Can I afford a $1,400,000 house

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ohboy!
Posts: 286
Joined: Thu Jan 04, 2018 2:21 pm

Re: Can I afford a $1,400,000 house

Post by ohboy! »

Big salaries aren’t as guaranteed as debt. Pay that debt off. I hate to think how many people are doing this, enticed by low loans and scared of rising prices. Blinded by the real estate only goes up mantras.
e5116
Posts: 601
Joined: Mon Oct 05, 2009 11:22 am

Re: Can I afford a $1,400,000 house

Post by e5116 »

Thanks for the update, OP. Congrats on everything! I personally agree with you that this site is generally quite conservative with regards to home spending, particularly for people younger in their careers. It can be quite lucrative really to buy a house earlier on, depending on market forces and how everything else goes in life. I think the thing is it's never a guarantee and not buying affords more flexibility.

But certainly buying "earlier/more" often CAN end up being much more lucrative and the seeming right decision than waiting. It's just that it had SOME downside risk whereas renting more/spending less did not. And this site is risk averse usually. But, hey, you only live once, and no risk, no reward. Sometimes you have to take a leap of faith and take the plunge, which you did and it worked out great!!
Cash is King
Posts: 251
Joined: Sun Dec 10, 2017 9:04 am

Re: Can I afford a $1,400,000 house

Post by Cash is King »

Tingting1013 wrote: Fri Sep 18, 2020 2:35 pm
anon1212 wrote: Fri Sep 18, 2020 2:31 pm
Raymond wrote: Mon Dec 04, 2017 10:16 am
beezquimby wrote: Mon Dec 04, 2017 9:40 am Often in these posts the person asking the question already has an answer in mind, any advice that matches their preconceived answer they will listen to and any advice that contradicts it they will dismiss.
OP hasn't posted in a week.

Is probably muttering, "Those cheap bastard, Toyota-driving residents on Bogleheads did not confirm my thinking! Bah, we'll buy the house anyway, those ramen-eating cheapskates!"

:D

I'm the OP. Almost 3 years later I'll give an update.

We did buy the house for 1.4 million and then went on to gut it and remodel it, spending another 300k (with me doing most of the work). House is probably worth nearly 2 million now.

Seems the concensus was to not buy the house until we had more savings/had kids/paid off debt. We both still hold the same jobs, have a kid and continue to pay down debt while saving for retirement. We are renting out our other home for a profit of over 1k a month as well.

We now have 800k in retirement savings and student loan debt is down to 250k.

Had we followed your advice and waited a few years to buy a house we would have had approx 1.4 -1.5million in savings (instead of 800k) and would still be looking at spending 300-400k on a down payment.

I appreciate the advice, but sometimes I think the recomendatioms here are a bit too conservative, especially for younger people with decades ahead to make up for any mistakes/bad luck before retiremtn
What is your current income?
:confused Why do you care ? The OP bought the house approximately three years go.
Tingting1013
Posts: 414
Joined: Mon Aug 24, 2020 5:44 pm

Re: Can I afford a $1,400,000 house

Post by Tingting1013 »

Cash is King wrote: Fri Sep 18, 2020 3:24 pm
Tingting1013 wrote: Fri Sep 18, 2020 2:35 pm
anon1212 wrote: Fri Sep 18, 2020 2:31 pm
Raymond wrote: Mon Dec 04, 2017 10:16 am
beezquimby wrote: Mon Dec 04, 2017 9:40 am Often in these posts the person asking the question already has an answer in mind, any advice that matches their preconceived answer they will listen to and any advice that contradicts it they will dismiss.
OP hasn't posted in a week.

Is probably muttering, "Those cheap bastard, Toyota-driving residents on Bogleheads did not confirm my thinking! Bah, we'll buy the house anyway, those ramen-eating cheapskates!"

:D

I'm the OP. Almost 3 years later I'll give an update.

We did buy the house for 1.4 million and then went on to gut it and remodel it, spending another 300k (with me doing most of the work). House is probably worth nearly 2 million now.

Seems the concensus was to not buy the house until we had more savings/had kids/paid off debt. We both still hold the same jobs, have a kid and continue to pay down debt while saving for retirement. We are renting out our other home for a profit of over 1k a month as well.

We now have 800k in retirement savings and student loan debt is down to 250k.

Had we followed your advice and waited a few years to buy a house we would have had approx 1.4 -1.5million in savings (instead of 800k) and would still be looking at spending 300-400k on a down payment.

I appreciate the advice, but sometimes I think the recomendatioms here are a bit too conservative, especially for younger people with decades ahead to make up for any mistakes/bad luck before retiremtn
What is your current income?
:confused Why do you care ? The OP bought the house approximately three years go.
I want to know how wrong everyone turned out to be.
Cash is King
Posts: 251
Joined: Sun Dec 10, 2017 9:04 am

Re: Can I afford a $1,400,000 house

Post by Cash is King »

Tingting1013 wrote: Fri Sep 18, 2020 3:32 pm
Cash is King wrote: Fri Sep 18, 2020 3:24 pm
Tingting1013 wrote: Fri Sep 18, 2020 2:35 pm
anon1212 wrote: Fri Sep 18, 2020 2:31 pm
Raymond wrote: Mon Dec 04, 2017 10:16 am

OP hasn't posted in a week.

Is probably muttering, "Those cheap bastard, Toyota-driving residents on Bogleheads did not confirm my thinking! Bah, we'll buy the house anyway, those ramen-eating cheapskates!"

:D

I'm the OP. Almost 3 years later I'll give an update.

We did buy the house for 1.4 million and then went on to gut it and remodel it, spending another 300k (with me doing most of the work). House is probably worth nearly 2 million now.

Seems the concensus was to not buy the house until we had more savings/had kids/paid off debt. We both still hold the same jobs, have a kid and continue to pay down debt while saving for retirement. We are renting out our other home for a profit of over 1k a month as well.

We now have 800k in retirement savings and student loan debt is down to 250k.

Had we followed your advice and waited a few years to buy a house we would have had approx 1.4 -1.5million in savings (instead of 800k) and would still be looking at spending 300-400k on a down payment.

I appreciate the advice, but sometimes I think the recomendatioms here are a bit too conservative, especially for younger people with decades ahead to make up for any mistakes/bad luck before retiremtn
What is your current income?
:confused Why do you care ? The OP bought the house approximately three years go.
I want to know how wrong everyone turned out to be.
:)
JBTX
Posts: 6977
Joined: Wed Jul 26, 2017 12:46 pm

Re: Can I afford a $1,400,000 house

Post by JBTX »

4.1%, an awful interest rate, on a $1.4 million loan on top of already existing negative equity.

Hard Pass.
EnjoyIt
Posts: 4720
Joined: Sun Dec 29, 2013 8:06 pm

Re: Can I afford a $1,400,000 house

Post by EnjoyIt »

anon1212 wrote: Fri Sep 18, 2020 2:31 pm
Raymond wrote: Mon Dec 04, 2017 10:16 am
beezquimby wrote: Mon Dec 04, 2017 9:40 am Often in these posts the person asking the question already has an answer in mind, any advice that matches their preconceived answer they will listen to and any advice that contradicts it they will dismiss.
OP hasn't posted in a week.

Is probably muttering, "Those cheap bastard, Toyota-driving residents on Bogleheads did not confirm my thinking! Bah, we'll buy the house anyway, those ramen-eating cheapskates!"

:D

I'm the OP. Almost 3 years later I'll give an update.

We did buy the house for 1.4 million and then went on to gut it and remodel it, spending another 300k (with me doing most of the work). House is probably worth nearly 2 million now.

Seems the concensus was to not buy the house until we had more savings/had kids/paid off debt. We both still hold the same jobs, have a kid and continue to pay down debt while saving for retirement. We are renting out our other home for a profit of over 1k a month as well.

We now have 800k in retirement savings and student loan debt is down to 250k.

Had we followed your advice and waited a few years to buy a house we would have had approx 1.4 -1.5million in savings (instead of 800k) and would still be looking at spending 300-400k on a down payment.

I appreciate the advice, but sometimes I think the recomendatioms here are a bit too conservative, especially for younger people with decades ahead to make up for any mistakes/bad luck before retiremtn
First and foremost. Congrats on your success.

Next you can’t judge a decision solely on the outcome. Sometimes good decision give bad results and visa-versa. As noted by others, if one of you lost their job or something happened you may have been singing a different tune. If the housing market in your area collapsed it may be different. Luckily it all worked out which is great, but would you recommend the same advice to someone today? Will housing keep skyrocketing indefinitely, will their job stay secure? No one knows which is why your decision had risks.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
jasonrecite25
Posts: 74
Joined: Tue Apr 11, 2017 1:16 pm

Re: Can I afford a $1,400,000 house

Post by jasonrecite25 »

Agree with the general conservatism, but that doesn't have to be a bad thing if leveraged as collective wisdom. Can I ask how you funded your downpayment of 280k when you only had 95k in cash? Also, did your incomes go up over time? 800k savings + 280k down payment + 300k in remodel cash... almost 1.4m, on top of living expenses. Assuming 75k annual expenses that is like $1.6m ... on a 400k gross household income (over 2.5 years is like 1.2m).
Topic Author
anon1212
Posts: 8
Joined: Mon Nov 27, 2017 7:11 pm

Re: Can I afford a $1,400,000 house

Post by anon1212 »

jasonrecite25 wrote: Fri Sep 18, 2020 5:25 pm Agree with the general conservatism, but that doesn't have to be a bad thing if leveraged as collective wisdom. Can I ask how you funded your downpayment of 280k when you only had 95k in cash? Also, did your incomes go up over time? 800k savings + 280k down payment + 300k in remodel cash... almost 1.4m, on top of living expenses. Assuming 75k annual expenses that is like $1.6m ... on a 400k gross household income (over 2.5 years is like 1.2m).
Down payment was only 10%, had gift to cover the difference
Income last year was 900k.
mervinj7
Posts: 1538
Joined: Thu Mar 27, 2014 3:10 pm

Re: Can I afford a $1,400,000 house

Post by mervinj7 »

anon1212 wrote: Sun Sep 20, 2020 9:14 pm
jasonrecite25 wrote: Fri Sep 18, 2020 5:25 pm Agree with the general conservatism, but that doesn't have to be a bad thing if leveraged as collective wisdom. Can I ask how you funded your downpayment of 280k when you only had 95k in cash? Also, did your incomes go up over time? 800k savings + 280k down payment + 300k in remodel cash... almost 1.4m, on top of living expenses. Assuming 75k annual expenses that is like $1.6m ... on a 400k gross household income (over 2.5 years is like 1.2m).
Down payment was only 10%, had gift to cover the difference
Income last year was 900k.
Congrats, OP.

For those commenting, the original post was from three years ago. House has already been bought and everything worked out.

:sharebeer
l1am
Posts: 372
Joined: Wed Mar 02, 2016 2:27 pm

Re: Can I afford a $1,400,000 house

Post by l1am »

EnjoyIt wrote: Fri Sep 18, 2020 5:15 pm First and foremost. Congrats on your success.

Next you can’t judge a decision solely on the outcome. Sometimes good decision give bad results and visa-versa. As noted by others, if one of you lost their job or something happened you may have been singing a different tune. If the housing market in your area collapsed it may be different. Luckily it all worked out which is great, but would you recommend the same advice to someone today? Will housing keep skyrocketing indefinitely, will their job stay secure? No one knows which is why your decision had risks.
This. It worked out because the salaries persisted, but there's no way I'd buy a $1.4M home while in negative NW.

So it really depended on how solid those incomes were. A probability game.
TimeTheMarket
Posts: 166
Joined: Fri Jan 25, 2019 8:49 am

Re: Can I afford a $1,400,000 house

Post by TimeTheMarket »

anon1212 wrote: Fri Sep 18, 2020 2:31 pm
Raymond wrote: Mon Dec 04, 2017 10:16 am
beezquimby wrote: Mon Dec 04, 2017 9:40 am Often in these posts the person asking the question already has an answer in mind, any advice that matches their preconceived answer they will listen to and any advice that contradicts it they will dismiss.
OP hasn't posted in a week.

Is probably muttering, "Those cheap bastard, Toyota-driving residents on Bogleheads did not confirm my thinking! Bah, we'll buy the house anyway, those ramen-eating cheapskates!"

:D

I'm the OP. Almost 3 years later I'll give an update.

We did buy the house for 1.4 million and then went on to gut it and remodel it, spending another 300k (with me doing most of the work). House is probably worth nearly 2 million now.

Seems the concensus was to not buy the house until we had more savings/had kids/paid off debt. We both still hold the same jobs, have a kid and continue to pay down debt while saving for retirement. We are renting out our other home for a profit of over 1k a month as well.

We now have 800k in retirement savings and student loan debt is down to 250k.

Had we followed your advice and waited a few years to buy a house we would have had approx 1.4 -1.5million in savings (instead of 800k) and would still be looking at spending 300-400k on a down payment.

I appreciate the advice, but sometimes I think the recomendatioms here are a bit too conservative, especially for younger people with decades ahead to make up for any mistakes/bad luck before retiremtn
This is not surprising, and fairly predictable. However, it's also entirely possible you could have had some major hiccup in income, or any other number of things went wrong. So you over exposed yourself. Often that works out just fine, so you somewhat rolled the dice and it turned out okay.

Had I posted on this thread in 2017 I would have said at your income you can definitely afford it, but you should pay down all your debt first, which at $500k+ income won't take long.
Username is not serious :)
Wenonah
Posts: 103
Joined: Sat Nov 24, 2012 1:30 pm

Re: Can I afford a $1,400,000 house

Post by Wenonah »

What if you make a mistake and get fired or hate your job?
What would Warren Buffet do? He's rich because he didn't live like he was rich.
You might want to read The Millionaire Next Door.
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