My girlfriend and I are in the early stages of looking into potentially buying a house together. We would most likely get married beforehand. Our finances look pretty amazing to me, we've been very lucky, but I'm looking for a sanity check and to make sure I'm not making any mistakes. Thanks in advance.
I'm 35, she's 39. Both work in tech. We currently live together in my 900sqft condo. We'd be looking to buy a house in about a year or so.
My credit score is about 815, hers is about 800.
Combined gross income is about $220k per year. (Her 140k, me 80k).
Combined net takehome after taxes, 401k, IRA, etc is $12k. (Her 7k, me 5k. Hers would be about 9k takehome but she contributes the max to her 401k, she's playing catchup a bit).
We have zero debt except her car that she would pay off long before we bought a home, and my 140k loan on my condo. No credit card or student loan debt.
We have 700k to use for the down payment/improvements. We're thinking 600k down, 100k towards any improvements, new appliances, floors, whatever is needed, furnishings, etc.
She has been lucky with stock and selling a previous property and has 450k to contribute towards the down payment and any needed improvements, reno, furniture, etc. She has maybe another 50 or 100k in savings that would be her reserve/emergency fund not to be touched. I own a condo with lots of equity and when I sell will make about 250k cash profit after paying off the loan, sales tax, etc. I will use all of that towards the downpayment, improvements, etc if needed. I will have another 50k in savings that will be my reserve/emergency, not to be touched. This is more than a 6 month cushion for both of us.
We do not want kids. We live in a high cost of living area. Washington USA, Seattle Eastside, Kirkland, Bellevue, Renton, etc.
The kind of house we want is around 2500 sqft, 2-3 car garage, 3-4 bdrm, 2-3 bath, decent private yard. Probably in the suburbs 30 mins from work. Our price range is somewhere from 1 to 1.3 million. Sadly that's pretty average in our area and even on the cheaper side.
We've decided we would split the mortgage, insurance, taxes, and utilities according to the ratio of our incomes. So right now that would mean she pays roughly 66% and me 34%. Everything else like eating out, vacations, etc would be split 50/50. We are not sharing bank accounts or pooling all our money.
We're looking at a fixed 30 year mortgage with about a 7.5% interest rate with current market conditions I think? This means buying a $1.3mil house with 600k down equates to a total payment of $5850 when including taxes, insurance, etc. With expected utilities the total we'd be paying for all shared expenses is about $6400. With our split this means she's be paying about $4266 and me $2133 per month. Add in both of our other personal individual expenses like food, gas, spending money, etc (about $1000 each), and her total monthly expenditure to live comfortably would be about $5200 and mine would be $3100. This leaves her with a monthly savings of about $2000 and me $1900. This is the absolute maximum we would consider paying.
Questions:
Are we insane for looking at 1.3 mil houses? Should we limit it to 1.2 or 1.1 mil?
Is buying now a good idea and then refinancing later?
Should we even consider buying a home if we're not married yet? Financial wise, married is better right? Either way we would have both our names on the property and would have an agreement in writing beforehand.
She has suggested we find a home for a price that would allow us to make additional principal payments frequently. Obviously I'm in favor of this IF POSSIBLE, but I don't think it's a NECESSITY. If we just make the minimum payments for 30 years, sure we pay more in interest but if I can afford the monthly I think that's fine. If I get a windfall I'd throw some of it at the principal, sure, but I don't think we need to lower our price range so that we can make EXTRA payments every month?
Does this all sound reasonable? Lol.
I know that was a ton of info and I know we're super privileged. I wish everyone had the opportunity we have to afford a decent home. Any advice appreciated. :)
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source https://www.reddit.com/r/RealEstate/comments/172vqjt/buying_a_house_sanity_check_please/
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