What kind of position are my fiance and I in?

[Baltimore0924]

I'm about to start my second year of law school and will not have any hindering debt after graduation (including bar prep/study). My fiance is finishing grad school and she won't have any student loans after graduating either. Both of our cars are paid off and both of our families have decided to front the bill for the entire wedding. Currently just paying car insurance. Also have about 500k in inheritance. When I graduate I'll be 27 and my fiance will be 28. Credit score is currently 735. What kind of house can we realistically afford in the future and how are we for our future? Any advice would be great. Thanks!

[Olivia1]

I'd say wait to figure out salary first. No need to rush into a house when in school still. You may not find jobs where you are located, etc.

[rennigade]

I see your username is Baltimore. If you currently go to school in Baltimore...when finished you may want to leave that disgusting place.

Also...now would not be a good time to buy a home. You may not know where you will end up after you graduate.

[corn18]

To answer the question in your title, you and your fiancé appear to be blessed with a wonderful financial situation:

1. No debt
2. $500k in savings
3. Completing advanced degrees (what is your fiancé studying in grad school?)
4. Not even 30 yet

I'd say you are light years ahead of most 27-28 year olds.

I am going to ask why your credit score is relatively low considering your excellent financial situation? 735 is indicative of some problems or no credit history. Could you give us more details?

What is the $500k doing right now? Is it yours? How is it invested? Does it have a purpose identified?

I will echo what others have said and advise you to take your time on buying a house. Get married, graduate, get jobs and see where you land. Renting is not evil. Actually, renting can save you money vs. owning a home. Notice I said vs. owning a home, not getting a mortgage. Home ownership is costly and can be very expensive. Renting is mostly a fixed cost each month. While you aren't building any equity when you rent, guess what? You aren't building much equity when you have a mortgage. At least not in the beginning.

So, enjoy your freedom and each other. Don't become spendy and have fun.

Tom

[Joan.of.the.Arch]

I agree to wait until you graduate before you buy a house. But it would be good to use the time to familiarize yourselves with the housing stock and various areas where you might live, so that you will understand more about the possibilities. Do a lot of looking without immediate intention to buy.

I see your username is Baltimore. If you currently go to school in Baltimore...when finished you may want to leave that disgusting place.

Oh my gosh. That is kind of rude to say to someone you don't even know. Did you have a hard time there?

[rennigade]

Oh my gosh. That is kind of rude to say to someone you don't even know. Did you have a hard time there?

No nothing bad ever happened to me there luckily. What I said shouldnt be too shocking. The violence in baltimore has skyrocketed in the last year...and it was bad before. I think at one point baltimore used to be the gonorrhea capital of the US. Most people who have visited Baltimore only ever step foot in the inner harbor area...which is bearable for a couple hours.

For anyone who lives in the DC area...Id rather live in the PG County area. Theres usually only a couple of murders there each month so its not too bad I guess.

edit: It appears in 1998 Baltimore was the syphilis and gonorrhea capital of the US. Now they're doing better coming in at #6 in the STD race.

Baltimore does have some nice restaurants though.

[disneysteve]

What kind of house can we realistically afford

You guys are in great shape. Congrats on getting through school without debt!

We can't answer the house question, though. We would need to know how much you will be earning after you are both done school, married, and working. Your income is what will determine the house affordability.

[bjl584]

I'm about to start my second year of law school and will not have any hindering debt after graduation (including bar prep/study). My fiance is finishing grad school and she won't have any student loans after graduating either. Both of our cars are paid off and both of our families have decided to front the bill for the entire wedding. Currently just paying car insurance. Also have about 500k in inheritance. When I graduate I'll be 27 and my fiance will be 28. Credit score is currently 735. What kind of house can we realistically afford in the future and how are we for our future? Any advice would be great. Thanks!

You're off to a great start, but we'll need more info to answer your question. I'd slow down and wait till you graduate. Figure out your salary, your budget, and where you're going to be living before worrying about a house.

[myrdale]

The house will really depend on the job. Either way I would rent for the first year or two while you get the job down and learn about marriage. Once the honeymoon has worn off, and you have settled into the job, then start looking.

The rule of thumb I've heard is the house should not cost more than twice your annual gross pay, or alternately the payment should not be more than 25% of your monthly take home pay. To be conservative, lets say which ever is the least.

With $500k just sitting in the bank you should be more than able to buy the house that matches those statics outright.

Consider this though, say you made $100,000 per year, and by my math you can afford a $200,000 mortgage, but then you say "I've got $500k so I can get a $700k house" I would disagree with that!! With the $500k in mind, stay at $300k or less. Then you have a decent amount of money left in the bank and no mortgage. Keep taxes and insurance in mind also. You may find paying $5k per year in property tax adds up fast.

If you're particularly smart you will find something decent for $100 to $150k and not get hung up on trying to live a particular life style. Having $400k capital sitting around to invest in your future business may be useful.

[tripods68]

I agree with your assessment, wait at least 1 year before buying a house once you have find employment.

If I were you--consider paying cash for a starter home. Look for home price around in the mid 200K. That still provides plenty in reserve towards EF. With no debt + potential 100K a year income, you'll able to maximize retirement contributions. There would be less financial pressure from both parents to work FT in the event to raise a family.