Am I right or my wife?

E

eggtarte_IHB

New member
Just wanted to see what everyone's thoughts are on a debate that my wife and I are having.



We are planning on moving to Irvine because of a new job. I will be making $150,000 before taxes. My wife will be staying at home with our one year old and we are planning on having another baby. In otherwords, I will be the sole breadwinner and with 2 babies in the next year or two. My question is with 150K in savings (for a downpayment), how much can we afford to spend on a house? Factoring HOA, property tax, homeowners insurance, utililities,etc. Also keeping in mind my income to support 2 babies and wife. She thinks we can afford a house up to $890,000 max. I think probably less-much less. But how much less not quite sure as those online calculators don't factor in the cost of raising kids. Just wanted to hear from those who have kids with or without homes. Thanks.
 
If i was in your situation.........



this is easier said than done of course:



My max limit - I would go 450k mortgage (30 year fixed) + 150k down = 600k house

My mininum limit - 300k mortgage (15 year fixed) + 100k down (leave 50k in reserves for emergencies) = 400k house

I probably be somewhere in the middle of those, somewhere between 450k and 500k.



Either way for me, a 890k house would be out of the question unless I'm making 300k a year or more and have at least 250k in cash for the down and 50k in reserves.



I'm much more conservative than most people though.
 
She needs a major reality check. There are others here who can provide better than my quick estimates but I would say no more than a 600K house and even that is a stretch (even with the down payment). Personally, I would never saddle myself with more than a 400K mortgage on your income.



BTW, 24inIrvine, JINX! I hit "post" and then I see almost my same exact words!
 
I don't have kids so take it for what it's worth:



1: Is renting an option? In a year or two, you will be able to afford much more house for the money and you'll likely have more room for the kids to run. Seems like you have a decent window to wait things out because neither of your kids will be in school just yet. Renting might also make sense in this employment climate because you wouldn't be stuck trying to sell a depreciating house if something goes wrong.



2: If renting is a no, I would say definitely lower than 890k. At the very least, you want to be able to put 20% down and be able to comfortably afford the monthly payment on a 30yr fixed. The lower the better. 24inIrvine suggested a 600k house and that's in line with my thinking also. Keep expenses low...I hear those kids are pretty dang expensive :p
 
[quote author="tmare" date=1242966640]She needs a major reality check. There are others here who can provide better than my quick estimates but I would say no more than a 600K house and even that is a stretch (even with the down payment). Personally, I would never saddle myself with more than a 400K mortgage on your income.



BTW, 24inIrvine, JINX! I hit "post" and then I see almost my same exact words!</blockquote>


You know the saying...Great minds think alike :)



And if he asked to rent or buy....i'd say RENT...600k will buy you what? 3 bedrooms in Irvine? I'd want that 4th room for a my own office/guest room!
 
egg - Per your scenario, you would be using 4.93 times your income for your mortgage alone and that does not include your other housing-related expenses. The consensus on this forum seems to be to not exceed 3-4 x your income to play it safe. (I would stick to the lower end of that and personally, I would keep the loan conforming.)
 
have more kids. More kids equals more tax deductions and bigger house. Even more kids leads to reality tv show.



Do you need to live in Irvine? I'd rent in one of those woodbury townhome apartments if i had a family.
 
I would be much more conservative. That probably means renting for a year or two.



If you are going to be the sole earner, you need *much more* savings, especially in these times.





I would want to have a minimum of 6 months after tax income, so a $50k cushion.



Also, if you want to save for retirement or college funds, I wouldn't pay more than 3x income.



$525k house, with a $75k down. max.
 
Do you think if this was being asked 3 years ago the question would be more like:



"I make 150k before taxes. Should I buy the $1,500,000 house in Quail Hill that my broker already qualified me for on an option ARM? He also says that he doesn't need my 150k on it to put down. Should I put it into the house anyways? Or should use it for upgrades? My broker says that will instantly make my house worth 150k more."
 
If you haven't already figured it out, the wife is always right, especially on residential decisions. I think your wife may be technically correct, assuming you put a $180k down, a $700k mortgage is possible with a $150k income. However, you would have to live a very spartan and risky lifestyle to pull this off. I think your wife would prefer to live confortably and if that is the goal, I think $650k should be your upper limit.
 
[quote author="eggtarte" date=1242966281]Just wanted to see what everyone's thoughts are on a debate that my wife and I are having.



We are planning on moving to Irvine because of a new job. I will be making $150,000 before taxes. My wife will be staying at home with our one year old and we are planning on having another baby. In otherwords, I will be the sole breadwinner and with 2 babies in the next year or two. My question is with 150K in savings (for a downpayment), how much can we afford to spend on a house? Factoring HOA, property tax, homeowners insurance, utililities,etc. Also keeping in mind my income to support 2 babies and wife. She thinks we can afford a house up to $890,000 max. I think probably less-much less. But how much less not quite sure as those online calculators don't factor in the cost of raising kids. Just wanted to hear from those who have kids with or without homes. Thanks.</blockquote>
You have several options here:



1) Rent for a 1-4 years and let house prices come down

2) Buy a condo under $550k based upon your income and downpayment

3) Buy a home outside of Irvine

3) Tell your wife she is wrong

4) If she is still giving you a hard time...find a new wife
 
[quote author="High Gravity" date=1242968352]If you haven't already figured it out, the wife is always right, especially on residential decisions. I think your wife may be technically correct, assuming you put a $180k down, a $700k mortgage is possible with a $150k income. However, you would have to live a very spartan and risky lifestyle to pull this off. I think your wife would prefer to live confortably and if that is the goal, I think $650k should be your upper limit.</blockquote>
Not even, I was making about $150k the last few years and I had a first and second mortgage of about $500k on the condo with just myself and it sucked about $3,500/mo out of my take-home pay to pay for that condo. Kids are not cheap so why be a slave to your home?
 
I wouldn't go any higher than $600K purchase and ideally not go too much over $450K mortgage. If you can get a really low rate, then you may be ok with $480K loan. Everything is more expensive out here.
 
In every circumstance, the correct answer to this question is always: <span style="color: blue;"><strong>Your wife is right.</strong></span>

The sooner you acknowledge this simple fact, the better.



-IrvineRealtor
 
[quote author="IrvineRealtor" date=1242969603]In every circumstance, the correct answer to this question is always: <span style="color: blue;"><strong>Your wife is right.</strong></span>

The sooner you acknowledge this simple fact, the better.



-IrvineRealtor</blockquote>


And the trick is to get her to be "right" at $600,000 or less or better yet, make her right to wait.



Just cuz I talk slow, don mean I'm stupid.
 
Buy her a $890K Irvine house outside the immediate periphery of Irvine for $600k. Problem solved. When you kids reach Middle school age then reconsider moving to Irvine for a better school.



Happy wife happy life. She is right again.
 
We were in a similar situation last year and we are renting. My husband I decided even if we could make the financial side work, we didn't know the area well enough to buy. I'm glad we made that decision. We are waiting another year or two and will buy then. Moving and young kids are stressful enough, I wouldn't add a high mortgage. Good Luck.
 
My estimates actually exclude any HOA's, Mello Roos or any of those other things that don't exist in my universe, so actually I'd consider a 375K mortgage. Please also consider that although your wife stays at home, by the time your children are 3 years old you will want to place them in a good quality preschool for a few hours a day for at least a few days a week. This is not cheap and is usually not something stay at home mom families consider in their calculations, but it is a reality in preparing your child for Kindergarten and beyond.
 
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