Finance scenario question

[TXHokie]

My brother and his fiancé/wife are planning to buy a 320k house with household income of 95k. They have no debt and one car payment. Will be putting 20% down. Where they live is just expensive in the VA/DC area. Would you think they will struggle financially? I'm thinking that's barely getting by with any left for saving. They're pretty good with money so I'm just hoping the best for them.

 

[Via]

If they're not into hookers and blow and their jobs are secure I don't know why they'd struggle. Are the taxes there outrageous?

 

[OVerLoRDI]

20% down, 95k/year income, house value 320k, no debt besides single car payment. Sounds very reasonable.

Unless they are paying off a Ferrari or something insane.

 

[Xcobra]

Looks pretty solid to me. It sounds like they are responsible. They should be ok.

 

[Destiny]

95k... 60k after taxes they take home $5k a month... figuring their mortgage with tax/insurance is about $2k (give or take - just quick guessing on the top of my head)... they should be fine until they start blowing their disposable income and buy stuff they don't need...

 

[Doppel]

95k... 60k after taxes they take home $5k a month... figuring their mortgage with tax/insurance is about $2k (give or take - just quick guessing on the top of my head)... they should be fine until they start blowing their disposable income and buy stuff they don't need...

$95k tax rate on a couple certainly doesn't cost close to $25k/year in taxes, nowhere near that.

3:1 is considered by many (home:income) a reasonable purchase. Also, with 20% down they were well ahead; financially they are making a reasonable decision.

 

[kranky]

Sounds OK to me.

 

[CPA]

About 10 years ago, I bought a house of similar cost and had household income in similar range and we have been okay. However, we live in the Houston, TX area so COL is not as high as VA/MD, I'm sure.

 

[Texashiker]

Would you think they will struggle financially?

I think if one of them loses their job, they are going to lose their home.

My personal opinion, they are buying beyond their ability.

Besides the price of the home, you have to consider the property tax and home owners insurance.

 

[mshan]

If they are moving to the NoVA area, another very useful forum is: http://www.city-data.com/forum/northern-virginia/

They can probably give you a good idea of what all your other expenses will add up to each month.

And if you are not aware, http://www.franklymls.com has a searchable database of 5 years of actual sale prices, in addition to currently active and under contract listings.

 

[Cal166]

95k... 60k after taxes they take home $5k a month... figuring their mortgage with tax/insurance is about $2k (give or take - just quick guessing on the top of my head)... they should be fine until they start blowing their disposable income and buy stuff they don't need...

Should be around $1500-1600 in mortgage and tax/insurance. Perfectly doable.

 

[Texashiker]

Should be around $1500-1600 in mortgage and tax/insurance. Perfectly doable.

In the post you quoted, the keyword is "they".

We are assuming that neither of the couple will "ever" lose their job? The woman will never get pregnant and have to take leave, neither will never get sick or hurt,,,,,.

I would like to know what the husband and wife each bring home.

 

[vi edit]

Taxes can make or break it. Just going off of some other tax threads it sounds like that part of the east coast is a miserable place for property taxes. I'm going to assume an annual tax bill of $10,000+?

Be sure to factor that in. If they ever plan to have kids in daycare they are going to be in for a very uncomfortable payment.

 

[Texashiker]

If they ever plan to have kids in daycare they are going to be in for a very uncomfortable payment.

I think was Dr. Pizza who said he pays close to $1,000 a month on daycare for his two kids?

 

[purbeast0]

at 320k in the VA/DC area, they are NOT in the expensive area.

 

[vi edit]

I think was Dr. Pizza who said he pays close to $1,000 a month on daycare for his two kids?

I pay $1500 for two. And that's with a $400 a month employer subsidy and one of the kids being 4 years old and on the cheaper pre-k rate.

The nicer day cares around me are $1200 a month for infant daycare alone.

 

[NutBucket]

I was thinking the same thing. Seems VERY cheap for that area.

 

[Texashiker]

I pay $1500 for two.

Holy crap that is a lot of money.

My step daughter was in a situation with daycare a few months ago. Her and her husband were both working, everything she made went to daycare.

I think she cleared something like $20 or $50 a week after paying daycare. It just was not worth it. She quit her job and is staying at home with the kids.

People do not realize how expensive kids are. Daycare, doctors visits, clothes, food, diapers,,,,.

For the couple in the OP, $5k might be a lot of money. Have a couple of kids, one or the other loses their job, things could get real bad.

 

[bignateyk]

Sounds good to me. With no other debt they are easily under the 40% debt/income ratio.

My wife and I have $320K mortgage with a $120K income. The bank approved us for up to $600K since we have no other debt and close to perfect credit.

 

[The-Noid]

P and I would be about $1,222 on a 30 year mortgage.

Seems doable.

 

[Tweak155]

Um, how do they have no debt but have a car payment? Pretty sure that is called debt, lol.

That said I'm in a similar boat, only we literally have no debt. Not even a car payment! But I'm hoping to score a home in the $200k range first, but will go as high as $300k for the right deal. And yeah we have the 20% down payment.

 

[The-Noid]

Um, how do they have no debt but have a car payment? Pretty sure that is called debt, lol.

That said I'm in a similar boat, only we literally have no debt. Not even a car payment! But I'm hoping to score a home in the $200k range first, but will go as high as $300k for the right deal. And yeah we have the 20% down payment.

Didn't you get the memo, in this day and age, car debt and mortgage debt is not considered debt as it is tied to an asset...

Psychology is strange among Americans. Having a car and mortgage payment is expected, having CC debt or unsecured is debt, the other stuff is just payments.

 

[Tweak155]

Didn't you get the memo, in this day and age, car debt and mortgage debt is not considered debt as it is tied to an asset...

Psychology is strange among Americans. Having a car and mortgage payment is expected, having CC debt or unsecured is debt, the other stuff is just payments.

Scary notion.

 

[NutBucket]

Anything under 5% APR isn't debt

 

[Texashiker]

That said I'm in a similar boat, only we literally have no debt. Not even a car payment! But I'm hoping to score a home in the $200k range first, but will go as high as $300k for the right deal. And yeah we have the 20% down payment.

I am not trying to pick a fight, I just have a couple of questions.

How old are you and your wife?

Do you and your wife have children? If not, do you plan on having children?

Why would you want to buy a home at the upper limit? Why not buy at the lower limit and have a buffer zone?