200k income - 1m dollar home - thoughts?
delete thread
Last edited by zonnie on Mar 7th, 2022 5:26 pm, edited 1 time in total.
- Last Updated:
- Oct 12th, 2020 12:14 pm
Tags:
- SCORE+2
- zonnie [OP]
- Jr. Member
- Apr 18, 2014
- 121 posts
- 72 upvotes
56 replies
- JanZ95915
- Sr. Member
- Aug 17, 2018
- 627 posts
- 1124 upvotes
With a 200k income, you should net just over 10k each month. With no debt and a monthly payments of 2800 for your mortgage, why would you not be able to afford that house?
Do you really have concerns or are you trying to show off?
Do you really have concerns or are you trying to show off?
Last edited by JanZ95915 on Sep 29th, 2020 1:07 pm, edited 1 time in total.
- zonnie [OP]
- Jr. Member
- Apr 18, 2014
- 121 posts
- 72 upvotes
Thanks for your input. Just trying to be as transparent as possible as this is a large transaction and we're emotionally invested and that could impair our judgement. It's one thing having a mortgage of 300k for a condo with a 200k salary but it's completely and objectively daunting when that mortgage more than doubles as you upgrade into a bigger home. That in addition to wanting to start a family and possibly having more dependents and responsibilities can be overwhelming. Not sure if showing humility is now considered showing off.. but if I wanted to flex it wouldn't be on RFD.. this is a forum of no frills I'm well aware.
- MarinersFanatik
- Deal Addict
- Jun 14, 2018
- 1260 posts
- 1522 upvotes
If you've crunched the numbers, and it works, be confident in your projections and move forward. Take into consideration any future increases in income and as well as increases in monthly expenses (daycare, for one). You'll definitely encounter some unexpected expenses along the way, but just have a backup/emergency plan ready to go incase it happens.
- Spiritwalker2222
- Member
- Dec 5, 2017
- 248 posts
- 218 upvotes
That is a lot of money, I'd be scared too. But properties are expensive now and you have a decent income. Keep back at least a 3 months emergency fund.
- danfromwaterloo
- Deal Guru
-
- Sep 14, 2003
- 10776 posts
- 769 upvotes
- Mississauga
How long do you expect to be there for? If it's a long time and you're setting down roots, go for it. There's zero chance that rates go up anytime soon, and if your jobs are relatively secure, go for it.zonnie wrote: ↑ Hi there,
My next move is a big move for me and it's been keeping me up the past few nights. I am in the process of buying a house and I want to get some unbiased opinions.
Background
- 28 years of age
- just married, want to start a family and looking for new home
- 200k annual gross household income
- no external debts. no car payments or credit card or line of credit.
- no financial obligations to parents/siblings as they do well for themselves
- wife and I work in essential services
- we've owned 2 condos before so are well accustomed to having a mortgage and paying bills and everything that comes with adulthood (with the exception of kids!)
We're looking at a $1,050,000 home. We have 375k down payment and obtained a mortgage for 1.89% on a 5 year term. Mortgage comes to 2800 rounded up. As a family we could still live on my salary alone. Wife will be responsible for saving and other some day to day stuff. It's a Vancouver property in a good clean neighborhood so we strongly believe it will hold its value relatively well. Home is 3 years old and inspection report was strong with almost zero defects noted. Warranty still in tact.
Objectively speaking the mortgage size is daunting. But we are heading into this as prepared as we can be, as debt free as we can be, with good saving habits in mind. Just want to get thoughts if anyone else has been in a similar situation or whether you have general advice based on the circumstances set out above.
Thanks!
4chan melts your brain.
- zonnie [OP]
- Jr. Member
- Apr 18, 2014
- 121 posts
- 72 upvotes
I plan to live in this next home for 8-10 years at least. That should allow us to save more money over the next decade. Hopefully the move after that will be into our 'forever home'.
- ProductGuy
- Deal Addict
- Jan 1, 2017
- 1742 posts
- 1708 upvotes
Why not stick it out in your condo one more year and save more money before purchasing? If you are trying to have a kid you will have 9 months to find a place lol
- JanZ95915
- Sr. Member
- Aug 17, 2018
- 627 posts
- 1124 upvotes
- kenchau
- Deal Guru
- Apr 11, 2006
- 10594 posts
- 4559 upvotes
- Mississauga
I would say do it and only put 20% down ($210K). Invest the rest. Or keep some aside as emergency fund if the above didn't have any contingency fund set aside.
Also keep in mind funds you need to set aside for closing, including land transfer taxes, legal, etc. and furniture/decor.
In short, don't put all the money you have into the down payment.
Also keep in mind funds you need to set aside for closing, including land transfer taxes, legal, etc. and furniture/decor.
In short, don't put all the money you have into the down payment.
- tars42
- Newbie
- Nov 18, 2019
- 13 posts
- 2 upvotes
Just curious, can you tell me in which neighborhood the home is? I am also looking a place but i have been only here for few years so not familiar with all the places. You can pm me if you don't wanna share publicly, thanks.
- zonnie [OP]
- Jr. Member
- Apr 18, 2014
- 121 posts
- 72 upvotes
just to answer a few quick questions here above.
- I was able to purchase for 100k under bc assessment of the property for the next home which I think I will not be able to do next year
- I don't have faith in the condo market increasing exponentially next year and in fact may sell at a lesser profit
- I do not want to deal with buying a place when wife is pregnant or right after she gives birth
the reasons above are why I think a move now makes most sense.
I've always been quite conservative and risk adverse - not sure where I would invest the rest to be honest so that was never an option that was explored. But we do have a contingency and the closing costs specifically taxes have been accounted for.
Hard to say what my forever home price will be 10 years from now but if the market remains the same I anticipate I would need to spend 1.8m by the time I am 40 for a 'forever home'.
- I was able to purchase for 100k under bc assessment of the property for the next home which I think I will not be able to do next year
- I don't have faith in the condo market increasing exponentially next year and in fact may sell at a lesser profit
- I do not want to deal with buying a place when wife is pregnant or right after she gives birth
the reasons above are why I think a move now makes most sense.
I've always been quite conservative and risk adverse - not sure where I would invest the rest to be honest so that was never an option that was explored. But we do have a contingency and the closing costs specifically taxes have been accounted for.
Hard to say what my forever home price will be 10 years from now but if the market remains the same I anticipate I would need to spend 1.8m by the time I am 40 for a 'forever home'.
- oasis2002
- Sr. Member
- Sep 16, 2009
- 683 posts
- 474 upvotes
You are doing the right thing. As unbelievable as it sounds - in a few years you will look back and say to yourself - why did I even think so much? The caveat of course is that you should continue to make current income levels - if not more.zonnie wrote: ↑ Hi there,
My next move is a big move for me and it's been keeping me up the past few nights. I am in the process of buying a house and I want to get some unbiased opinions.
Background
- 28 years of age
- just married, want to start a family and looking for new home
- 200k annual gross household income
- no external debts. no car payments or credit card or line of credit.
- no financial obligations to parents/siblings as they do well for themselves
- wife and I work in essential services
- we've owned 2 condos before so are well accustomed to having a mortgage and paying bills and everything that comes with adulthood (with the exception of kids!)
We're looking at a $1,050,000 home. We have 375k down payment and obtained a mortgage for 1.89% on a 5 year term. Mortgage comes to 2800 rounded up. As a family we could still live on my salary alone. Wife will be responsible for saving and other some day to day stuff. It's a Vancouver property in a good clean neighborhood so we strongly believe it will hold its value relatively well. Home is 3 years old and inspection report was strong with almost zero defects noted. Warranty still in tact.
Objectively speaking the mortgage size is daunting. But we are heading into this as prepared as we can be, as debt free as we can be, with good saving habits in mind. Just want to get thoughts if anyone else has been in a similar situation or whether you have general advice based on the circumstances set out above.
Thanks!
- arbytor
- Sr. Member
- Aug 22, 2016
- 532 posts
- 313 upvotes
tough decision. I would have worried taking on such a large mortgage @200K if it was pre-pandemic.
Now that the interest rates are so low and you can fix them for next five years, when you do the math, it sounds like you should be fine if you are getting this rate. keen in mind your expenses will jump a bit with kids and with moving into a larger home.
Now that the interest rates are so low and you can fix them for next five years, when you do the math, it sounds like you should be fine if you are getting this rate. keen in mind your expenses will jump a bit with kids and with moving into a larger home.
- JayLove06
- Deal Expert
- Feb 29, 2008
- 17354 posts
- 14749 upvotes
- Tarrana & The Ri…
600-650K mortgage for a $1M house and rates at 1.8% with 200K income is nothing to be worried about. As has been mentioned, I'd put 20% down. You are not gaining anything by putting more than that. Just invest the rest.
- icedtea365
- Member
- Jun 6, 2014
- 294 posts
- 124 upvotes
- Toronto, ON
You are getting cold feet over buying a $1M home, but your forever home is $1.8M. Because when you go from the $1M to $1.8M home in 10 years, your mortgage is going to be more then $700K you're getting now. Anyhow, yes you can afford the $1M home with your income. Yes, it's a lot of money, but that's how much the average home costs is these days.
- ky.antz
- Member
- Jan 29, 2007
- 290 posts
- 65 upvotes
- Markham
on paying 20% down, wouldnt that make your monthly payment higher?
i'm in the same boat-ish and i'm now thinking of putting less down based on your post =o=
i'm in the same boat-ish and i'm now thinking of putting less down based on your post =o=
- JanZ95915
- Sr. Member
- Aug 17, 2018
- 627 posts
- 1124 upvotes
I bought a house at the same price point with 20% down and my payment is at around $3350. Why would you put more down than needed?
The interest rate is at 1.8%, most investments yield more than that. Also keep in mind that most mortgage lenders allow you to do one-time payments against your principal anytime or increase your payments, so you can always put more money in when you want and can. I rather have more money liquid in the bank and not tied up with the flexibility to put more against the house if I feel like it, rather than being house-poor and have all my money tied up in the house.
- ky.antz
- Member
- Jan 29, 2007
- 290 posts
- 65 upvotes
- Markham
you're totally right. just scary to have that much monthly payment! but thank goodness for redflagdeals giving me a different perspective!JanZ95915 wrote: ↑ I bought a house at the same price point with 20% down and my payment is at around $3350. Why would you put more down than needed?
The interest rate is at 1.8%, most investments yield more than that. Also keep in mind that most mortgage lenders allow you to do one-time payments against your principal anytime or increase your payments, so you can always put more money in when you want and can. I rather have more money liquid in the bank and not tied up with the flexibility to put more against the house if I feel like it, rather than being house-poor and have all my money tied up in the house.
- Angel Girl
- Sr. Member
-
- May 10, 2008
- 940 posts
- 919 upvotes
- Vancouver, BC
You are doing very well for someone your age. I think you should go for it!
Just some things to think about: if things tough, do you have other sources of income or ability to do extra OT at work to make ends meet? Do you have family that can bail you out?
I’m curious to know what/where you are buying....because I’m not seeing anything in Vancouver so far that I want to make an offer on.
Just some things to think about: if things tough, do you have other sources of income or ability to do extra OT at work to make ends meet? Do you have family that can bail you out?
I’m curious to know what/where you are buying....because I’m not seeing anything in Vancouver so far that I want to make an offer on.
Thread Information
There is currently 1 user viewing this thread. (0 members and 1 guest)