Can we afford this $725,000 house?

[Glockenspiel]

We're 36 with kids aged 5 and 2.
Combined income = $190k per year
Net worth = $1.15 M
Current Home Value = $460k
Current mortgage balance = $132k
Current Home equity = $318k
Investments (401k, HSA, Taxable Brokerage) = $710k
Cash accounts ~ $150k

We're looking at buying a new house for about $725k in a better neighborhood in a midwestern suburb with better schools, quieter street, larger yard, a house that works better for us, and closer commute. We'd take a maximum mortgage amount of about $500k to stay under the jumbo mortgage limit. We're currently paying about $25k per year in daycare costs, which will greatly decrease once they both start public schools. I've calculated that our home payment (PITI) would go from about $2295/month up to about $2,900/month.

Can we afford it, yes or no?

[runner3081]

Can you afford it? Probably.

Is it something I would due to my own finances? Heck no. Way too high.

[neverpanic]

We're 36 with kids aged 5 and 2.
Combined income = $190k per year
Net worth = $1.15 M
Current Home Value = $460k
Current mortgage balance = $132k
Current Home equity = $318k
Investments (401k, HSA, Taxable Brokerage) = $710k
Cash accounts ~ $150k

We're looking at buying a new house for about $725k in a better neighborhood in a midwestern suburb with better schools, quieter street, larger yard, a house that works better for us, and closer commute. We'd take a maximum mortgage amount of about $500k to stay under the jumbo mortgage limit. We're currently paying about $25k per year in daycare costs, which will greatly decrease once they both start public schools. I've calculated that our home payment (PITI) would go from about $2295/month up to about $2,900/month.

Can we afford it, yes or no?

With $318,000 equity, yes, you can afford it.

Buy the house, enjoy your life.

[oneleaf]

If you don't think finances are too tight over the next few years (before which you might still be on the hook for daycare costs), it sounds like a good decision. We recently made a similar choice buying a similarly priced home and schools was the most important factor. Our combined income is the same as yours, but our net worth is substantially larger. The higher cost was offset by the lack of private school tuition we would have to pay.

[Nate79]

Yes, a $190k income can afford a mortgage of $725k - 318k = $407k mortgage.

[Olemiss540]

Yes. Should be easy for you guys but why are you looking at a 500k mortgage considering your current equity?

Hell of a good job with your networth at 36. Is that brute savings or was there inheritance involved? Crazy good job!

[Glockenspiel]

Yes, a $190k income can afford a mortgage of $725k - 318k = $407k mortgage.

Thanks for the reassurance. I grew up in a rural area where homes were rarely over $100-$150k, so it scares me. We're currently saving over $50k per year in investments, so it feels like we have a bit of a buffer to spend an extra $500-$600/month on housing.

[Glockenspiel]

Yes. Should be easy for you guys but why are you looking at a 500k mortgage considering your current equity?

Hell of a good job with your networth at 36. Is that brute savings or was there inheritance involved? Crazy good job!

Very low interest rates, might as well invest some of the home equity or use part of it to fully furnish the new house.
Mostly brute savings. We also have ownership of some partial mineral rights that have provided us about $200k in income over the last few years. From the bottom of the market in March, our investments have grown nearly $250k, partially because we bought about $60k in stock near the bottom.

[jerrysmith]

I am way too blue collar in mindset to ever dream of spending that much on a home.
But looking and what you posted, if you drop the full equity on it you could probably afford it, you didn't mention other debt or lifestyle expenses.

[z3r0c00l]

You could easily afford it. 3.8 years of income on a home? With over a million net worth in your 30's? I mean really, there's being cautious and then there is being overly cautious. With young kids you will get many good years out of a proper home in a nice area. Pay it off around 65 in time for retirement and you can downsize when empty nested if desired.

[Glockenspiel]

I am way too blue collar in mindset to ever dream of spending that much on a home.
But looking and what you posted, if you drop the full equity on it you could probably afford it, you didn't mention other debt or lifestyle expenses.

We currently spend about $6,000-$7,000 in monthly expenses (housing, food, clothes, cars, utilities, entertainment, etc), not including investment savings.

[Glockenspiel]

You could easily afford it. 3.8 years of income on a home? With over a million net worth in your 30's? I mean really, there's being cautious and then there is being overly cautious. With young kids you will get many good years out of a proper home in a nice area. Pay it off around 65 in time for retirement and you can downsize when empty nested if desired.

We're aiming to retire sometime in our 50s, once our kids are out of college. Will probably try to pay it off earlier than 30 years, as time goes on.

[regularguy455]

If you can’t afford it, who can?

[KlangFool]

We're 36 with kids aged 5 and 2.
Combined income = $190k per year
Net worth = $1.15 M
Current Home Value = $460k
Current mortgage balance = $132k
Current Home equity = $318k
Investments (401k, HSA, Taxable Brokerage) = $710k
Cash accounts ~ $150k

We're looking at buying a new house for about $725k in a better neighborhood in a midwestern suburb with better schools, quieter street, larger yard, a house that works better for us, and closer commute. We'd take a maximum mortgage amount of about $500k to stay under the jumbo mortgage limit. We're currently paying about $25k per year in daycare costs, which will greatly decrease once they both start public schools. I've calculated that our home payment (PITI) would go from about $2295/month up to about $2,900/month.

Can we afford it, yes or no?

Glockenspiel,


1) What is your annual expense and annual saving before buying this house?


2) I would not buy the house for a non-financial reason. I do not like to live among my Jones aka my income peers. The Jones but a house at 3.5 times or more of their household income.


KlangFool

[Glockenspiel]

Glockenspiel,


1) What is your annual expense and annual saving before buying this house?


2) I would not buy the house for a non-financial reason. I do not like to live among my Jones aka my income peers.


KlangFool

Annual expenses are around $70-85k. Annual savings are about $55k. There's living around your income peers and there's moving to good schools to help your kids succeed in life. We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.

[KlangFool]

Glockenspiel,


1) What is your annual expense and annual saving before buying this house?


2) I would not buy the house for a non-financial reason. I do not like to live among my Jones aka my income peers.


KlangFool

Annual expenses are around $70-85k. Annual savings are about $55k. There's living around your income peers and there's moving to good schools to help your kids succeed in life. We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.

Glockenspiel,


<<There's living around your income peers>>

Do you believe that your neighborhood influences your kids? If the answer is yes, then, you need to account for the negative influence.


<<there's moving to good schools >>


How much better?


Which one will influence your kids more? Neighborhood versus school.

<<We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.>>


Why do you think you will fit right into this kind of neighborhood? Check out the cars in this neighborhood before you buy. Ditto for your kids.


<<Annual expenses are around $70-85k. Annual savings are about $55k. >>


Your annual expense would go up at least to 77K to 92K. Your annual savings goes down to 48K.


Can you reach your retirement and college education financing goals with the new numbers? You can do the calculation and find your answers.


KlangFool

[firedup]

Looks good to me, financially speaking. Especially once that child care savings kicks in--25K savings versus $7200 extra annual payment

Beyond the finances though, it seems that this home will bring you a better quality of life, better education for your kids and happiness for your family.

Seems worth it. . Best of luck to you and your family!

[barnaclebob]

Your situation isnt much different than ours when we upgraded houses. It certainly wouldnt be financial suicide.

[MathIsMyWayr]

2) I would not buy the house for a non-financial reason. I do not like to live among my Jones aka my income peers. The Jones but a house at 3.5 times or more of their household income.

I wouldn't make a decision on buying a house for residence from financial reasons. If OP's finance is in order now and in the foreseeable future, it is a matter of life style. I wouldn't mix life style and investment. There are times and matters to count pennies or not. OP is young (37). Be comfortable and focus on the career. It may be much more productive trying to increase income rather squeezing last pennies.

[Greenman72]

Can you afford it? Probably.

Is it something I would due to my own finances? Heck no. Way too high.

"Your scientists were so preoccupied with whether they COULD, that they never stopped to think if they SHOULD."

[stoptothink]

Can you afford it? Probably.

Is it something I would due to my own finances? Heck no. Way too high.

Very similar situation; 39 and 34, 2 young kids, we have a little more income but close to identical NW, similar home equity (although our home is paid off), and in MCOL. OP can definitely make it work, but that is way further than I'd feel comfortable with

[Harry Livermore]

OP, I think you will be just fine. Hard to put a price on better schools and better living. If your situation was more marginal, it might be worth closer scrutiny. But I think you're good to go.
Cheers

[Quirkz]

Annual expenses are around $70-85k. Annual savings are about $55k. There's living around your income peers and there's moving to good schools to help your kids succeed in life. We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.

Other than the fact you might be leaning a little too hard on what the schools will get you, I think the rest of this seems reasonable. The quality of life improvements on the house make sense. You've proven you can live reasonably and save well. You've got enough equity you can have a reasonable number for your mortgage given your salary. They're all big numbers, but it's in balance. If you want to prioritize the house and splurge a bit there, and don't let that spill over to too many other areas, you should be fine.

[Firemenot]

Can you afford it? Probably.

Is it something I would due to my own finances? Heck no. Way too high.

Depends where he lives. In many areas of the country you can’t even buy a house for 725K.

[StevieG72]

You can afford it, keep in mind the additional expenses if any that come along with the new home. HOA? Larger home that would need additional furniture etc? Repairs and maintenance costs for this new home?

Have you started a 529 for the kids yet, I only ask because of their age, AND I wish I has started one sooner.

[awval999]

We're 36 with kids aged 5 and 2.
Combined income = $190k per year
Net worth = $1.15 M
Current Home Value = $460k
Current mortgage balance = $132k
Current Home equity = $318k
Investments (401k, HSA, Taxable Brokerage) = $710k
Cash accounts ~ $150k

Yes, you can afford the payments, but I *personally* wouldn't do it.
You could make a couple clicks and literally be free of debt bondage *today*.
I am your age, and strive to be in your position one day.

[HomeStretch]

IMO you can afford to buy the house and enjoy the better living/schools.

You currently save $55k or 29% of your $190k income. You likely will still be saving at least 20% (after higher mortgage costs of $7k/year + assumed $8k for higher property’s taxes/utilities).

[Slacker]

<<We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.>>


Why do you think you will fit right into this kind of neighborhood? Check out the cars in this neighborhood before you buy.

KlangFool

It is interesting to do this where we live in NC. The neighborhoods with typical homes going for $700k have a lot of 5-10 yr old toyotas, hondas, ford's. Sometimes suvs, but often sedans.

Our neighborhood where the typical home is $325k is more likely to have a more expensive car or newer car sitting on the driveway. A guy two doors down owns a $50k challenger, around the corner is a model3 performance, across the street is an Acura suv.

Kinda funny to me!

[Firemenot]

<<We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.>>


Why do you think you will fit right into this kind of neighborhood? Check out the cars in this neighborhood before you buy.

KlangFool

It is interesting to do this where we live in NC. The neighborhoods with typical homes going for $700k have a lot of 5-10 yr old toyotas, hondas, ford's. Sometimes suvs, but often sedans.

Our neighborhood where the typical home is $325k is more likely to have a more expensive car or newer car sitting on the driveway. A guy two doors down owns a $50k challenger, around the corner is a model3 performance, across the street is an Acura suv.

Kinda funny to me!

I own a house worth considerably over 1 million and park a 7 year-old Honda CRV in the driveway.

[Valuethinker]

We're 36 with kids aged 5 and 2.
Combined income = $190k per year
Net worth = $1.15 M
Current Home Value = $460k
Current mortgage balance = $132k
Current Home equity = $318k
Investments (401k, HSA, Taxable Brokerage) = $710k
Cash accounts ~ $150k

We're looking at buying a new house for about $725k in a better neighborhood in a midwestern suburb with better schools, quieter street, larger yard, a house that works better for us, and closer commute. We'd take a maximum mortgage amount of about $500k to stay under the jumbo mortgage limit. We're currently paying about $25k per year in daycare costs, which will greatly decrease once they both start public schools. I've calculated that our home payment (PITI) would go from about $2295/month up to about $2,900/month.

Can we afford it, yes or no?

It is important to enjoy life on the way.

A moderate home in a good area is a "low beta" house. They hold the value in downturns far better than expensive "bling" homes that are built for sale at the top of the market.

Because location is the most important factor in real estate, and there is a finite supply of good locations, these homes remain in demand even in bad markets. You can almost always sell them if you need to.

There is no doubt financially you can swing this.

It may or may not turn out to be a good "investment" but it will enhance your quality of life. You will get the happier years that a better home brings.

I would say proceed. You are not financially overstretched by this purchase and it brings lifestyle benefits.

[Tamarind]

Wife and I make just a smidge more than OP, early 30s, DINK. Absolutely no way would I ever spend that much on a house on our income.

We are doing the move vs reno math right now and our move budget is capped at 400k. More than that would not let me sleep well.

[MathIsMyWayr]

<<We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.>>


Why do you think you will fit right into this kind of neighborhood? Check out the cars in this neighborhood before you buy.

KlangFool

It is interesting to do this where we live in NC. The neighborhoods with typical homes going for $700k have a lot of 5-10 yr old toyotas, hondas, ford's. Sometimes suvs, but often sedans.

Our neighborhood where the typical home is $325k is more likely to have a more expensive car or newer car sitting on the driveway. A guy two doors down owns a $50k challenger, around the corner is a model3 performance, across the street is an Acura suv.

Kinda funny to me!

Only people with a low self-esteem worry about such trivial things. You play your own game.

[AZAttorney11]

You can absolutely afford it.

[Watty]

You can likely afford the house but not the $500K mortgage. If you buy the house then at put at least all your home equity from your current house into the new house.

A few things to consider though.

We're 36 with kids aged 5 and 2.

If there is any chance that you will have more kids then you need to redo your numbers with the additional kids. If you have another kid the you might need to go down to one income if the next kid has any health issues, even if they are temporarily and minor daycare might not be a good or even possible option. Twins are also a possibility. With three(or more) kids having a stay at home parent could be a financially reasonable choice. You could also have expensive fertility treatments or adoption costs.

You only have about 12 years until the college costs start.

You did not mention any college savings. Buying the expensive house could mean that your kids will have large student loan.

Once your kids start going off to college you will not need as big a house. Be careful about buying a house that will be too big for you then.

We're currently paying about $25k per year in daycare costs, which will greatly decrease once they both start public schools.

You will also have lots of other new expenses as they get older and you will also have after school care and some sort of daycare during the summers and school holidays. The expenses might decrease a bit but don't count on a huge overall reduction.

I've calculated that our home payment (PITI) would go from about $2295/month up to about $2,900/month.

How much will your taxes and insurance go up?

The monthly payment is misleading since with a new 30 year mortgage you would also be extending the length of the loan which would not be paid off until you are 66. Even if you want to work that long you might not be able to.

Be sure to also consider houses that might cost in the $600K price range.

[KlangFool]

<<We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.>>


Why do you think you will fit right into this kind of neighborhood? Check out the cars in this neighborhood before you buy.

KlangFool

It is interesting to do this where we live in NC. The neighborhoods with typical homes going for $700k have a lot of 5-10 yr old toyotas, hondas, ford's. Sometimes suvs, but often sedans.

Our neighborhood where the typical home is $325k is more likely to have a more expensive car or newer car sitting on the driveway. A guy two doors down owns a $50k challenger, around the corner is a model3 performance, across the street is an Acura suv.

Kinda funny to me!

Only people with a low self-esteem worry about such trivial things. You play your own game.

MathIsMyWayr,

Do you believe that you are not influenced by your neighborhood when you are 2 to 5 years old? It may not matter to the parents. But, it may impact the kids.


KlangFool

[MathIsMyWayr]

<<We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.>>


Why do you think you will fit right into this kind of neighborhood? Check out the cars in this neighborhood before you buy.

KlangFool

It is interesting to do this where we live in NC. The neighborhoods with typical homes going for $700k have a lot of 5-10 yr old toyotas, hondas, ford's. Sometimes suvs, but often sedans.

Our neighborhood where the typical home is $325k is more likely to have a more expensive car or newer car sitting on the driveway. A guy two doors down owns a $50k challenger, around the corner is a model3 performance, across the street is an Acura suv.

Kinda funny to me!

Only people with a low self-esteem worry about such trivial things. You play your own game.

MathIsMyWayr,

Do you believe that you are not influenced by your neighborhood when you are 2 to 5 years old? It may not matter to the parents. But, it may impact the kids.


KlangFool

No, little kids learn from their parents. If parents are conscious of such trivial things, young kids sense it and imitate.
Don't blame the neighbors, but yourself.

[Firemenot]

Not sure how helpful the feedback in the aggregate has been to OP. Seems split between “of course you can afford” versus “no way.”

[KlangFool]

<<We don't aim to live a luxurious lifestyle. We're both fairly frugal with no expensive hobbies, don't eat at fancy restaurants, and travel 1-2 times/year. We buy Toyotas and keep them for 8-12 years.>>


Why do you think you will fit right into this kind of neighborhood? Check out the cars in this neighborhood before you buy.

KlangFool

It is interesting to do this where we live in NC. The neighborhoods with typical homes going for $700k have a lot of 5-10 yr old toyotas, hondas, ford's. Sometimes suvs, but often sedans.

Our neighborhood where the typical home is $325k is more likely to have a more expensive car or newer car sitting on the driveway. A guy two doors down owns a $50k challenger, around the corner is a model3 performance, across the street is an Acura suv.

Kinda funny to me!

Only people with a low self-esteem worry about such trivial things. You play your own game.

MathIsMyWayr,

Do you believe that you are not influenced by your neighborhood when you are 2 to 5 years old? It may not matter to the parents. But, it may impact the kids.


KlangFool

No, little kids learn from their parents. If parents are conscious of such trivial things, young kids sense it and imitate.
Don't blame the neighbors, but yourself.

MathIsMyWayr,


Okay. So, you are one of those parents that believe the parents can shield the children from all the influences from the environment/neighborhood.


KlangFool

[HomeStretch]

Not sure how helpful the feedback in the aggregate has been to OP. Seems split between “of course you can afford” versus “no way.”

Hopefully OP will find responses that are helpful/resonate in making his/her personal decision. It’s rare to find 100% consensus on any BH topic. I find it helpful to have a variety of responses as it helps to consider points of view I hadn’t thought about.

[MathIsMyWayr]

It is interesting to do this where we live in NC. The neighborhoods with typical homes going for $700k have a lot of 5-10 yr old toyotas, hondas, ford's. Sometimes suvs, but often sedans.

Our neighborhood where the typical home is $325k is more likely to have a more expensive car or newer car sitting on the driveway. A guy two doors down owns a $50k challenger, around the corner is a model3 performance, across the street is an Acura suv.

Kinda funny to me!

Only people with a low self-esteem worry about such trivial things. You play your own game.

MathIsMyWayr,

Do you believe that you are not influenced by your neighborhood when you are 2 to 5 years old? It may not matter to the parents. But, it may impact the kids.


KlangFool

No, little kids learn from their parents. If parents are conscious of such trivial things, young kids sense it and imitate.
Don't blame the neighbors, but yourself.

MathIsMyWayr,


Okay. So, you are one of those parents that believe the parents can shield the children from all the influences from the environment/neighborhood.


KlangFool

KlangFool,

You don't have to shield the children. You only have to show the example everyday. You have live the example, not pretend it.

[Flyer24]

Let’s get back focused on financial aspects of the home purchase please.

[gch]

Not sure how helpful the feedback in the aggregate has been to OP. Seems split between “of course you can afford” versus “no way.”

OP could have a 1MM income and 10MM net worth and there would be some people that would say they couldn’t afford it, or their net worth is too low compared to income so they should save more for a few years before they buy something in that range.

In the end, the math is very simple. The OP can afford this house. Certainly there are always some risks that have been mentioned ITT such as job loss, more kids, wanting to retire earlier, etc. But as of today they certainly can afford the house with little problem.

[Dave55]

You can likely afford the house but not the $500K mortgage. If you buy the house then at put at least all your home equity from your current house into the new house.

I agree with this 100%. Then your mortgage balance will be approx $407K.

Go ahead and buy the house.

Dave

[VoiceOfReason]

We're 36 with kids aged 5 and 2.
Combined income = $190k per year
Net worth = $1.15 M
Current Home Value = $460k
Current mortgage balance = $132k
Current Home equity = $318k
Investments (401k, HSA, Taxable Brokerage) = $710k
Cash accounts ~ $150k

We're looking at buying a new house for about $725k in a better neighborhood in a midwestern suburb with better schools, quieter street, larger yard, a house that works better for us, and closer commute. We'd take a maximum mortgage amount of about $500k to stay under the jumbo mortgage limit. We're currently paying about $25k per year in daycare costs, which will greatly decrease once they both start public schools. I've calculated that our home payment (PITI) would go from about $2295/month up to about $2,900/month.

Can we afford it, yes or no?

Think of it this way:

Can you afford to buy the current house you live in if you were to buy it today with 20% down?

460k with 20% down would be a mortgage of $368k.

725k with 318k equity rolled over is a mortgage of $407k.

That delta of $49k on a mortgage is equal to ~$200/month difference.

Yes, i think you can afford it.

[EnjoyIt]

OP,
I have watched over the years parents make decisions which they say is for the kids. The sky is the limit when it comes to "the kids." Is the bigger house and all the added expenses worth the better school district? Is it really that much better to delay financial independence for 4-5 years? Only you can answer that.

I can tell you that you currently spend $75k-$80k a year. When you move in the new house you will probably be spending an additional $5k-$10k on higher expenses, upkeep and property tax. Let us say your expenses will be up to $90k a year. That will require a portfolio of $2.25 million. You currently have $1.3 million. With no additional contributions you will hit that number in 11.5 years with 5% growth, 14 years at 4% growth, or 18.5 years with 3% growth. Only you can decide if it is worth it to you.

Also, understand that if your kids will be going to school with predominantly richer kids, they will very likely take on some of those characteristics, both good and bad. Personally I would not want my kids to feel like they deserve a BMW for their car at 16 just because all their friends have one. At the same time I would hate to put them in the position where they are the poorest kids in class. Again, you decide. Maybe worthwhile driving through the school parking lot and see what the other kids look like and what they are driving.

With those caveats above, you can afford it, but there will be consequences.

[Savingscaptain]

We're 36 with kids aged 5 and 2.
Combined income = $190k per year
Net worth = $1.15 M
Current Home Value = $460k
Current mortgage balance = $132k
Current Home equity = $318k
Investments (401k, HSA, Taxable Brokerage) = $710k
Cash accounts ~ $150k

We're looking at buying a new house for about $725k in a better neighborhood in a midwestern suburb with better schools, quieter street, larger yard, a house that works better for us, and closer commute. We'd take a maximum mortgage amount of about $500k to stay under the jumbo mortgage limit. We're currently paying about $25k per year in daycare costs, which will greatly decrease once they both start public schools. I've calculated that our home payment (PITI) would go from about $2295/month up to about $2,900/month.

Can we afford it, yes or no?

Why avoiding a jumbo loan? I would take your liquid assets, go to WF get a jumbo loan for super cheap, and save on interest.

[abracadabra11]

Wife and I make just a smidge more than OP, early 30s, DINK. Absolutely no way would I ever spend that much on a house on our income.

We are doing the move vs reno math right now and our move budget is capped at 400k. More than that would not let me sleep well.

I likely would have agreed with this sentiment before having kids. Considerations change dramatically when you have children that are transitioning to school age. The reality is that OP can easily afford this home and savings will take a hit until daycare costs drop off, but it's a reasonable tradeoff.

[PowderDay9]

Yes, you can easily afford this new house and you should buy it based on the reasons you stated.

Some people focus on all the negative things that could happen if everything goes wrong but I think it's more likely that you will continue to be successful financially based on your prior earning, saving and investing habits. It's probably likely that you grow your incomes and pay off this house sometime in your 40s while also saving plenty for college and retirement. You'll then look back and be thankful you bought this house and will be fond of all the memories.

Congrats on your financial success and I hope you enjoy the new house!

[AZAttorney11]

Not sure how helpful the feedback in the aggregate has been to OP. Seems split between “of course you can afford” versus “no way.”

OP could have a 1MM income and 10MM net worth and there would be some people that would say they couldn’t afford it, or their net worth is too low compared to income so they should save more for a few years before they buy something in that range.

In the end, the math is very simple. The OP can afford this house. Certainly there are always some risks that have been mentioned ITT such as job loss, more kids, wanting to retire earlier, etc. But as of today they certainly can afford the house with little problem.

This. This board is beyond overly conservative when it comes to "Can I afford this home" type of questions. It's borderline comical.

[Firemenot]

Not sure how helpful the feedback in the aggregate has been to OP. Seems split between “of course you can afford” versus “no way.”

OP could have a 1MM income and 10MM net worth and there would be some people that would say they couldn’t afford it, or their net worth is too low compared to income so they should save more for a few years before they buy something in that range.

In the end, the math is very simple. The OP can afford this house. Certainly there are always some risks that have been mentioned ITT such as job loss, more kids, wanting to retire earlier, etc. But as of today they certainly can afford the house with little problem.

This. This board is beyond overly conservative when it comes to "Can I afford this home" type of questions. It's borderline comical.

I also think many dint realize how costly entry point housing is in high cost of living areas are. The typical ratios just don’t work and haven’t for decades basically.