Can I afford this 2.3 million dollar home?

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Topic Author
cmoney2011
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Can I afford this 2.3 million dollar home?

Post by cmoney2011 » Wed May 29, 2019 6:26 pm

Hi all, some advice please.

Interested in buying a dream home in ideal location next year for 2.3 million. Would plan on staying for a long time, possibly forever. Price is a bit shocking, but after months of scanning the market, it seems to be the best option for our taste.

Mid 30s, married, one young child.

Home equity: $90k on $300k loan, current market value approx $400k. Year 4 on 5/1 ARM at 2.75%

Retirement accounts (combined): $330k

Taxable (earmarked for retirement): $835k

Cash: $300k

Non-mortgage debt: None

Income: Combined annual income $850k, will increase to 1-1.2 mil next year. Fairly secure employment.

Annual savings:

$11k for Roth conversions x2

$38k for 401k x2

$276k in taxable, earmarked for retirement

$120k in high yield savings for down payment.



In one year, should have cash for at least 20% down on $1.8 mil loan.

Upcoming expenses: $12k annually for 529 plan; $20k annually for childcare


These numbers seem insane. I know what the affordability calculators say, and I know we can find financing, but do normal people find these numbers reasonable or just out of control? Looking for some perspective here.


Thanks in advance-

MMC

z3r0c00l
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Re: Can I afford this 2.3 million dollar home?

Post by z3r0c00l » Wed May 29, 2019 6:29 pm

Sure, if your income is stable you are on the road to being wealthy and can afford a nice home. You are a one percenter by income right now : )

Here in NYC 2.3 million gets you a nice 2 br 2 ba in Manhattan so I don't think the number is automatically obscene. But if you are buying a giant home in the suburbs for that much, I might question the need for all that space.
Last edited by z3r0c00l on Wed May 29, 2019 6:32 pm, edited 1 time in total.

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Meaty
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Re: Can I afford this 2.3 million dollar home?

Post by Meaty » Wed May 29, 2019 6:30 pm

cmoney2011 wrote:
Wed May 29, 2019 6:26 pm
Hi all, some advice please.

Interested in buying a dream home in ideal location next year for 2.3 million. Would plan on staying for a long time, possibly forever. Price is a bit shocking, but after months of scanning the market, it seems to be the best option for our taste.

Mid 30s, married, one young child.

Home equity: $90k on $300k loan, current market value approx $400k. Year 4 on 5/1 ARM at 2.75%

Retirement accounts (combined): $330k

Taxable (earmarked for retirement): $835k

Cash: $300k

Non-mortgage debt: None

Income: Combined annual income $850k, will increase to 1-1.2 mil next year. Fairly secure employment.

Annual savings:

$11k for Roth conversions x2

$38k for 401k x2

$276k in taxable, earmarked for retirement

$120k in high yield savings for down payment.



In one year, should have cash for at least 20% down on $1.8 mil loan.

Upcoming expenses: $12k annually for 529 plan; $20k annually for childcare


These numbers seem insane. I know what the affordability calculators say, and I know we can find financing, but do normal people find these numbers reasonable or just out of control? Looking for some perspective here.


Thanks in advance-

MMC
Technically you can probably afford it. That said, if it were me, I wouldn’t be willing to take on 2 million dollars of debt. That’s about equivalent to the lifetime earnings (pretax) of the average person
"Discipline equals Freedom" - Jocko Willink

mortfree
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Re: Can I afford this 2.3 million dollar home?

Post by mortfree » Wed May 29, 2019 6:30 pm

I think it is $12k for Roth contribution

Going from a 400k home to a 2.3 is quite a jump.

Enjoy

stoptothink
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Re: Can I afford this 2.3 million dollar home?

Post by stoptothink » Wed May 29, 2019 6:32 pm

cmoney2011 wrote:
Wed May 29, 2019 6:26 pm
Hi all, some advice please.

Interested in buying a dream home in ideal location next year for 2.3 million. Would plan on staying for a long time, possibly forever. Price is a bit shocking, but after months of scanning the market, it seems to be the best option for our taste.

Mid 30s, married, one young child.

Home equity: $90k on $300k loan, current market value approx $400k. Year 4 on 5/1 ARM at 2.75%

Retirement accounts (combined): $330k

Taxable (earmarked for retirement): $835k

Cash: $300k

Non-mortgage debt: None

Income: Combined annual income $850k, will increase to 1-1.2 mil next year. Fairly secure employment.

Annual savings:

$11k for Roth conversions x2

$38k for 401k x2

$276k in taxable, earmarked for retirement

$120k in high yield savings for down payment.



In one year, should have cash for at least 20% down on $1.8 mil loan.

Upcoming expenses: $12k annually for 529 plan; $20k annually for childcare


These numbers seem insane. I know what the affordability calculators say, and I know we can find financing, but do normal people find these numbers reasonable or just out of control? Looking for some perspective here.


Thanks in advance-

MMC
"Normal people" don't belong anywhere near this thread. You are earning 15x-20x what "normal" households do. That's about 5x what I think I could ever stomach to pay for a home, regardless of our financial picture (we earn about 1/4th of what you do), but yes, you can afford it.

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willthrill81
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Re: Can I afford this 2.3 million dollar home?

Post by willthrill81 » Wed May 29, 2019 6:34 pm

I like the rule-of-thumb created by Dr. Thomas Stanley, author of "The Millionaire Next Door": if you could not pay your mortgage if your income were cut in half, then you cannot easily afford your home.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

chevca
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Re: Can I afford this 2.3 million dollar home?

Post by chevca » Wed May 29, 2019 6:35 pm

"Normal people" don't even dream of those types of numbers, so.... :wink: :happy

Sounds like the mortgage would be about 1.5x your annual salary. So, seems plenty affordable.

Congrats!

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Re: Can I afford this 2.3 million dollar home?

Post by Presintense » Wed May 29, 2019 6:39 pm

Can you afford it today? Probably. Do you want to be a slave to it as time goes on? That's the question. The house is going to have an appetite for cash whether it's in taxes, insurance, repairs or keeping up with the folks next door. What is the opportunity cost? Freedom.
Performance = Potential - Distraction

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Re: Can I afford this 2.3 million dollar home?

Post by MrBobcat » Wed May 29, 2019 6:43 pm

cmoney2011 wrote:
Wed May 29, 2019 6:26 pm

These numbers seem insane. I know what the affordability calculators say, and I know we can find financing, but do normal people find these numbers reasonable or just out of control? Looking for some perspective here.


Thanks in advance-

MMC
Speaking as a normal person, yeah those numbers seem insane and out of control. :P

As a normal person I can't even comprehend that kind of income let alone dropping that kind of change on a house.

That being said you've done good and it sure looks like it's well within your affordability range so if you want it, go for it and enjoy.

chevca
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Re: Can I afford this 2.3 million dollar home?

Post by chevca » Wed May 29, 2019 6:53 pm

cmoney2011 wrote:
Wed May 29, 2019 6:26 pm
Interested in buying a dream home in ideal location next year for 2.3 million. Would plan on staying for a long time, possibly forever. Price is a bit shocking, but after months of scanning the market, it seems to be the best option for our taste.
Is this a new or custom build house to be built next year? Or, how do you know it would still be available next year?

bluebolt
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Re: Can I afford this 2.3 million dollar home?

Post by bluebolt » Wed May 29, 2019 6:55 pm

You can afford it. At your income, I might even consider a 15 year mortgage, so in 15 years, it will make the FIRE decision easier. :sharebeer

Considerations as your "forever" home:
How will the layout seem as you age into it? Will that staircase seem painful at 60, 70? Do you have to travel between floors to do laundry? Etc.
Utilities, maintenance, cleaning, lawn care - are you prepared for those expenses? For maintenance, cleaning & lawn care, you will have a decreasing ability/desire to do these as you age. Does that fit into your future budget?
Once you are empty nesters, will the home seem too big & empty?

Before you make the move, I would lay out your current budget versus your future budget, being sure to include increased utilities, maintenance, taxes, entertainment(?) expenses. If you're comfortable with the new budget and able to meet your savings/investment goals, why not?

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Re: Can I afford this 2.3 million dollar home?

Post by Dottie57 » Wed May 29, 2019 6:55 pm

willthrill81 wrote:
Wed May 29, 2019 6:34 pm
I like the rule-of-thumb created by Dr. Thomas Stanley, author of "The Millionaire Next Door": if you could not pay your mortgage if your income were cut in half, then you cannot easily afford your home.
+1

Topic Author
cmoney2011
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Re: Can I afford this 2.3 million dollar home?

Post by cmoney2011 » Wed May 29, 2019 7:05 pm

:idea:
chevca wrote:
Wed May 29, 2019 6:53 pm
cmoney2011 wrote:
Wed May 29, 2019 6:26 pm
Interested in buying a dream home in ideal location next year for 2.3 million. Would plan on staying for a long time, possibly forever. Price is a bit shocking, but after months of scanning the market, it seems to be the best option for our taste.
Is this a new or custom build house to be built next year? Or, how do you know it would still be available next year?
Nice pickup. Left this bit it out for the sake of simplicity. It’s a custom build.

Cossack1
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Re: Can I afford this 2.3 million dollar home?

Post by Cossack1 » Wed May 29, 2019 7:09 pm

of course, and still have money left over for luxury cars and traveling the world.
Last edited by Cossack1 on Wed May 29, 2019 7:13 pm, edited 1 time in total.

Topic Author
cmoney2011
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Re: Can I afford this 2.3 million dollar home?

Post by cmoney2011 » Wed May 29, 2019 7:13 pm

Cossack1 wrote:
Wed May 29, 2019 7:09 pm
and a luxury car and traveling the world, and everything else 99.9% of us people can only dream of.
apologies for the extreme first world problems post, but this is bogleheads afterall.

123
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Re: Can I afford this 2.3 million dollar home?

Post by 123 » Wed May 29, 2019 7:22 pm

One thing to consider is if there is a reasonable "exit" plan should you decide (or have to) sell the 2.3 million dollar home (death/divorce/job change). Is the home high-end, mid-level, or low-end in the community you are interested in? In some communities a $2.3 million dollar home is "nothing special" whereas in other communities it might be seen as extraordinary expensive. To the extent that it might be a "high-end" outlier there is a risk that it could be difficult to sell by you (or your estate). Of course if it's the perfect home in the perfect location and you can afford it there is nothing wrong with purchasing it knowing that a loss could be incurred at some point. Some "unique" properties appeal (have value) to a very limited market.
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alpenglow
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Re: Can I afford this 2.3 million dollar home?

Post by alpenglow » Wed May 29, 2019 7:31 pm

Out of curiosity, what do you do a living?

Threads like this remind me that I should have stuck with a more lucrative career path. :oops:

boglenomics
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Re: Can I afford this 2.3 million dollar home?

Post by boglenomics » Wed May 29, 2019 7:31 pm

Running under the assumption that your incomes are stable and transferrable to somewhere in the same location at the same rate if you were to leave your companies it's certainly affordable assuming that's all true.

If I were in your shoes personally (depending on the area) I would not. Plenty of enjoyment can be derived in most areas from a house half or even quarter the price and would reduce risk if there's a catastrophic issue that hinders career and income.

If that area is something like SF / LA / NY that's probably just normal market value and you're probably in the right range. Do consider that in those markets you can rent a home at that price significantly cheaper but if buying is your thing I'd think you'd make out just fine in the very long term.

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Re: Can I afford this 2.3 million dollar home?

Post by BogleBoogie » Wed May 29, 2019 7:35 pm

As others have said, this is really a question of debt to income ratio. You are talking about a house that is around 2x your annual salary. My loan is around 3x my salary, so that said you can afford it using the math I use for affordability. Lots of technical questions on here about stairs, and custom build, etc. which starts to take us out into the weeds a bit much. The math is simple here, you can easily afford this.

Imagine someone posting that they make $100k/yr and asking if they can afford a $200k house...

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Watty
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Re: Can I afford this 2.3 million dollar home?

Post by Watty » Wed May 29, 2019 7:36 pm

I think you are jumping the gun and it is too early to buy a house that that is that expensive. It would be good to wait a couple of years until your number are better.

cmoney2011 wrote:
Wed May 29, 2019 6:26 pm
Income: Combined annual income $850k, will increase to 1-1.2 mil next year. Fairly secure employment.
There may be something that I missed but at that level of income I can't think of any profession that would very secure. Even if you are something like a partner in a large law firm or medical practice they can run into problems or have an occasional lean year or two.

You would also be depending a lot on your future income so you should make sure that you have ample life and disability insurance.

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willthrill81
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Re: Can I afford this 2.3 million dollar home?

Post by willthrill81 » Wed May 29, 2019 7:39 pm

BogleBoogie wrote:
Wed May 29, 2019 7:35 pm
As others have said, this is really a question of debt to income ratio. You are talking about a house that is around 2x your annual salary. My loan is around 3x my salary, so that said you can afford it using the math I use for affordability. Lots of technical questions on here about stairs, and custom build, etc. which starts to take us out into the weeds a bit much. The math is simple here, you can easily afford this.

Imagine someone posting that they make $100k/yr and asking if they can afford a $200k house...
It's a lot easier to achieve a $100k income than $1.2 million though. But the OP says that their household income is stable, although I'm really interested to know how they earn it. Perhaps they are both neurosurgeons in a HCOL area.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Lars_2013
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Re: Can I afford this 2.3 million dollar home?

Post by Lars_2013 » Wed May 29, 2019 7:46 pm

BogleBoogie wrote:
Wed May 29, 2019 7:35 pm
As others have said, this is really a question of debt to income ratio. You are talking about a house that is around 2x your annual salary. My loan is around 3x my salary, so that said you can afford it using the math I use for affordability. Lots of technical questions on here about stairs, and custom build, etc. which starts to take us out into the weeds a bit much. The math is simple here, you can easily afford this.

Imagine someone posting that they make $100k/yr and asking if they can afford a $200k house...
Except their income is currently $850k, with an expectation of a future increase, and the house is $2.3m. So it's like someone that makes $100k/year asking if they can buy a $270k house. Yes, they can probably afford it, but it's more than I'd spend as a multiple of my income. I've made two home purchases and both were under 1.5x family income, with a mortgage that was affordable if the higher earner lost their job. Of course, on a high income like the OP the tradeoff of spending so much on a house is less extreme (they can still take nice vacations, etc).

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Re: Can I afford this 2.3 million dollar home?

Post by Nate79 » Wed May 29, 2019 7:47 pm

On the new income? Yes. On the current income? No. Get the new income first and ensure it is stable. I would also pour as much money into the mortgage and pay it off in 5 years max.

I like the WCI recommendation of mortgage no more than 2x income and put it on a 15 year fixed rate mortgage. This is similar to Dave Ramsey no more than a 1/4 of take home pay on 15 year fixed.

The other issue is that you are buying at the max for your future income and means you will be required to make that much to afford the home. Since it sounds like you are a duel income family that has implications for both to work.

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cmoney2011
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Re: Can I afford this 2.3 million dollar home?

Post by cmoney2011 » Wed May 29, 2019 8:04 pm

Thanks, all. Would rather not disclose professions but we are both professionals - not corporate execs or similar. To be clear the income I’m using as projected is fairly conservative. Expect max future income combined to be closer to 1.4.

Of course catastrophes happen and nobody can be totally secure with respect to job loss. I was thinking of locking in 30 year fixed mortgage for more security and paying down at a 15 year rate.

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Re: Can I afford this 2.3 million dollar home?

Post by PQ12$ » Wed May 29, 2019 8:12 pm

OP: Sounds like you can afford it. Sounds like you want it. The question you should be asking is, is it a good investment?

That's a very different question that you are no doubt smart enough to answer, particularly if you listen to some people you trust who have some distance from the emotion of this decision. The problem with homes is they tend to be emotional purchases in your 30's. They become much more rational as you age, and you see them for what they are - a large box you will ultimately have to sell.

The Boglehead way would be to not get too far ahead of your skis when buying a home -- perhaps wait a few years, save like crazy, until you can make a bigger downpayment and borrow less. That gets you to the same place with alot less stress, and risk. Too many of us here have seen "sure" things -- investments, careers, stock options, etc. go bust to do it any other way.

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Re: Can I afford this 2.3 million dollar home?

Post by random_walker_77 » Wed May 29, 2019 8:13 pm

Once you're in this realm, it's probably not a once-in-a-lifetime opportunity. Yes, you can afford it. Yes, it seems a little insane. Yes, if your income projections bear out (and therein lies the main risks), there's no reason why you can't borrow from the future to upgrade your lifestyle now. That said, if you want to be a little more conservative, just wait 3 more years. You'll have time to figure out if this really is the location you want to lock in, can think through education for your kids, and/or figure out if you want to spend a little more (2.9 million?). Presumably, at that point you'd have an extra $1.5-2.0M in cash, and this would be a small mortgage, or a down payment on an even better property. For luxuries, consider building up the cash rather than borrowing, as borrowing has risks and costs. That said, if your projected income is accurate, then you'd be fine borrowing.

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Re: Can I afford this 2.3 million dollar home?

Post by boglenomics » Wed May 29, 2019 8:16 pm

cmoney2011 wrote:
Wed May 29, 2019 8:04 pm
Thanks, all. Would rather not disclose professions but we are both professionals - not corporate execs or similar. To be clear the income I’m using as projected is fairly conservative. Expect max future income combined to be closer to 1.4.

Of course catastrophes happen and nobody can be totally secure with respect to job loss. I was thinking of locking in 30 year fixed mortgage for more security and paying down at a 15 year rate.
30 year fixed is the way. Rates are not low enough for 15 compared to 30 for it to be viable for the risk if things turn upside down. An extra 15 years of amortization runway is a great security. Beware early payoff penalties in the mortgage terms though. I know some folks who have been burned by that.

Goal33
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Re: Can I afford this 2.3 million dollar home?

Post by Goal33 » Wed May 29, 2019 8:19 pm

I think it depends on where you live. In a VHCOL location can probably sell easily reducing your risk. In a cheaper place... you'll struggle to sell. The risk is a factor in affordability, IMO.
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Goal33
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Re: Can I afford this 2.3 million dollar home?

Post by Goal33 » Wed May 29, 2019 8:19 pm

I think it depends on where you live. In a VHCOL location can probably sell easily reducing your risk. In a cheaper place... you'll struggle to sell. The risk is a factor in affordability, IMO.
A man with one watch always knows what time it is; a man with two watches is never sure.

Jefferson
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Re: Can I afford this 2.3 million dollar home?

Post by Jefferson » Wed May 29, 2019 8:21 pm

My asset and life stats are very similar to yours. There’s no way I would do that, but my income is likely much less stable than yours.

Big expensive houses cost more than just the mortgage. Prepare for constant redecorating and expensive furniture. Eventually, you might have to break ground on a pool that looks like it should be on a TV show.

Your job may be safe, but unless you own the company, it’s possible to get fired. And if you do own the company, your income is even more volatile. Bottom line, anything could happen. I’ve got a really big house, but I could pay off the mortgage 4X over if I had to.

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Re: Can I afford this 2.3 million dollar home?

Post by JonnyDVM » Wed May 29, 2019 8:49 pm

Yes. If this is the house you are sure you want, you can definitely afford it. 2.5X gross or less is a good comfort zone for a mortgage. We also upgraded large a few years back after paying down debt. We stretched our comfort zone a wee bit to get exactly what we wanted, where we wanted. Zero regrets.
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DanMahowny
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Re: Can I afford this 2.3 million dollar home?

Post by DanMahowny » Wed May 29, 2019 9:15 pm

Impressive income. Very impressive.

Yes you can afford the home.

Nice job.
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mvilleguy9
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Re: Can I afford this 2.3 million dollar home?

Post by mvilleguy9 » Wed May 29, 2019 9:45 pm

The folks are say that it's only 2x your average income are correct. When you look at that way, yes you can absolutely afford it.

Here's the other crazy idea, again, depending on where you are. Do you want to spend 2.3 on your permanent home when you can go say 1.5 on a permanent home and buy a 1 million dollar vacation home? At the beach or what-not? Something you can visit on weekends?

Congrats on having a problem that many of us wish we can have! :D :D :sharebeer

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TxAg
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Re: Can I afford this 2.3 million dollar home?

Post by TxAg » Wed May 29, 2019 10:00 pm

:sharebeer good to see folks doing so well. You can afford it.

retire2022
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Re: Can I afford this 2.3 million dollar home?

Post by retire2022 » Wed May 29, 2019 10:10 pm

op will you be able to handle the real estate taxes if you were there were lost of income?

Do you have letter of credit or pre-approvals?

check out this similar thread regarding living in Manhattan

viewtopic.php?f=2&t=206967

good luck

Thegame14
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Re: Can I afford this 2.3 million dollar home?

Post by Thegame14 » Wed May 29, 2019 10:11 pm

using round numbers for ease, income is $1M, mortgage is $2M, I know this isnt exact, but that doesnt even matter. If I said I make 100K a year and want to buy a house with a mortgage or $200K, everyone would say that is 2X income and I can easily afford it, so as long as that employement is secure, ABSOLUTELY YES, you can afford it.

rj342
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Re: Can I afford this 2.3 million dollar home?

Post by rj342 » Wed May 29, 2019 10:27 pm

$64k question -- what if wife decides she wants to be home with child while young instead of being raised by a nanny?

Lord knows you could afford her doing it by any normal standard -- AND have the nanny around for help too.

But would that monster house make giving up her income a somewhat tough decision financially, when it should be trivial otherwise in your circumstances?

student
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Re: Can I afford this 2.3 million dollar home?

Post by student » Wed May 29, 2019 10:30 pm

As some posters have already mentioned, you can afford the house based on the numbers given, as house is worth about 3 times your income.

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ResearchMed
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Re: Can I afford this 2.3 million dollar home?

Post by ResearchMed » Wed May 29, 2019 10:31 pm

rj342 wrote:
Wed May 29, 2019 10:27 pm
$64k question -- what if wife decides she wants to be home with child while young instead of being raised by a nanny?

Lord knows you could afford her doing it by any normal standard -- AND have the nanny around for help too.

But would that monster house make giving up her income a somewhat tough decision financially, when it should be trivial otherwise in your circumstances?
If the OP's income comprises most of the combined income (or will), this is less of a concern.

However, either way, and *especially* if one of you has a big percentage of the joint total income, be sure you each have adequate life insurance *and* disability insurance. You are definitely dependent upon that income (one or both) for some time yet.

RM
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HomerJ
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Re: Can I afford this 2.3 million dollar home?

Post by HomerJ » Wed May 29, 2019 10:34 pm

cmoney2011 wrote:
Wed May 29, 2019 6:26 pm
Income: Combined annual income $850k, will increase to 1-1.2 mil next year. Fairly secure employment.
Why will it increase so much next year? That guaranteed?

How secure? 10 years secure? If one of you lost of your jobs today, would it be easy to get another job making the same kind of money?

You can afford it, but I'd wait until I had the big raises, not just counting on them in the future. Even better would be to save a bit more after getting the raises for a bigger down payment.

Nothing wrong with waiting a couple of years and making the money FIRST before spending it.

Have you figured out much it will cost annually for such an expensive home? Insurance, property taxes, maintenance?
Last edited by HomerJ on Wed May 29, 2019 10:37 pm, edited 1 time in total.
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SoonerD
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Re: Can I afford this 2.3 million dollar home?

Post by SoonerD » Wed May 29, 2019 10:35 pm

I would not spend more than I can comfortably pay on a 15 year fixed mortgage with one income.

This allows for the unfortunate to happen without loosing the home. Too many people (almost all home buying Americans) buy based on what they can afford if things go well - they never consider that they are more likely to become a household with a disabled member than to die young. They never consider that their plans for children might change (adopt, have twins, have special needs).

At very high income levels I would be able to afford a wonderful home on one income with a 15 year mortgage. Any more and I'm likely motivated by some less than pleasant side of human behavior (showing off to my parents/siblings/spouse, keeping up with the Jones' or trying to become the Jones')

If I buy way more than I need using 2 incomes and 30 years to payoff I'm probably on my way to a whole lot more lifestyle escalation race. Might become a servant to those possessions.

I hope your doing great things for humanity with your likely remarkable intelligence and drive!

Good luck to you and family

SoonerD
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Re: Can I afford this 2.3 million dollar home?

Post by SoonerD » Wed May 29, 2019 10:40 pm

References to "first world problems" in these can I afford a luxury item posts are odd - to me. I've never seen a 3rd world post here - something like I want to trade 2 goats for a pig but I think maybe I should put more mud on the roof first.

Posts for all over the world and all income strata are welcome here. One should never apologize for their intelligence, looks, income (earned with integrity), etc.

DesertDiva
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Re: Can I afford this 2.3 million dollar home?

Post by DesertDiva » Wed May 29, 2019 10:49 pm

SoonerD wrote:
Wed May 29, 2019 10:35 pm
I would not spend more than I can comfortably pay on a 15 year fixed mortgage with one income.
+1 Excellent advice

HEDGEFUNDIE
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Re: Can I afford this 2.3 million dollar home?

Post by HEDGEFUNDIE » Wed May 29, 2019 10:51 pm

DesertDiva wrote:
Wed May 29, 2019 10:49 pm
SoonerD wrote:
Wed May 29, 2019 10:35 pm
I would not spend more than I can comfortably pay on a 15 year fixed mortgage with one income.
+1 Excellent advice
I am guessing that if the OP had lived his/her life with this conservative outlook, he/she would not be making anywhere close to $1M/yr.

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Sandtrap
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Re: Can I afford this 2.3 million dollar home?

Post by Sandtrap » Wed May 29, 2019 10:57 pm

willthrill81 wrote:
Wed May 29, 2019 6:34 pm
I like the rule-of-thumb created by Dr. Thomas Stanley, author of "The Millionaire Next Door": if you could not pay your mortgage if your income were cut in half, then you cannot easily afford your home.
+1

In Hawaii's UHCOL areas, this type of home purchase is very "normal" for far less income.

j :happy
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DesertDiva
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Re: Can I afford this 2.3 million dollar home?

Post by DesertDiva » Wed May 29, 2019 11:00 pm

HEDGEFUNDIE wrote:
Wed May 29, 2019 10:51 pm
DesertDiva wrote:
Wed May 29, 2019 10:49 pm
SoonerD wrote:
Wed May 29, 2019 10:35 pm
I would not spend more than I can comfortably pay on a 15 year fixed mortgage with one income.
+1 Excellent advice
I am guessing that if the OP had lived his/her life with this conservative outlook, he/she would not be making anywhere close to $1M/yr.
I’m guessing that if you run your personal life like a for-profit business, you will make wise decisions that will both grow and retain your wealth. Excessive housing costs often prevent people from reaching any meaningful financial goals.

cherijoh
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Re: Can I afford this 2.3 million dollar home?

Post by cherijoh » Wed May 29, 2019 11:28 pm

Sandtrap wrote:
Wed May 29, 2019 10:57 pm
willthrill81 wrote:
Wed May 29, 2019 6:34 pm
I like the rule-of-thumb created by Dr. Thomas Stanley, author of "The Millionaire Next Door": if you could not pay your mortgage if your income were cut in half, then you cannot easily afford your home.
+1

In Hawaii's UHCOL areas, this type of home purchase is very "normal" for far less income.

j :happy
Yes but the OP clearly isn't living in UHCOL Hawaii (or anywhere else that is UHCOL for that matter), because they are currently in a home worth $400K.

OP I am very curious about the differences between your current house and your "dream house". It boggles my mind to think about purchasing a house that costs more than 5X where I currently lived. I'm pretty sure you could upgrade without taking it to this extreme. What makes this your "dream house"?

EnjoyIt
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Re: Can I afford this 2.3 million dollar home?

Post by EnjoyIt » Wed May 29, 2019 11:35 pm

Is this a high cost of living area, or are you going to be living in one of the most expensive houses in town?

Lee_WSP
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Re: Can I afford this 2.3 million dollar home?

Post by Lee_WSP » Wed May 29, 2019 11:50 pm

It is 3x your income of 850k, so it is well below most income multiple affordability ratios.

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AerialWombat
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Re: Can I afford this 2.3 million dollar home?

Post by AerialWombat » Wed May 29, 2019 11:56 pm

cmoney2011 wrote:
Wed May 29, 2019 6:26 pm
These numbers seem insane. I know what the affordability calculators say, and I know we can find financing, but do normal people find these numbers reasonable or just out of control? Looking for some perspective here.
Your income is about 2x mine, and you’re talking about buying one house at a price more than 2x the combined value of my four houses (rentals).

I think your numbers are absolutely insane. I can’t fathom wanting, let alone actually living in, a $2 million house. As a normal person, your numbers are absolutely out of control (that *was* your question).

Yes, you can afford it. For now. But what about job loss? Do you really want to go that much in debt for the box you sleep in?
“Life doesn’t come with a warranty.” -Michael LeBoeuf

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