Too much house, right?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
crazygrow
Posts: 144
Joined: Sun Apr 24, 2016 8:56 am

Re: Too much house, right?

Post by crazygrow » Sun Nov 26, 2017 12:11 pm

johnubc wrote:
Sun Nov 26, 2017 9:47 am
so - to build, you will be spending 2 years of aggravation and 900k.

What can you buy in the area for 900k - is it worth the 2 years of aggravation?
Definitely an important question. Utah is not a HCOL area. This acre must be up on the benches or something. I have an acre lot, 5000 sq. ft custom home in a great neighborhood for half of that (and we paid a third of that when we scooped it up in a foreclosure sale). You are definitely paying for location. I'd make sure that location is absolutely amazing for the premium you are paying (hundreds of thousands of dollars).

hightower
Posts: 621
Joined: Mon Dec 12, 2016 2:28 am

Re: Too much house, right?

Post by hightower » Sun Nov 26, 2017 12:33 pm

Utahdogowner wrote:
Fri Nov 24, 2017 6:06 pm
I think the answer to this is going to be a more resounding, "No!", but it seems to be a once-in-a-lifetime opportunity, so I am wanting to get some opinions.

We are rapidly outgrowing our current home due to our rambunctious 3yo and 18mo, and am looking to move within 1-2 years. We discovered a simply gorgeous acre lot on a little bit of a hill for 250k. Acres in the area we live are very, very scarce; I spoke w/ one developer who pointed out these have basically disappeared in our county. It is undeveloped, and would likely need ~15k in sewer/water/power access, an extra 20-30k in driveway, and 50-75k in landscaping (my guess? I've never done this . . . :shock: ). And then there's the house.

I'm a family doc making ~250-275k/yr, wife is SAHM w/ 2 kids. We don't have another kid on the way, but likely will have another 1-2 within 5ish years. DW would likely return to work as a nurse once they're all back in school. We've been putting ~75k / yr into retirement/investments since I finished training. We have about 150k left on our mortgage, in about a 300k home.

Cash on hand, ~80k, 30 of which is earmarked for some expected taxes April 2017.
Retirement assets: 300k
Short term savings / E-fund: 30k (not counted in cash on hand)
Debt: Mortgage only. Finally killed our student loans this year. No car loans or consumer debt.

New construction is pretty expensive here in Utah, between $150-200 / sq ft. If we put a 3500 sq ft home, that'd be a 525-700k home, in addition to the lot.

We can cut corners in the landscaping and perhaps not finishing the basement, but to my rough calculation this would be 250k lot + 100k in lot improvements + house (600k?) = 950k. Subtracting down payment leaves 750k mortgage, or 3x annual income. Our payment would be 4,207.18 based on a web calculator guessing what our taxes etc would add. I think we're relatively frugal people, but I really worry that this would leave us very house poor. Thanks in advance, but what say ye?
Didn't have time to read all the replies, but in my opinion, you're doing well and are very good at managing your own finances. If you expect your income to be stable and your wife will end up making money again soon as well, you can easily afford a mortgage 2X your annual salary. I would definitely recommend doing a full 20% down to keep the mortgage size in check, but at your income level a 600k mortgage is totally affordable. This would mean with a 200k downpayment you could afford up to around 800k. I don't know that I would go for a 950k house though. That does seem like a bit of a stretch and may not feel good once you have it. You want to have some wiggle room for savings, vacations, unexpected repairs/improvements, etc, etc.

Dottie57
Posts: 7477
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Too much house, right?

Post by Dottie57 » Sun Nov 26, 2017 12:51 pm

I am a no. You don't have enough for down payment. Concentrate on saving for a new house. Get $250k for the lot, then build the house.

Leemiller
Posts: 1271
Joined: Sat Jun 01, 2013 12:42 pm

Re: Too much house, right?

Post by Leemiller » Sun Nov 26, 2017 1:33 pm

My vote is too expensive. You can only squeeze into this if you get a 30 year mortgage. You’re relying on one income and plan to have four kids? 3k a year won’t even cover state school, and you’ll still be paying off that mortgage when your kids are in school, so how are you going to help them pay for college?

Also, this sounds like a very expensive house for the area. Meaning if you needed to sell, depending on the economy, etc, you might take a loss. When we bought we bought with a mortgage of less than 2x dual income. I think with a single earner you may want to be more conservative, not less.

Topic Author
Utahdogowner
Posts: 165
Joined: Sun Nov 09, 2014 3:53 pm

Re: Too much house, right?

Post by Utahdogowner » Mon Nov 27, 2017 2:36 pm

celia wrote:
Sun Nov 26, 2017 3:33 am
We discovered a simply gorgeous acre lot on a little bit of a hill for 250k. Acres in the area we live are very, very scarce; I spoke w/ one developer who pointed out these have basically disappeared in our county. It is undeveloped, and would likely need ~15k in sewer/water/power access, an extra 20-30k in driveway, and 50-75k in landscaping (my guess? I've never done this . . . :shock: ).
This sounds contradictory to me. A "gorgeous" lot, to me, has fully grown and nice-looking landscaping. Why would you then have to spend so much for landscaping? Take advantage of what is already there naturally and avoid putting in a lawn, which only uses a lot of water and needs to be mowed all the time. For a play area, find a level place and pull out the weeds/ground cover and put pea gravel or some tiny rocks, like pea gravel or decomposed granite to keep it from getting muddy and washing away.
No - it's just that the lot has the opportunity to be awesome - some cool trees, cool location, but needs some grading, needs some trash trees ripped out etc. Gorgeous to us includes the wild. I can see how it's not what you envision as gorgeous, but I think we have different visions of the perfect yard. . . Which isn't good or bad.
aristotelian wrote:
Fri Nov 24, 2017 7:58 pm
You current savings rate is 75k out of 250k, about 30%. That puts you on track to retire in about 28 working years. Back of the napkin, the new house payment would probably eat up about 25k and drop your savings rate down to 20%. That's not terrible but it will set you back about 9 years and put you on track to retire in 37 working years. Does that sound worth it to you?
Current savings is north of that, since that didn't include the work we did retiring my student loans in the last year, but your point is still well taken that we should really think hard about the YEARS this house will cost us in delaying retirement. My calculation suggested at 5-6% returns that we have ~23y left, which put us retiring (or more realistically, having that as an option) at about 60. But, again, thanks for the insgiht.

Topic Author
Utahdogowner
Posts: 165
Joined: Sun Nov 09, 2014 3:53 pm

Re: Too much house, right?

Post by Utahdogowner » Mon Nov 27, 2017 2:39 pm

Olemiss540 wrote:
Sun Nov 26, 2017 7:20 am
I say to wait. Financial stress can cause havoc in personal relationships around the house and with tour current nest egg, I say you need to buckle down for a few more years. I am in a similar situation and doing my best to enjoy our undersized house as long as possible to be able to loan <2x income on our dream house.
I think this single comment is the one that has resonated the most. Thank you.

Topic Author
Utahdogowner
Posts: 165
Joined: Sun Nov 09, 2014 3:53 pm

Re: Too much house, right?

Post by Utahdogowner » Mon Nov 27, 2017 2:40 pm

aristotelian wrote:
Sun Nov 26, 2017 7:47 am
celia wrote:
Sun Nov 26, 2017 3:33 am
I would assume they will sell their existing house after they move in, so the costs are not as much as you project.
True, but they appear to be relatively young so I am assuming not much equity built up. He does state that they currently have a mortgage. Perhaps the new house would require 8.5 additional years of working. Need more details. He can certainly afford it. The question to me is whether it is worth it.
Well, w/ the cash and equity we have over 200k.
But you're right, the question is whether it is worth it.
Thanks for your thoughts.

an_asker
Posts: 2591
Joined: Thu Jun 27, 2013 2:15 pm

Re: Too much house, right?

Post by an_asker » Mon Nov 27, 2017 2:53 pm

Utahdogowner wrote:
Fri Nov 24, 2017 6:06 pm
I think the answer to this is going to be a more resounding, "No!", but it seems to be a once-in-a-lifetime opportunity, so I am wanting to get some opinions.

We are rapidly outgrowing our current home due to our rambunctious 3yo and 18mo, and am looking to move within 1-2 years. We discovered a simply gorgeous acre lot on a little bit of a hill for 250k. Acres in the area we live are very, very scarce; I spoke w/ one developer who pointed out these have basically disappeared in our county. It is undeveloped, and would likely need ~15k in sewer/water/power access, an extra 20-30k in driveway, and 50-75k in landscaping (my guess? I've never done this . . . :shock: ). And then there's the house.

I'm a family doc making ~250-275k/yr, wife is SAHM w/ 2 kids. We don't have another kid on the way, but likely will have another 1-2 within 5ish years. DW would likely return to work as a nurse once they're all back in school. We've been putting ~75k / yr into retirement/investments since I finished training. We have about 150k left on our mortgage, in about a 300k home.

Cash on hand, ~80k, 30 of which is earmarked for some expected taxes April 2017.
Retirement assets: 300k
Short term savings / E-fund: 30k (not counted in cash on hand)
Debt: Mortgage only. Finally killed our student loans this year. No car loans or consumer debt.

New construction is pretty expensive here in Utah, between $150-200 / sq ft. If we put a 3500 sq ft home, that'd be a 525-700k home, in addition to the lot.

We can cut corners in the landscaping and perhaps not finishing the basement, but to my rough calculation this would be 250k lot + 100k in lot improvements + house (600k?) = 950k. Subtracting down payment leaves 750k mortgage, or 3x annual income. Our payment would be 4,207.18 based on a web calculator guessing what our taxes etc would add. I think we're relatively frugal people, but I really worry that this would leave us very house poor. Thanks in advance, but what say ye?
You are a doctor. I think you can swing it. One quick point though - you didn't mention term life insurance anywhere. I'm assuming you have one or will get one on yourself at least (if not for DW as well).

Most doctors I know have houses bigger than 3500 sq ft for two kids (or even fewer kids). So you would not be a big outlier, if that!

Tal-
Posts: 464
Joined: Fri Apr 22, 2016 10:41 pm

Re: Too much house, right?

Post by Tal- » Mon Nov 27, 2017 3:17 pm

I'm pretty blown away by the responses here. I feel that this is a clear, and strong no.

You don't have enough for the down payment. Not by a long shot. Your current cash on hand/savings are in good shape, but they including savings and the e-fund, I would not want you to go much below this for any discretionary purchases - house included. So, unless you have several hundred thousand dollars laying about, I don't think you can afford the down payment.

And even if you can afford the down payment, I'm not sure you can afford to live in the house. Someone above suggested that the house would run you $6400/month when all fees/expenses are included. I don't think that you can afford to spend that much on housing while also saving for retirement. There is also lifestyle creep to consider (private school, new car, vacations, etc. etc. etc.).

But, my biggest red flag is actually not financial. You said that this is a once in a lifetime opportunity. I say this with all due respect, but I kind of doubt that. If you've had your eye on this lot for 10 years, or you've spent the last 5 years actively trying to find the ideal lot to buy on, I'd be far more open to this. But, your tone is that of someone who happened across this beautiful lot, and are confusing a beautiful piece of land with a once-in-a-lifetime opportunity. It's not. There will be other plots of land. There will be other opportunities.

So, I suggest you tap the breaks. If your plan is to find a plot of land to build a 3000 ft house on, that's great, but figure out what your finances need to look like to afford it, and then work from there. At first glance, I'd say you need something like $300,000 in accessible funds (in addition to retirement) and be saving a total something like $100,000/year in your current situation (you're close to that).

Maybe I'm being too conservative. But that's my take.
Debt is to personal finance as a knife is to cooking.

randomguy
Posts: 8503
Joined: Wed Sep 17, 2014 9:00 am

Re: Too much house, right?

Post by randomguy » Mon Nov 27, 2017 3:25 pm

Utahdogowner wrote:
Fri Nov 24, 2017 6:06 pm
I think the answer to this is going to be a more resounding, "No!", but it seems to be a once-in-a-lifetime opportunity, so I am wanting to get some opinions.

We are rapidly outgrowing our current home due to our rambunctious 3yo and 18mo, and am looking to move within 1-2 years. We discovered a simply gorgeous acre lot on a little bit of a hill for 250k. Acres in the area we live are very, very scarce; I spoke w/ one developer who pointed out these have basically disappeared in our county. It is undeveloped, and would likely need ~15k in sewer/water/power access, an extra 20-30k in driveway, and 50-75k in landscaping (my guess? I've never done this . . . :shock: ). And then there's the house.

I'm a family doc making ~250-275k/yr, wife is SAHM w/ 2 kids. We don't have another kid on the way, but likely will have another 1-2 within 5ish years. DW would likely return to work as a nurse once they're all back in school. We've been putting ~75k / yr into retirement/investments since I finished training. We have about 150k left on our mortgage, in about a 300k home.

Cash on hand, ~80k, 30 of which is earmarked for some expected taxes April 2017.
Retirement assets: 300k
Short term savings / E-fund: 30k (not counted in cash on hand)
Debt: Mortgage only. Finally killed our student loans this year. No car loans or consumer debt.

New construction is pretty expensive here in Utah, between $150-200 / sq ft. If we put a 3500 sq ft home, that'd be a 525-700k home, in addition to the lot.

We can cut corners in the landscaping and perhaps not finishing the basement, but to my rough calculation this would be 250k lot + 100k in lot improvements + house (600k?) = 950k. Subtracting down payment leaves 750k mortgage, or 3x annual income. Our payment would be 4,207.18 based on a web calculator guessing what our taxes etc would add. I think we're relatively frugal people, but I really worry that this would leave us very house poor. Thanks in advance, but what say ye?

You can easily afford the house. Simple math tells you that. If buying that house versus spending the money else where will make you happier is something that nobody can answer. Maybe at this point of your life tying up your money in a material possesion will maximize your happiness. Maybe getting a 500k house and spending 400k on trips (or retiring 5 years earlier) will make you happier. You are the only one that can answer that.

And no once you buy a million dollar house, you can't refer to yourself as frugal anymore:)

Valuethinker
Posts: 39208
Joined: Fri May 11, 2007 11:07 am

Re: Too much house, right?

Post by Valuethinker » Mon Nov 27, 2017 3:32 pm

Utahdogowner wrote:
Fri Nov 24, 2017 6:06 pm
I think the answer to this is going to be a more resounding, "No!", but it seems to be a once-in-a-lifetime opportunity, so I am wanting to get some opinions.

We are rapidly outgrowing our current home due to our rambunctious 3yo and 18mo, and am looking to move within 1-2 years. We discovered a simply gorgeous acre lot on a little bit of a hill for 250k. Acres in the area we live are very, very scarce; I spoke w/ one developer who pointed out these have basically disappeared in our county. It is undeveloped, and would likely need ~15k in sewer/water/power access, an extra 20-30k in driveway, and 50-75k in landscaping (my guess? I've never done this . . . :shock: ). And then there's the house.

I'm a family doc making ~250-275k/yr, wife is SAHM w/ 2 kids. We don't have another kid on the way, but likely will have another 1-2 within 5ish years. DW would likely return to work as a nurse once they're all back in school. We've been putting ~75k / yr into retirement/investments since I finished training. We have about 150k left on our mortgage, in about a 300k home.

Cash on hand, ~80k, 30 of which is earmarked for some expected taxes April 2017.
Retirement assets: 300k
Short term savings / E-fund: 30k (not counted in cash on hand)
Debt: Mortgage only. Finally killed our student loans this year. No car loans or consumer debt.

New construction is pretty expensive here in Utah, between $150-200 / sq ft. If we put a 3500 sq ft home, that'd be a 525-700k home, in addition to the lot.

We can cut corners in the landscaping and perhaps not finishing the basement, but to my rough calculation this would be 250k lot + 100k in lot improvements + house (600k?) = 950k. Subtracting down payment leaves 750k mortgage, or 3x annual income. Our payment would be 4,207.18 based on a web calculator guessing what our taxes etc would add. I think we're relatively frugal people, but I really worry that this would leave us very house poor. Thanks in advance, but what say ye?
You only live once and such sites are seldom available.

Yes you will be house poor but you are in a stable profession. As long as your life insurance and Long Term Disability is adequate (in the latter case, you might well have to downsize of course) then I'd say you should do it.

I'd consider finishing the basement. Making sure it is insulated and you have the insulated floor. You can kit it out later, but doing that later from unfinished could be expensive and a real pain.

I'd also consider getting it right from an insulation point of view the first time- -that's almost impossible to do if you don't do it in the original build.

The extreme is the Passive House (passivhaus - it was German originally) design. A lot of what makes that work is air tightness. Once you get past a certain R Value in the walls and roof then it is down to the air tightness. Costs should not be more than c. 10% above normal build, but your utilities then should just be basically electricity + hot water.

Even if you don't go that far an extra few inches in the walls and roof can pay big dividends in the long run.

BTW $150-200 psf does not sound expensive to me. I am aware of eastern North America, where $250+ is certainly possible. New construction is always the cheapest.

Type265
Posts: 1
Joined: Mon Nov 27, 2017 3:42 pm

Re: Too much house, right?

Post by Type265 » Mon Nov 27, 2017 4:05 pm

Utahdogowner,

Lots of good advice here. From one physician to another, I would wait. It sounds like you are early in your career(you didn't specify how long you were practicing). I would wait until you've been in practice 10 years. The career honeymoon period will be over and you'll not only be in a better position financially but also professionally. Practices change hands, hospitals are subject to regime changes and doctors, especially FP docs, experience burnout. Someone mentioned an extra 8 years to retire adjusting for house payments. That will feel like 20 years later in life. My advice pass on on it. Plan for expansion in the next 7-10 years and build up your financial cushion. Don't worry, there will be an opportunity. Remember big house=big problems, small house=small problems.

User avatar
JDCarpenter
Posts: 1403
Joined: Tue Sep 09, 2014 2:42 pm

Re: Too much house, right?

Post by JDCarpenter » Mon Nov 27, 2017 4:07 pm

Utahdogowner wrote:
Mon Nov 27, 2017 2:39 pm
Olemiss540 wrote:
Sun Nov 26, 2017 7:20 am
I say to wait. Financial stress can cause havoc in personal relationships around the house and with tour current nest egg, I say you need to buckle down for a few more years. I am in a similar situation and doing my best to enjoy our undersized house as long as possible to be able to loan <2x income on our dream house.
I think this single comment is the one that has resonated the most. Thank you.
No one mentioned anything quite like what we experienced, so I'll throw our anecdote out there.

We were MD/JD couple in very early thirties with three kids under age 4; DW was OBG making more than what you do now. Bought our dream house on a 1.6 acre lot in exclusive old neighborhood high on bluff with arguably best views in a multi-county area. Decided was too small and "knew" we'd grow old and die in the house, so added basically another luxury house onto it .... (I went to very part-time work to stay home with kids and help on house construction in the interim; planned to come back into work for college tuitions.)

In the end, we had roughly 1.1 million into house and it was perfect. Six months later, the malpractice situation in our area got nasty and we decided to move. Between the tail and the loss on the house, we were set back over 500K. (And even with losing 300K on the house, it took nine months to unload it.)

In sum, even if the numbers "work," make sure to retain enough liquidity for flexibility if the ceiling falls in. We did--but it was not fun for a couple years...
Edit Signature

travellight
Posts: 2841
Joined: Tue Aug 12, 2008 5:52 pm
Location: San Diego

Re: Too much house, right?

Post by travellight » Mon Nov 27, 2017 4:41 pm

950k seems very expensive for Utah. I would be very cautious about this.
364

KlangFool
Posts: 14555
Joined: Sat Oct 11, 2008 12:35 pm

Re: Too much house, right?

Post by KlangFool » Mon Nov 27, 2017 7:31 pm

OP,

Set aside all financial consideration. You have a stay-at-home spouse with 2 to 4 kids. You are a physician with little free time. So, who is going to take care of the acre of lands and a big house? Do you have any actual experience living in this kind of house?

You may not enjoy the actual experience of living and maintaining the house.

KlangFool

DarthSage
Posts: 341
Joined: Tue Sep 19, 2017 9:39 am

Re: Too much house, right?

Post by DarthSage » Tue Nov 28, 2017 10:28 am

Something else to keep in mind--life might not turn out like you expect it to. I know you're planning on a couple more kids, then your wife returning to work--that may well happen. But, it might not. In our case, our second child had numerous health and developmental issues when he was young--there's no way I could have worked, even part time, during that stage. And we wrestled with secondary infertility. We eventually had 4 kids...over an 11-year span. Even now, I swear, every time I glance in the direction of a part-time job, something comes up that makes us re-confirm that my being full-time at home is the right choice for us.

Hopefully, you won't have these issues. You might also have loving relatives nearby who are willing to pitch in with childcare--we never had this. And one of the nice things about nursing is that it's very possible to earn some money--shift work, contract work, etc., without being full-time. My BFF managed to have 5 kids and work long nursing shifts--enough to earn full-time pay with part-time hours. She was also a pro at timing her pregnancies (I was so jealous! But, I wouldn't trade my kids for anything.)

My point is, could you afford this house on one salary? My guess is yes, you could, but you need to look at the hard numbers. Klangfool makes a good point about maintenance--would you hire this out, or do it your self? Some people find joy in chopping wood or mowing the lawn--others hate it. A bigger lot generally requires more work, but it really depends on your taste and the "style" of lot--we used to live in a very wooded area--half our 1.3 acres was left wooded, but others chose to have theirs all grass. Prior to that, we had 2.6 acres of fields.

researcher
Posts: 1183
Joined: Thu Mar 12, 2015 7:05 pm

Re: Too much house, right?

Post by researcher » Tue Nov 28, 2017 10:45 am

Utahdogowner wrote:
Fri Nov 24, 2017 6:06 pm
...it seems to be a once-in-a-lifetime opportunity...
You are kidding yourself if you think this is a "once-in-a-lifetime opportunity."

I'm sure there are PLENTY of other opportunities for you to spend $1M on a house.

I'm surprised more people haven't pointed this out.

letsgobobby
Posts: 12074
Joined: Fri Sep 18, 2009 1:10 am

Re: Too much house, right?

Post by letsgobobby » Tue Nov 28, 2017 11:29 am

Deleted
Last edited by letsgobobby on Wed Aug 28, 2019 10:55 pm, edited 1 time in total.

DavidRoseMountain
Posts: 170
Joined: Sun Nov 30, 2014 3:27 pm

Re: Too much house, right?

Post by DavidRoseMountain » Tue Nov 28, 2017 11:58 am

Make sure to do comparables in the neighborhood to make sure there are other million dollars homes next door or nearby.

WageSlave
Posts: 97
Joined: Tue Jan 08, 2013 3:20 pm

Re: Too much house, right?

Post by WageSlave » Tue Nov 28, 2017 2:39 pm

The numbers don't cut it for my conservative tastes. But I totally get the thrill of buying a "blank canvas".

We recently just bought a new home; it was pre-built, but I put a lot of time and energy into learning about building our dream home. I would have done it too, except that we were unable to find a suitable lot. The house we ended up buying is basically perfect, except that it's not an energy-efficient build (i.e. "code min").

Is there a middle ground here? How much longer can you be happy in your current home? Is it possible to buy the lot, but delay the house build for a year or two (or five)? You could then payoff the lot itself, which you could use as collateral for your construction loan. During this time, you could possibly pay cash for the initial cleanup, bringing in of city services, etc.

Further, you could use that time to learn about home construction, and possibly self-mange the construction yourself (i.e. be your own general contractor). You may not have the time for this, as this would take a considerable amount of study if you wanted to have the knowledge to do it right.

Solicit some feedback from local builders in your area. They can give you ideas about the build process itself, including costs and typical timelines.

Even though I haven't built a custom home myself, I've seen the following mentioned enough that I'll assume they're true: (1) costs will be higher than expected - I was told to plan on 20% contingency; (2) things will get delayed and take longer than planned - this is a true wildcard, with 50% contingency being possible; (3) it takes a certain personality to actually enjoy the build process and not get stressed out or come to hate it.

Regarding the timeline issue: one builder I spoke to said the first big holdup is the initial permitting and basically all the paperwork that's required in your area. This is a very regional thing: you could have a fast and efficient local government that gets things done quickly, or the champions of the foot-dragging game, or anything in-between. Local developers should be able to give you a feel for this. After that, I was told that the biggest holdup is actually the client! Everyone says a custom home build requires you to make a million decisions---and many of those will stop progress completely if not answered in a timely manner.

Another thing to consider: the finance aspect isn't straightforward. You definitely can't get a standard home mortgage to finance your custom home build. I talked to a banker about this. I forget all the details, but I remember some general points. Only when the house is totally done will you refinance into a conventional mortgage. Until then, you are paying what is typically an interest-only construction loan, with rates well above those for a home mortgage. And every delay in the build, your fault or not, is literally wasted interest payments on the construction loan. And also note that this adds interest rate risk: today mortgage loans may be appealing, but what if rates sky rocket just before your build is done?

If you decide to build, you owe it to yourself to read up on "green" (i.e. energy efficient) construction techniques. Try to talk to a developer in your area who specializes in this. I found that there is, for reasons I don't understand, a stigma against energy-efficient home design, as though it's basically a waste of money. I disagree with this notion. Consider that practically every product you buy, from your laptop, to your TV, to your car has a substantial engineering team behind it. And yet most homes continue to be built largely with rules of thumb. A house is a mechanical system, with many inter-dependent sub-systems, similar to your car. The build deserves to have an actual engineer do some thermodynamic modeling to make sure it all comes together in an optimal way.

While building green can be more expensive, it doesn't necessarily have to be. E.g., it's not necessarily a hard extra 10% or 20% or whatever. Think of it as a series of upgrades, each with an increasing payoff horizon (in terms of energy savings). Some things may even be cheaper. The green builder I talked to showed me this Wally Walls product, which are basically pre-fabbed steel and foam walls. They are recyclable, have no off-gassing, very high R values (without thermal bridging), reasonable cost and actually come out cheaper than stick frame construction (due to rising lumber costs and higher labor costs with traditional stick framing). Depending on how far you take the sealing and insulation, you can also recognize immediate savings with a smaller/simpler HVAC system (but this requires real engineering: old rules of thumb say X sq ft needs Y ton HVAC - but with a tightly sealed and well-insulated home, the HVAC requirements can go down dramatically).

In terms of the per-square-foot build cost: what I was told (by multiple people) and read in numerous places: it largely comes down to the finish level. I talked to developers in the greater Chicago area, who ranged from $120 ft^2 to upwards of $300 ft^2. My perspective is this: if I were to build new, I'd put the real money in the "guts" of the house, i.e. the non-glamorous stuff that won't impress anyone except home construction geeks. For an existing home, it's much easier to refinish a bathroom than it is to re-route plumbing/HVAC, pull new wiring, change the insulation/sealing scheme, add a de-watering system... Start with the engineered wood floor instead of the exotic hardwood; get quartz instead of marble counters; start with a simple blacktop driveway, upgrade to pavers later; modern vinyl tile does an amazing ceramic impersonation; ...

Personally I don't think size matters as much as some might contend. There are whole books written that talk about maximizing living space. This is where a good architect can really earn his fee. I've been in 3000 sqft houses that feel like 2000 and vice-versa. The smaller you can make your house and still be comfortable, the better: it will save you money in the long and short run. The house we bought had an unfinished basement, and that's exactly what we wanted. The main and second floor have everything we need (and currently everything we want). So we have all this extra space waiting for us whenever our "wants" increase. And in the meantime, we have a ton of storage space!

Lastly, another cost I haven't seen mentioned yet: the architect's fee. I was told this could be as low as $5k for an architect to get all the necessary approvals/permits/sign-offs for an existing design, to $20k or more for something completely custom. Just one example of the litany of extra "gotcha" expenses.

That turned into kind of a rambling mess somewhere along the way... but the main point is that there are lot of aspects of building a home. That could be a deterrent to some people, and from what I've read, a lot of people jump in head-first without understanding what's involved. On the other hand, for the right person, it can be very rewarding and fun. I haven't yet built a custom home, but it's very much on my bucket list---all the little details and "gotchas" to me seem like fun problems.

User avatar
unclescrooge
Posts: 4157
Joined: Thu Jun 07, 2012 7:00 pm

Re: Too much house, right?

Post by unclescrooge » Tue Nov 28, 2017 4:52 pm

Having just finished major remodel project, I'll say it's not for the faint of heart.

It will also take twice as long, and cost twice as much as you expect. That's because your idea of what the finishes should be won't align with the builders. So everything you choose will be extra.

Also, 75% of the way through, as you see the structure in real life, you'll realize that some things need to be changed. Either the placement of a window, a door or a closet. These will be costly.

I suggest you watch the brilliant British show "Grand Designs" on Netflix (or find it online if you don't have Netflix). It's more realistic than the formulaic and scripted shows on HGTV and will give you a much better overview of what's possible, and what common points of failure are. If you don't have time to watch the show, you won't have time to build a house.

Texanbybirth
Posts: 1252
Joined: Tue Apr 14, 2015 12:07 pm

Re: Too much house, right?

Post by Texanbybirth » Tue Nov 28, 2017 5:07 pm

We have the same kids as you and plans for more. I can't imagine a 3500 sq ft home, as I'm sure you'd want to treat yourself to a lot of toys and decorations to fill up said house. (Think media room, bedroom for each kid, office, dance studio, dining and of course living room, etc.) Our house is 2500 sq ft and it fits us just fine. You could call our kids "rambunctious" too, but I'd be more inclined to say it's just their ages. I can see us having 2 or 3 more kids here easily. It might be your lifestyle, but I definitely consider us to be frugal and I would not call a million-dollar house/lot to be "frugal" as another poster said. :-)

With your income you should consider a house half the cost, and stash away money for your retirement and kids' college. I make 1/3 of what you make and worry about saving for college for that many kids. Doesn't make us not want to have them, but you have the opportunity in 10 years to be in a really solid financial position for your family. I wouldn't blow it on something that is certainly not a "once in a lifetime opportunity" as you put it, enticing as it sounds right now.
Old Tom Bombadil is a merry fellow, | Bright blue his jacket is, and his boots are yellow. | None has ever caught him yet, for Tom, he is the master: | His songs are stronger songs, and his feet are faster.

brad.clarkston
Posts: 716
Joined: Fri Jan 03, 2014 8:31 pm
Location: Kansas City, MO

Re: Too much house, right?

Post by brad.clarkston » Tue Nov 28, 2017 5:09 pm

If you have to ask it means you know yes it's to much in time and money.

I'd look for something a little less hands on with kids of those ages and your jobs your not going to have the time and/or money to do the things you want.

jlcnuke
Posts: 434
Joined: Thu Mar 16, 2017 10:26 am

Re: Too much house, right?

Post by jlcnuke » Tue Nov 28, 2017 5:29 pm

mouses wrote:
Sun Nov 26, 2017 10:32 am
Property taxes, insurance - homeowners, car, umbrella liability, perhaps flood or earthquake -, medical and dental costs, utilities, food, clothing, those will make mincemeat of that $5K a month.
Depends on the rates for everything. Using mine (and one other since my food costs are likely way different than a family of 4)
Property taxes + homeowner's insurance - ~$100/month each
Umbrella insurance ($1M) - $10/month
Medical- $272.50 max
Dental - $25 (assuming no problems... the normal.. problems taken out of emergency funds)
Utilities - $475 (only 2,200 sq ft though)
Food - according to the experts, a family of 4 can eat well on $1,252/month
Clothing - $100/month (really high imo, but maybe the kids are all sporting designer clothes they'll outgrow in 6 months).

That's ~$2.3k, leaving a bit shy of $2,700/month for vacations, etc... that doesn't seem unreasonable to me or like something that would be a major hardship. Even if the property taxes are 5x what mine are, that would still leave $2,300/month for discretionary spending.

onourway
Posts: 2142
Joined: Thu Dec 08, 2016 3:39 pm

Re: Too much house, right?

Post by onourway » Tue Nov 28, 2017 7:48 pm

jlcnuke wrote:
Tue Nov 28, 2017 5:29 pm
Depends on the rates for everything. Using mine (and one other since my food costs are likely way different than a family of 4)
Property taxes + homeowner's insurance - ~$100/month each
Umbrella insurance ($1M) - $10/month
Medical- $272.50 max
Dental - $25 (assuming no problems... the normal.. problems taken out of emergency funds)
Utilities - $475 (only 2,200 sq ft though)
Food - according to the experts, a family of 4 can eat well on $1,252/month
Clothing - $100/month (really high imo, but maybe the kids are all sporting designer clothes they'll outgrow in 6 months).

That's ~$2.3k, leaving a bit shy of $2,700/month for vacations, etc... that doesn't seem unreasonable to me or like something that would be a major hardship. Even if the property taxes are 5x what mine are, that would still leave $2,300/month for discretionary spending.
Add to that regular things like:

cable/internet; $150/month
cell phones; $150
car insurance; $100
maintenance/replacement of two cars; $500
pets; $50
kids activities; ??
vacations; ??
eating out; $200
sitters on occasion; $100
gifts; ??

These are all pretty typical numbers we see posted from low-moderate income earners looking for help on the Personal Finance board on Reddit. Likely those expenses for a doctor in a $1M house will be much higher. And this is allocating zero dollars for personal spending for mom and dad, no spending on outfitting the new, much bigger house, no saving to finish projects they don't budget for on the initial build, newer cars, etc.

Maybe they are super frugal and could easily afford this house. However, I suspect the more likely answer is they don't have a detailed understanding of their current spending because if they did, they wouldn't need to ask this question. They'd know exactly how much they have left over each month and whether this kind of house expense could fit in the budget and/or what they'd have to sacrifice to make it happen.

gadoc
Posts: 39
Joined: Thu Aug 06, 2015 3:45 pm

Re: Too much house, right?

Post by gadoc » Tue Nov 28, 2017 8:20 pm

I'm in exactly the same situation as you with roughly a similar income ( maybe slightly more ). I also have 2 small kids and my wife has gone part time. Congrats on paying off the loans, we have about 30K left. We also have about 300K in retirement assets and also about 70K in liquid funds. Difference is my wife is a physician and she will probably start working a bit more once kids are slightly older but probably will never go full time. WIth that said I would not get a house that costs that much. Way too expensive for me. I wouldnt want a mortgage of more than 500K. So if i were going to buy a house for 750 I would be sure i had 250 down before I moved. This might take a little longer to accumulate but I would feel much better with a smaller monthly payment.

I can empathize with you because we are in the process of looking for a house in a new city and it seems as if the market has gone absolutely crazy. I'm not sure how satisfied you as as a family medicine doc but for me the work has become more annoying and the last thing I want to do is work because i HAVE to. I'm currently in a position where I have to but in the next 10-15 years I want to be in a position where I control my hours and job schedule. You can work for your money or make your money work for you. By buying this house you are almost guaranteeing you will be working very hard in your field for a significantly longer period of time to pay off this mortgage. Are you ok with that? Best of luck.

User avatar
Toons
Posts: 13424
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Too much house, right?

Post by Toons » Tue Nov 28, 2017 8:39 pm

Make the Move.
You have figured things out so far and
will continue to do so. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Mingus
Posts: 696
Joined: Fri Apr 19, 2013 2:25 pm

Re: Too much house, right?

Post by Mingus » Tue Nov 28, 2017 9:24 pm

DarthSage wrote:
Sat Nov 25, 2017 10:35 am


Along the same lines, the entire house doesn't have to be finished to your final vision right away. For example, finishing the basement might not be a priority while your kids are young, but a nice finished rec room or whatever would be great when they're older. You could maybe even find a plan where you could add extra bedrooms down the line--adding on a second floor or bumping out the back. Adding things like a porch/deck or pool don't have to come immediately, either.

Other than waiting to finish a basement, the rest of those ideas would cost a magnitude more the second after the house is complete. That 150 SF bedroom addition would cost 4X versus including it in the initial build. Plus a major hassle, mess, disruption, etc.

jlcnuke
Posts: 434
Joined: Thu Mar 16, 2017 10:26 am

Re: Too much house, right?

Post by jlcnuke » Tue Nov 28, 2017 10:10 pm

onourway wrote:
Tue Nov 28, 2017 7:48 pm
jlcnuke wrote:
Tue Nov 28, 2017 5:29 pm
Depends on the rates for everything. Using mine (and one other since my food costs are likely way different than a family of 4)
Property taxes + homeowner's insurance - ~$100/month each
Umbrella insurance ($1M) - $10/month
Medical- $272.50 max
Dental - $25 (assuming no problems... the normal.. problems taken out of emergency funds)
Utilities - $475 (only 2,200 sq ft though)
Food - according to the experts, a family of 4 can eat well on $1,252/month
Clothing - $100/month (really high imo, but maybe the kids are all sporting designer clothes they'll outgrow in 6 months).

That's ~$2.3k, leaving a bit shy of $2,700/month for vacations, etc... that doesn't seem unreasonable to me or like something that would be a major hardship. Even if the property taxes are 5x what mine are, that would still leave $2,300/month for discretionary spending.
Add to that regular things like:

cable/internet; $150/month
cell phones; $150
car insurance; $100
maintenance/replacement of two cars; $500
pets; $50
kids activities; ??
vacations; ??
eating out; $200
sitters on occasion; $100
gifts; ??

These are all pretty typical numbers we see posted from low-moderate income earners looking for help on the Personal Finance board on Reddit. Likely those expenses for a doctor in a $1M house will be much higher. And this is allocating zero dollars for personal spending for mom and dad, no spending on outfitting the new, much bigger house, no saving to finish projects they don't budget for on the initial build, newer cars, etc.

Maybe they are super frugal and could easily afford this house. However, I suspect the more likely answer is they don't have a detailed understanding of their current spending because if they did, they wouldn't need to ask this question. They'd know exactly how much they have left over each month and whether this kind of house expense could fit in the budget and/or what they'd have to sacrifice to make it happen.
cable/internet; $150/month
cell phones; $150
car insurance; $100
maintenance/replacement of two cars; $500
pets; $50
kids activities; ??
vacations; ??
eating out; $200
sitters on occasion; $100
gifts; ??

I covered "cable/internet" in my "utilities" for myself. OP didn't mention owning pets. "Eating out" I include in my "food" budget (and so does the source I cited iirc). So we're left with cell phone plans (available for much less, but let's go with your numbers), car stuff, sitters, and "misc expenses (vacations, gifts, kid's crap, etc). The $2,700/month still leave $1,750/month for those "misc" expenses.

The average household in America has a TOTAL income of just over $4k/month BEFORE taxes. That income covers their mortgage/rent, AND all the bills we're talking about here (with upwards of 20-30% of their income covering mortgages/rent). So it's not hard for me to imagine that while having a mortgage/rent of $0/month, and 120% of the average income on top of that, a person could live a decent lifestyle with a family. In fact, it seems like a "no-brainer" when I look at it like that...

onourway
Posts: 2142
Joined: Thu Dec 08, 2016 3:39 pm

Re: Too much house, right?

Post by onourway » Tue Nov 28, 2017 10:24 pm

jlcnuke wrote:
Tue Nov 28, 2017 10:10 pm
I covered "cable/internet" in my "utilities" for myself. OP didn't mention owning pets. "Eating out" I include in my "food" budget (and so does the source I cited iirc). So we're left with cell phone plans (available for much less, but let's go with your numbers), car stuff, sitters, and "misc expenses (vacations, gifts, kid's crap, etc). The $2,700/month still leave $1,750/month for those "misc" expenses.

The average household in America has a TOTAL income of just over $4k/month BEFORE taxes. That income covers their mortgage/rent, AND all the bills we're talking about here (with upwards of 20-30% of their income covering mortgages/rent). So it's not hard for me to imagine that while having a mortgage/rent of $0/month, and 120% of the average income on top of that, a person could live a decent lifestyle with a family. In fact, it seems like a "no-brainer" when I look at it like that...
username is 'utahdogowner' so....

Your numbers are perfectly reasonable for most people. I'm just pointing out that for a doctor considering a $1M home and isn't currently flush with cash, they probably aren't representative.

In any case, I'd say considering spending ~60% of ones' take-home income on housing leaves you house-poor no matter how you look at it.

jlcnuke
Posts: 434
Joined: Thu Mar 16, 2017 10:26 am

Re: Too much house, right?

Post by jlcnuke » Tue Nov 28, 2017 10:31 pm

onourway wrote:
Tue Nov 28, 2017 10:24 pm
jlcnuke wrote:
Tue Nov 28, 2017 10:10 pm
I covered "cable/internet" in my "utilities" for myself. OP didn't mention owning pets. "Eating out" I include in my "food" budget (and so does the source I cited iirc). So we're left with cell phone plans (available for much less, but let's go with your numbers), car stuff, sitters, and "misc expenses (vacations, gifts, kid's crap, etc). The $2,700/month still leave $1,750/month for those "misc" expenses.

The average household in America has a TOTAL income of just over $4k/month BEFORE taxes. That income covers their mortgage/rent, AND all the bills we're talking about here (with upwards of 20-30% of their income covering mortgages/rent). So it's not hard for me to imagine that while having a mortgage/rent of $0/month, and 120% of the average income on top of that, a person could live a decent lifestyle with a family. In fact, it seems like a "no-brainer" when I look at it like that...
username is 'utahdogowner' so....

Your numbers are perfectly reasonable for most people. I'm just pointing out that for a doctor considering a $1M home and isn't currently flush with cash, they probably aren't representative.

In any case, I'd say considering spending ~60% of ones' take-home income on housing leaves you house-poor no matter how you look at it.
0% of one's take-home pay in the scenario I posited... is 0% of your income on a house too high in your opinion??

Leemiller
Posts: 1271
Joined: Sat Jun 01, 2013 12:42 pm

Re: Too much house, right?

Post by Leemiller » Tue Nov 28, 2017 11:02 pm

jlcnuke wrote:
Tue Nov 28, 2017 5:29 pm
mouses wrote:
Sun Nov 26, 2017 10:32 am
Property taxes, insurance - homeowners, car, umbrella liability, perhaps flood or earthquake -, medical and dental costs, utilities, food, clothing, those will make mincemeat of that $5K a month.
Depends on the rates for everything. Using mine (and one other since my food costs are likely way different than a family of 4)
Property taxes + homeowner's insurance - ~$100/month each
Umbrella insurance ($1M) - $10/month
Medical- $272.50 max
Dental - $25 (assuming no problems... the normal.. problems taken out of emergency funds)
Utilities - $475 (only 2,200 sq ft though)
Food - according to the experts, a family of 4 can eat well on $1,252/month
Clothing - $100/month (really high imo, but maybe the kids are all sporting designer clothes they'll outgrow in 6 months).

That's ~$2.3k, leaving a bit shy of $2,700/month for vacations, etc... that doesn't seem unreasonable to me or like something that would be a major hardship. Even if the property taxes are 5x what mine are, that would still leave $2,300/month for discretionary spending.
These numbers are way too low. Our property taxes alone on a million plus house are something like 15-17k a year. Clothing budget is low for their income and family size. 529 contributions could easily hit $500-1,000 per a month, per a child. Utilities are low. Maintance isn’t included nor furnishings. Vacation budget? Etc.

User avatar
Hawaiishrimp
Posts: 456
Joined: Tue Apr 14, 2015 4:13 am

Re: Too much house, right?

Post by Hawaiishrimp » Tue Nov 28, 2017 11:08 pm

With 1 single income, this is pretty high risk. God forbid, if something happen to you, your family could be in financial distress. You don't have a lot in retirement yet, I will buy less house and fund more into retirement and 529. Less house = less stress. That's my opinion. My income is about the same and I spend less than 25% of that for housing.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

jlcnuke
Posts: 434
Joined: Thu Mar 16, 2017 10:26 am

Re: Too much house, right?

Post by jlcnuke » Wed Nov 29, 2017 6:09 am

Leemiller wrote:
Tue Nov 28, 2017 11:02 pm
jlcnuke wrote:
Tue Nov 28, 2017 5:29 pm
mouses wrote:
Sun Nov 26, 2017 10:32 am
Property taxes, insurance - homeowners, car, umbrella liability, perhaps flood or earthquake -, medical and dental costs, utilities, food, clothing, those will make mincemeat of that $5K a month.
Depends on the rates for everything. Using mine (and one other since my food costs are likely way different than a family of 4)
Property taxes + homeowner's insurance - ~$100/month each
Umbrella insurance ($1M) - $10/month
Medical- $272.50 max
Dental - $25 (assuming no problems... the normal.. problems taken out of emergency funds)
Utilities - $475 (only 2,200 sq ft though)
Food - according to the experts, a family of 4 can eat well on $1,252/month
Clothing - $100/month (really high imo, but maybe the kids are all sporting designer clothes they'll outgrow in 6 months).

That's ~$2.3k, leaving a bit shy of $2,700/month for vacations, etc... that doesn't seem unreasonable to me or like something that would be a major hardship. Even if the property taxes are 5x what mine are, that would still leave $2,300/month for discretionary spending.
These numbers are way too low. Our property taxes alone on a million plus house are something like 15-17k a year. Clothing budget is low for their income and family size. 529 contributions could easily hit $500-1,000 per a month, per a child. Utilities are low. Maintance isn’t included nor furnishings. Vacation budget? Etc.
The numbers are actually high, based on what I pay.. and what most Americans spend...

The average household in the US pays their bills with less than $55k/year gross* income. NYC isn't a "LCOL" location, yet the median household income is less than $60k/year and those people manage to pay all their bills, support their families, and live a decent life.

That you "can" spend more doesn't mean it's necessary.

onourway
Posts: 2142
Joined: Thu Dec 08, 2016 3:39 pm

Re: Too much house, right?

Post by onourway » Wed Nov 29, 2017 8:21 am

jlcnuke wrote:
Tue Nov 28, 2017 10:31 pm
0% of one's take-home pay in the scenario I posited... is 0% of your income on a house too high in your opinion??
~60% of take home is what this particular poster appears they would be spending.
jlcnuke wrote:
Tue Nov 28, 2017 10:31 pm
The numbers are actually high, based on what I pay.. and what most Americans spend...

The average household in the US pays their bills with less than $55k/year gross* income. NYC isn't a "LCOL" location, yet the median household income is less than $60k/year and those people manage to pay all their bills, support their families, and live a decent life.

That you "can" spend more doesn't mean it's necessary.
What you or the large majority of Americans living on $55k/year spend on these items is almost certainly not applicable to this situation. Yes, it's possible. It's just not likely. Do you really think they're going to build a million dollar house and then furnish it from Wal-mart?

jlcnuke
Posts: 434
Joined: Thu Mar 16, 2017 10:26 am

Re: Too much house, right?

Post by jlcnuke » Wed Nov 29, 2017 8:28 am

onourway wrote:
Wed Nov 29, 2017 8:21 am
jlcnuke wrote:
Tue Nov 28, 2017 10:31 pm
0% of one's take-home pay in the scenario I posited... is 0% of your income on a house too high in your opinion??
~60% of take home is what this particular poster appears they would be spending.
jlcnuke wrote:
Tue Nov 28, 2017 10:31 pm
The numbers are actually high, based on what I pay.. and what most Americans spend...

The average household in the US pays their bills with less than $55k/year gross* income. NYC isn't a "LCOL" location, yet the median household income is less than $60k/year and those people manage to pay all their bills, support their families, and live a decent life.

That you "can" spend more doesn't mean it's necessary.
What you or the large majority of Americans living on $55k/year spend on these items is almost certainly not applicable to this situation. Yes, it's possible. It's just not likely. Do you really think they're going to build a million dollar house and then furnish it from Wal-mart?
I confused this thread with another where the poster could buy the house with cash. Oops. Though I'd imagine he already has some furniture for his family to sit/sleep on now, so it wouldn't require going to Wal-Mart to buy new stuff.

Kelmscott
Posts: 47
Joined: Fri Aug 17, 2012 8:02 am

Re: Too much house, right?

Post by Kelmscott » Wed Nov 29, 2017 6:48 pm

I would never buy it, simply because of your statement "... home we'd border on one side is actually an equestrian park w/ a small arena for training horses (not for rodeo etc), and the other two homes that border, ONE IS A TOTAL EYE SORE and one is a gorgeous million dollar beauty."

Why would you want to spent all that money and build a lovely house next to an eye sore?

If it's been that way for a long time, chances are it will never improve and it will bug you for years.

I would be wary of a horse farm, too. I grew up about a 1/4 mile from a thoroughbred farm and when the wind was moving in a certain direction... peeeww!

User avatar
Veiled
Posts: 152
Joined: Sun Oct 15, 2017 7:12 am

Re: Too much house, right?

Post by Veiled » Wed Nov 29, 2017 7:57 pm

"If you have to ask..." :P

I think Watty actually said it best:
Watty wrote:If your numbers are right then the payments would be well less than $60K a year. Taxes would skew it but in effect you would have to live like you were "only" making 190-215K a year. For most people that would be easy.
Especially true if you get some credit for solar energy as mentioned by another poster.
Pardon me as I read these one hundred and fifty-seven SP vs LLC vs Scorp threads...

Midwest
Posts: 1
Joined: Wed Nov 29, 2017 7:55 pm

Re: Too much house, right?

Post by Midwest » Wed Nov 29, 2017 8:11 pm

We built a house recently and spent about 1million for our "dream home". We love it. But when we were planning few years ago, our budget was about 700k. We put a downpayment of more than 50% of final price of the home. During building process there are a lot of variables. You can quickly go over the budget. $150/sq ft doesn`t really get you a nice house. If you want granite/quartz countertop, tall ceiling etc you should estimate $ 200/sq ft or above. Don`t underestimate the miscellaneous such as utilities. If your building is a little deep from the main road, there may be extra charges to put natural gas, internet, electricity and water/sewer. At the end, you have to furnish a bigger home than your current home. Your job and salary seem stable, but consider all of these before embarking on building home. Good luck.

Post Reply