Can I afford this 2.3 million dollar home?

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SQRT
Posts: 1087
Joined: Sat Feb 05, 2011 9:44 am

Re: Can I afford this 2.3 million dollar home?

Post by SQRT » Tue Jun 11, 2019 4:48 pm

It certainly wouldn’t be unusual for someone in their mid 30’s to have a very high proportion of their net worth tied up in their principal residence. I would have been well over 100%. To wait until you have a much higher net worth, may be more prudent but by the same token, you end up forgoing a lot of utility which may be important to a young family. Was for me.

Broken Man 1999
Posts: 2509
Joined: Wed Apr 08, 2015 11:31 am

Re: Can I afford this 2.3 million dollar home?

Post by Broken Man 1999 » Wed Jun 12, 2019 2:02 pm

SQRT wrote:
Tue Jun 11, 2019 4:48 pm
It certainly wouldn’t be unusual for someone in their mid 30’s to have a very high proportion of their net worth tied up in their principal residence. I would have been well over 100%. To wait until you have a much higher net worth, may be more prudent but by the same token, you end up forgoing a lot of utility which may be important to a young family. Was for me.
Me, also. I certainly didn't have the high multiples of NW some suggest as necessary to have a mortgage.

What I did have was a growing family. I was 27 when I took out our first mortgage.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

cherijoh
Posts: 5742
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: Can I afford this 2.3 million dollar home?

Post by cherijoh » Mon Jun 17, 2019 2:04 pm

SQRT wrote:
Tue Jun 11, 2019 4:48 pm
It certainly wouldn’t be unusual for someone in their mid 30’s to have a very high proportion of their net worth tied up in their principal residence. I would have been well over 100%. To wait until you have a much higher net worth, may be more prudent but by the same token, you end up forgoing a lot of utility which may be important to a young family. Was for me.
Your utility argument holds up a lot better when you are talking about going from a rental apartment to a median price home or from owning a town house to purchasing a home ~2x the price of the condo/townhouse. OP talking about moving up from a $400K house to a $2.3M house. As far as true utility (not just "I want it and can afford it"), how much utility is increasing your home by almost 6x going to bring you vs. say increasing it by 3x?

If all goes according to plan (OP gets the 50% raise next year; job security is as good as OP thinks it is; house can be built at current budget without major cost/time overruns; they stay in the house a long time; couple doesn't end up getting divorced) then buying now will likely be viewed in hindsight as a good decision. If one or more of the items above doesn't go as planned, then they could very well have a much bigger mess than an ordinary income person who stretches to buy a better house in their mid-thirties - e.g., recouping far less (as % of cost) on selling the house and having it on the market a lot longer before it sells. And unlike a normally priced house, how much demand can there be to rent a $2.3M house?

I expect the OP will decide to go for it. I would be curious to here how the how building process goes and if the house lives up to the OP's expectations.

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