Buying A Home
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
$1M house on $250k income?
It's hard for me to share any advice/opinion to my sis since I would never see myself working with these numbers; they make me dizzy. lol.
In your opinion, would you feel comfortable buying a $1M house? No debt, 10-20% down, $250k annual income, decent retirement and non-retirement savings (I don't know the number). This is at a LCOLA, if that matters.
Re: $1M house on $250k income?
20% down would mean an 800K mortgage. As a jumbo mortgage it will probably be at a higher rate. If they got a fantastic rate and had very low property taxes, that might be feasible (~4K/month out of 20K/month salary, pretax). However, it depends on what they hear back from their lender.
"The House We Built."
A journey of building the dream.
My first answer was no. A $250k household income isn't enough to be playing with million dollar real estate where losses can be mighty, IMO. $50k upside down in a $300k house is bad; I'd hate to face being $300k upside down in a $1M house.
But I thought about it and if it were a good investment with a certain amount of insulation to its value (perhaps historically significant with superb location and inherent value to the community), I'd say go for it. If it's just one of those atrocious McMansions parked on 12 acres in the middle of nowhere with no value to it other than what the builder declares it's worth, no; that seems like a risky investment to me.
My Pinterest
The Googlesites Paint Bio
Thinking of doing cosmetic updates to a dated home? These were our costs.
This. Our mortgage is exactly 1x our annual income. I want to live during this life, not be handcuffed to my house.
I live in a LCOL area, and could get a gorgeous high-end house for $500k. I think if we had a HHI of $250k, we'd stick a lot closer to that range.
lol We just moved from the NYC/NJ area these numbers are more common there. If you are not accustomed to dealing with large numbers - remove them from the equation and deal on percentages. That mortgage in annual payments is about 26% of their annual income (not including bonus I assume) - assuming 10% down (doesn't make as much since at that price to put more than 10% down in my experience - this depends on their over-all financial profile whether that causes them a higher rate of course) and also assuming 15K tax. Most financial gurus recommend under 30% but most americans are at 50% of their annual income on housing. So IMO - they are right in the green zone for GO.
Our 2 bedroom/2 bath apartment in Manhattan (nyc) was 1.5m and NJ house was 1.2m. LOL our IA house will be 700K (but certainly if we didn't custom construct could have probably bought existing for <500K) - love the midwest COL!
But only they know what their 'extra' expenses are. High incomes/different lifestyle = different expenses from many people's monthly spreadsheets such as nanny service, cleaning service (large home = higher cost), grounds maintenance, large home/yard = higher electric/water bills, taxes are always a consideration - in NJ we had 20K taxes but here in IA for the same size of home/yard can have 7K taxes, etc.
IMO your recommendation to them should be for them to consult with their financial adviser or the bank. Same advice to them as anyone else - plug in the numbers on a spreadsheet with all the 'staple' costs + new ones with the home.
I am surprised at that income level that your sister is asking for your opinion. I mean no disrespect to you - I just wouldn't probably go to family with such a question - especially if they do not share or have experience with my financial profile/background. I would be asking that question of my financial adviser/bank. And beside the experienced/professional element of the question - I could never talk to my family about my income/home price because I know that it would make them uncomfortable as they have never seen those large of numbers -I wouldn't want to make them feel over-whelmed, jealous, etc. Each to their own I guess.
Also - you didn't mention if 250K was pre or post tax? If that is their pre-tax salary then they will be stretching on 250K because after taxes they will be using about 35-40% of their take-home pay on mortgage/taxes per month. Still do-able but a bit more of a stretch.
No way.
That's our income, and our house was approx. $400,000. We have no debt other than the mortgage and have no kids. I can't even fathom looking at a $1M house on our income.
Mr. Sammy Dog
No, I would not do it.
Our new income will be somewhere around $200K and the house we put an offer on is about $300K (it's a foreclosure, worth somewhere around $450K). I would not pay twice what we make, because I just hate loans. Our best friends just bought a house that's three times what they make and they keep saying they are pretty much broke.
My Blog
Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's lifetime.
Mark Twain
My Travel Blog
Are you united with the CCOKCs?