Can I afford a new house?

[Jumpem]

My wife and I save 20% (including match). I am going to put $11k into Roth IRAs. We have a 12 month emergency fund. After all of these we have $19k per year going into savings.

If we got a new house our emergency fund would only cover nine months of expenses at first and our remaining savings would go down to $7k per year. If something happened with my job, my wife would only be able to cover about 62% of the bills. This all makes me nervous and anxious.

That said, in four years our daycare expenses would mostly go away and make up most of what the new house would cost each month. Mortgage rates are still very low right now. I also don't want to keep putting tens of thousands of dollars into my current house for maintenance when very little of it will be reflected in the sale price.

What thoughts do you guys have?

 

[Ken g6]

You could afford a tiny house.

 

[Jumpem]

You could afford a tiny house.

Our last two houses have been in the upper 1,300 sq.ft. range. We want something just a bit bigger with a second full bathroom, a mud room entry from the garage, and maybe a little bigger kids bedrooms.

 

[CraKaJaX]

What state?

 

[zerocool84]

Move to North Dakota, everyone can afford houses there.

 

[Jumpem]

Move to North Dakota, everyone can afford houses there.

I am in central NY. The house prices themselves aren't the problem. The ~3.2% property tax rate is the problem.

P&I would be about $1,342. Monthly property taxes would be an additional $800.

 

[NutBucket]

Fark. 3.2%? Anyway, different factors everywhere as far as affordability. I'd say you're in good shape....certainly better than my wife and I (and most folks I assume). I'd say in most cases it would be hard for anyone to afford a home on a single income...hence the emergency fund. I know my lender wants an 18 month reserve fund minimum. I would think that's pretty standard.

 

[zinfamous]

you look to be better off with savings, emergency, budgeting, and overall obsessive nerd-like devotion to numbers than 95% of people.

I'd say you're good.

 

[96Firebird]

I know how that is, I pay 3.3% in property taxes.

You looking around Syracuse? Are there any nearby towns/counties with cheaper property taxes? I only have a 6 month emergency fund, but no dependants. How secure are you with your job?

 

[Jumpem]

I know how that is, I pay 3.3% in property taxes.

You looking around Syracuse? Are there any nearby towns/counties with cheaper property taxes? I only have a 6 month emergency fund, but no dependants. How secure are you with your job?

I am in the suburbs northwest of Syracuse. My kids are in elementary school, so I want to stay in the same district, and preferably the same elementary school. If I didn't have kids and moved across the county line it would be cheaper.

I am somewhat secure in my job. I survived several layoffs since the recession, and work is busier now.

 

[Exterous]

My wife and I save 20% (including match). I am going to put $11k into Roth IRAs. We have a 12 month emergency fund. After all of these we have $19k per year going into savings.

If we got a new house our emergency fund would only cover nine months of expenses at first and our remaining savings would go down to $7k per year.

Just out of curiosity does the duration of emergency fund include unemployment income? Where you are in terms of retirement may be an important thing to consider depending on your goals. Only having $25,000 in retirement at age 45 is going to affect your situation differently than having $350,000 at 35. Also, are you anxious about your job because you work in a volatile\cyclical industry or is it more of a general concern? Either way thinking about things you wouldn't need to pay for if you lost your job (gas, parking, lunch etc) or that you could cut back on (starbucks, cable tv package, etc) you might be closer to your bill payment (or maybe not)

 

[Jumpem]

Just out of curiosity does the duration of emergency fund include unemployment income? Where you are in terms of retirement may be an important thing to consider depending on your goals. Only having $25,000 in retirement at age 45 is going to affect your situation differently than having $350,000 at 35. Also, are you anxious about your job because you work in a volatile\cyclical industry or is it more of a general concern? Either way thinking about things you wouldn't need to pay for if you lost your job (gas, parking, lunch etc) or that you could cut back on (starbucks, cable tv package, etc) you might be closer to your bill payment (or maybe not)

No, I am not including unemployment or severance. I am a little behind of where I would like to be for retirement, as we only saved ten percent for the first ten years or so. I am anxious about my job, because it seems to have busy and less busy cycles. There have been layoffs. Things have been looking up though.

 

[Jumpem]

Bump.

 

[cbrunny]

Is this a brag thread?

 

[Jumpem]

Is this a brag thread?

Not at all. I am just looking for opinions.

 

[OILFIELDTRASH]

If you can afford the 20 percent down payment then yes. If not then no. 62% of bills being covered by the wife with an iffy job doesn't sound very exciting. What's the point of a new place if you can't enjoy it due to the financial pressure weighing on you?

 

[Carson Dyle]

Your approach to your savings and finances seems very carefully considered. I think it would be well worth the time and money to seek the advice of a good financial advisor. Much of what you've posted here is (understandably) vague. We don't see the actual numbers. Your ages, your incomes, the amounts you have in your investments. A real answer can't be had without that info, and even with it, there probably aren't more than a couple of members with the qualifications to give you a qualified answer.

 

[Jumpem]

If you can afford the 20 percent down payment then yes. If not then no. 62% of bills being covered by the wife with an iffy job doesn't sound very exciting. What's the point of a new place if you can't enjoy it due to the financial pressure weighing on you?

We would have a second bathroom for the kids and some other benefits of a better layout. I also don't want to keep spending money on maintenance for my current house and not have it be reflected in the value of the house. I just replaced all of the vertical cedar siding on the back of the house. It was a terrible design choice that was popular years ago. I don't want to be here long enough to have to do it on the other three sides.

I likely won't be making a 20% down payment. I don't want to go into my emergency fund for it. I expect to be able to find a mortgage where I pay a minimal ($2k or so) upfront PMI payment instead of the more expensive monthly payments.

 

[Jumpem]

Your approach to your savings and finances seems very carefully considered. I think it would be well worth the time and money to seek the advice of a good financial advisor. Much of what you've posted here is (understandably) vague. We don't see the actual numbers. Your ages, your incomes, the amounts you have in your investments. A real answer can't be had without that info, and even with it, there probably aren't more than a couple of members with the qualifications to give you a qualified answer.

Thanks for the advice.

 

[TennesseeTony]

Property taxes 3.2%? 3.3%? Dear God, I thought the mafia had mostly been stamped out of America!?

Come on down south for some vacation, visit a realtor and view some homes you could have for $1500 P&I including escrow, do a quick job search, rerun the numbers, and prepare to be shocked.

 

[OILFIELDTRASH]

We would have a second bathroom for the kids and some other benefits of a better layout. I also don't want to keep spending money on maintenance for my current house and not have it be reflected in the value of the house. I just replaced all of the vertical cedar siding on the back of the house. It was a terrible design choice that was popular years ago. I don't want to be here long enough to have to do it on the other three sides.

I likely won't be making a 20% down payment. I don't want to go into my emergency fund for it. I expect to be able to find a mortgage where I pay a minimal ($2k or so) upfront PMI payment instead of the more expensive monthly payments.

Pmi is anywhere from half a percent all the way to .85 of purchase price. Paying pmi upfront would be much more than 2k. And with fha the pmi is for the life of the loan. Paying 20 percent down almost ensures you can get out of the house later if you do get to a point of paying 62%of your bills. If you're upside down because you don't have enough equity you could be in a really bad spot.

 

[Carson Dyle]

Property taxes 3.2%? 3.3%? Dear God, I thought the mafia had mostly been stamped out of America!?

Come on down south for some vacation, visit a realtor and view some homes you could have for $1500 P&I including escrow, do a quick job search, rerun the numbers, and prepare to be shocked.

And then work for $9.80 an hour at Piggly Wiggly or for $17 in a car plant. It's all (or mostly) relative.

 

[Jumpem]

Property taxes 3.2%? 3.3%? Dear God, I thought the mafia had mostly been stamped out of America!?

Come on down south for some vacation, visit a realtor and view some homes you could have for $1500 P&I including escrow, do a quick job search, rerun the numbers, and prepare to be shocked.

I am aware of how cheap real estate is in the south. I like the mountains in western SC, NC, and eastern TN.

 

[Jumpem]

Pmi is anywhere from half a percent all the way to .85 of purchase price. Paying pmi upfront would be much more than 2k. And with fha the pmi is for the life of the loan. Paying 20 percent down almost ensures you can get out of the house later if you do get to a point of paying 62%of your bills. If you're upside down because you don't have enough equity you could be in a really bad spot.

I have no PMI on my current mortgage. I paid around $2k up front. I am expecting the same case again. Perhaps it would be more since the house would be more.

I could wait a few years to save up the 20%. But if mortgage rates go up that could negate it. I also don't want to keep pumping money into my current house. It seems like only flashy kitchens or bathrooms will increase the price of your home. Maintenance items, which are just as expensive, don't seem to count for anything.

I don't think I would have to get out of the house later. I would just have to find another job.

I wish I could spend less to get a decent house. Cheaper new home builders are really lacking in build quality. And people with ten or fifteen year old existing homes want almost as much but then you have the liability of new windows and a new roof in the near future.

 

[cbrunny]

You have no equity in current house?