leaders aren’t born they are made. And they are made just like anything else, through hard work. And thats the price well have to pay to achieve that goal, or any goal.
-Vince Lombardi

Leaders who can stay optimistic and upbeat, even under intense pressure, radiate the positive feelings that create resonance. By staying in control of their feelings and impulses, they craft an environment of trust, comforts and fairness. And that self-management has a trickle down effect from the leader.
- Daniel Goleman, Primal Leadership

Hold yourself responsible for a higher standard than anybody else expects of you. Never excuse yourself. Never pity yourself. Be a hard master to yourself-and be lenient to everybody else.
Henry Ward Beecher

If we don’t discipline ourselves, the world will do it for us.
William Feather

It was high counsel that I once heard given to a young person, always do what you are afraid to do.
- Ralph Waldo Emerson

Rule your mind or it will rule you.
Horace

[snafu]

It may be do-able, but is it worth it to be 'house poor'? Life is more than penny pinching. I'm not sure that a 2nd child requires a 3rd bedrm. Small children can share a rm. and significantly benefit from that experience. We want you in a safe neighborhood with a good school but would you be willing to seek-out the cheapest house/condo in the neighborhood? The individual rooms will be smaller, the place will need paint, updating, new floor coverings and appliances but cosmetic projects can be done one-by-one as time, money and skill sets evolve. I'd give higher priority to kiddies activities, organized sports and school based extra curricular activities. They are all expensive and roll one into the next.

[HappySaver]

Let's say you use $250k for the downpayment. That leaves you in a good position with $50k left over in savings.

You're talking about a $350k mortgage. At 4.5% (being conservative here) you could get a 30yr loan for $1773. Add in $500 HOA and you're at $2273, which is almost exactly what you current pay in rent. Of course this doesn't include taxes/insurance/etc, but it's also a tax deductible loan.

You stated rents have gone up. They will only keep increasing. The $600k amount is lower than you mentioned a few years ago. Rates are excellent now and you have the income and the downpayment.

If it were me and I knew I were staying in the area with a stable income, I would go for it in a heartbeat. Assuming of course that you're happy with what you'd be purchasing.

[LivingAlmostLarge]

Yes we're in a similar position for income, home price, townhouse 3/2.5 and $600k and investments and we have 2 kids. Our PITI is $2200 and HOA $220. Very doable.

[yellow heel]

Its been 4 years...

Just an update as I stumbled upon this old thread. We rented the same place since then and now the rent is 3000/month. And now we have 3 kids

We are looking to buy something in the 750k range. I will try to keep it as low as possible though. Hopefully in the 600 range if it doesn't get bid up.

Instead of putting a large down payment, I have decided to just put 20% since I can get pretty low interest rate.

FWIW, in hindsight, I should have bought whatever I could 6 years ago... You live and learn!

I also updated my balance sheet since I thought it was interesting to compare with myself 6 years ago.

-------Balance Sheet--------------
*Financial Snapshot as of 4/27/2017

Asset:
Taxable Def Account - 760k
Taxable - 680k

Liability:
No mortgage or debt
---------------------

[disneysteve]

Just an update as I stumbled upon this old thread. We rented the same place since then and now the rent is 3000/month. And now we have 3 kids

Asset:
Taxable Def Account - 760k
Taxable - 680k

Liability:
No mortgage or debt
---------------------

Thanks for the update. It's always neat to see how things have progressed over time. Congrats on the kids. And congrats on the $1.4 million net worth. Good luck house hunting.

[yellow heel]

Thanks Steve. Its good to see you are still around here.

[LivingAlmostLarge]

funny how things have changed.

[Drake3287]

Living here in the Bay Area I was in your exact situation 30 years ago. The home prices of course were lower but so was my salary at the time so every things relevant.

I was able to do the same thing your planning. Yes you can do with a little imagination in your spending and saving habits. 30 years later and our house is paid off and we ended up having 3 kids.

Get out of renting as soon as you can. Your only making someone else wealthy not to mention how much rents will be 30 years from now when your house is paid off.

[yellow heel]

Drake, where were you 6 years ago when I made this thread LOL

Yes, I should have realized that buying earlier would have been a good choice especially in the bay area.

I am finally in contract for a house now. Hopefully the deal will go through smoothly!

[~bs]

owning vs renting tends to be a touchy subject, but my opinion is that if youre planning on living in a house for a long time, might make sense to buy. everyone's situation and location is different. My preference is not to buy into a hot real estate market, better to buy when the market is depressed.

I for one will be very happy once my mortgage is paid off, and all I have left is maintenance, utilities, and real property taxes. As opposed to renting, where you're paying market rents, which includes the owner's maintenance, utilities, and real property taxes.

[evgeniusleo]

Drake, where were you 6 years ago when I made this thread LOL

Yes, I should have realized that buying earlier would have been a good choice especially in the bay area.

I am finally in contract for a house now. Hopefully the deal will go through smoothly!

I just dream of a house in the USA.
I congratulate you.

[Gailete]

I've been hearing about the Bay area being horribly expensive for years now, starting when I used to watch House Hunters! I can't conceive of buying a house that expensive and then paying the property taxes on it!

Around the time, Hubby and I got married ~15 years ago, my SIL to be and her husband moved from Michigan to Delaware. I heard through the grape vine that they were having a hard time finding an affordable house since house prices were just crazy. They ended up with a house in the $250K (new construction I believe). One of the rooms didn't even have furniture in it for years as they had more house than they needed. But that was the story, the price of homes was out of sight. Well what I finally figured out is that the KIND of house she wanted was very expensive and somehow, she was going to get it. A couple years later we were in Delaware for business, didn't have time to see her, but I saw plenty of houses that were much less cheap than $250K.

Poor and middle class people need to live somewhere. I can't figure out when I hear that we can't find anything cheap enough is an excuse for getting your way in a house and skipping the handy man's special or if it is true? Not saying this is so in this case (yellow heel as they appear to be able to afford whatever they want and good for them!), But over the years, I keep hearing about how housing is so expensive in each person's area, and I always wonder about where the Walmart cashiers live. Or say school teachers since I haven't heard of many that get paid in the $100K+ category? This is just curiosity on my part. Everyone has a right to buy whatever they want to if they can afford it - no skin off my back. I even see the Money Magazine articles of best place to live every year and most of the homes are in the $100-150K range if my memory is working right. It seems that most big cities have affordable homes of some type anyhow.

I bought a house 16 years ago. I could have said that at $100+ they were all too expensive for me to handle on my own, although a bank would have happily given me a loan for one of them. I ended up buying the cheapest house in town ($60K) and it meet my needs very well until we moved up here to the house hubby built.