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Making an Offer, Getting Cold Feet, Is This Unwise?

Hi,

We, 44m/43f, are going to make an offer on a 800k house, but I’m second guessing if we should or if we can afford it. What do you think, is this stupid?

Married, wife doesn’t work, 3 kids - 6/9/11 - homeschooled.

Salary: 155k plus 35k bonus, healthcare and vehicle covered

Past: Sold business to private equity company, took a reduced salary. That’s where the money below comes from.

Savings: 525k

Future lump sum: 1.25M minus taxes in a couple months, so like 800k.

Current house: Worth about 525k, owe 300k

Plan:

We are going to buy before selling our current house. Our current house is way too packed, too busy, too crazy to list and sell. We are homeschoolers…

800k offer

300k down

500k mortgage

Use the 175 equity from our current house and apply to the mortgage, leaving a 325k mortgage.

What I’m afraid of is having a high interest rate on a 325k mortgage and after the dust settles, we will only have 1M to fall back on with a small 150k salary. Realistically I should only be buying a 450k house on a 150k salary, but we are using some of the proceeds from the sale of the business…

For the last 5 years I’ve been making closer to 400-500k, and 150k feels very small. My take home is about $8,800 per month. Add a $3,500 mortgage, food, utilities, and whatever, there isn’t much meat on the bone. I’m hoping the million in the bank can produce 50k or so per year to help pay the mortgage.

What would you do? It’s hard to walk away from a 2.875% rate, but our house is way too small and everything is so damn expensive.

submitted by /u/ZigZagZugZen
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source https://www.reddit.com/r/RealEstate/comments/1bg2bnk/making_an_offer_getting_cold_feet_is_this_unwise/
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