Financial Perspective

[Chiropteran]

I'm planning to do the same in few years, although the new place will be close to my current property. I don't see anything wrong with it.

 

[Corporate Thug]

Your situation sounds pretty good OP...do not see the problem.

 

[PricklyPete]

Thanks for the feedback :thumbsup:

 

[PricklyPete]

Just got off the phone with the realtor. Should have a formal offer in the next couple of hours. We'll see if the sellers will come down.

 

[jagec]

The remaining 76% should be just fine to cover expenses and continued savings. I am already taking my 401k contributions out before coming up with the Net figure.

Post-401k AND post-tax? If so, I wouldn't worry about it at all. The banks use 36% of GROSS as the debt-to-income ceiling for issuing mortgages.

There is always SOME risk in taking out debt, but your situation sounds safer than most.

 

[PricklyPete]

Post-401k AND post-tax? If so, I wouldn't worry about it at all. The banks use 36% of GROSS as the debt-to-income ceiling for issuing mortgages.

There is always SOME risk in taking out debt, but your situation sounds safer than most.

Yes, I'm calculating net as post 401k and post Tax. I'm feeling better about the situation... But still have a touch of anxiety moving into such a large sum of debt.

 

[Naeeldar]

Yes, I'm calculating net as post 401k and post Tax. I'm feeling better about the situation... But still have a touch of anxiety moving into such a large sum of debt.

Think of it as an investment. Honestly it's not a lot of debt for a house. My house today is 20% of my net take home. Now granted I live in the Northeast (suburbs of Philadelphia) so I'm used to more expensive housing vs what you saw in SC. SO I think nothing of it.

Heck my new car is going to be 12% of my net. Percentages are relative though and I think based off of everything you outlined, you have more than enough set aside to handle this. It sounds like you are just generally not an easy buyer, especially when it comes to large purchases. SO your stressing. I'd call it typical.

 

[PricklyPete]

Think of it as an investment. Honestly it's not a lot of debt for a house. My house today is 20% of my net take home. Now granted I live in the Northeast (suburbs of Philadelphia) so I'm used to more expensive housing vs what you saw in SC. SO I think nothing of it.

Heck my new car is going to be 12% of my net. Percentages are relative though and I think based off of everything you outlined, you have more than enough set aside to handle this. It sounds like you are just generally not an easy buyer, especially when it comes to large purchases. SO your stressing. I'd call it typical.

My wife and I are just cautious with big purchases. We both come from very fiscally conservative families.

Just to be clear, the new home is in Denver, CO. The old home/now rental for the past 5 years is in SC. Luckily both places have relatively low property taxes. I grew up in Connecticut though and it is crazy how much my parents used to pay.

 

[Jadow]

as long as the rents are fairly predictable on the 1st house, and you could afford a few months without that rent money and still make payments, sounds like you'll be fine.

 

[Jadow]

My wife and I discussed this and are thinking we will likely sell the rental if she stops working for kids. We'll probably plow that money into the principal of the new house if that is the case.

Don't be in such a hurry to pay off that debt. Interest rates are ridiculously low, and there is NOTHING wrong with having a huge pile of cash, having 6 month safety net feels good, imagine how a 2 year net feels.

 

[PricklyPete]

Don't be in such a hurry to pay off that debt. Interest rates are ridiculously low, and there is NOTHING wrong with having a huge pile of cash, having 6 month safety net feels good, imagine how a 2 year net feels.

Will definitely keep it in mind if I think I can do better when the time comes.

 

[Naeeldar]

My wife and I are just cautious with big purchases. We both come from very fiscally conservative families.

Just to be clear, the new home is in Denver, CO. The old home/now rental for the past 5 years is in SC. Luckily both places have relatively low property taxes. I grew up in Connecticut though and it is crazy how much my parents used to pay.

Agreed. And that's all I was reinforcing is that it's just being conservative to second guess it. nothing wrong with it.

Reality is though SC is cheap and so when you think about buying in Denver it will obviously cost more. However not anything like northeast for example Connecticut. I'm in that price range and thats part of why I don't bat an eye at % of monthly bills. I'm used to it culturally so to speak.

Anyway definitely no need to worry which it sounds like you are doing. Sometimes its easier to get out of the house then an apartment so you can always sell it off if something bad happened.

 

[PricklyPete]

Arghhh... Seller is not wanting to play ball... So this might end up being a mute point.

 

[Kntx]

How old are you?

What percentage of your total assets will be in residential real estate?

 

[PricklyPete]

How old are you?

What percentage of your total assets will be in residential real estate?

34 me, 32, my wife

46% (if total assets equals real estate equity + retirement + savings)**

**This is assuming that we buy the house that this thread is about, otherwise the % is much smaller obviously. We are contemplating a counter offer as I type this

 

[tfinch2]

Arghhh... Seller is not wanting to play ball... So this might end up being a mute point.

Is that like a point that doesn't make any sound?

 

[PricklyPete]

Is that like a point that doesn't make any sound?

haha...touche.

Meant "moot point".

 

[SSSnail]

What if both of you lose your jobs? I've seen worse happened, especially in Denver. I just saw a specials about how a lot of the middle class in Denver are losing their homes because of the very thing I just mentioned.

Yes, they had more than 6+ months in "oh shit" money, squandered their savings and retirement as well.

 

[jagec]

What if both of you lose your jobs? I've seen worse happened, especially in Denver. I just saw a specials about how a lot of the middle class in Denver are losing their homes because of the very thing I just mentioned.

Yes, they had more than 6+ months in "oh shit" money, squandered their savings and retirement as well.

Unless you've saved up 50+ years of emergency money, the "everyone loses their jobs forever" scenario is always a bad one.

In the OP's case, having the fallback house which they could sell or move back into if Denver didn't work out would be a good thing, even if they couldn't keep both houses.

 

[PricklyPete]

What if both of you lose your jobs? I've seen worse happened, especially in Denver. I just saw a specials about how a lot of the middle class in Denver are losing their homes because of the very thing I just mentioned.

Yes, they had more than 6+ months in "oh shit" money, squandered their savings and retirement as well.

Well we will have 20% equity in the new home and ~35% equity in the old home, so if things looked dire, my hope is we could get out if really, really needed.

Of course there is no magic ball that I can see the future, but my current work skills are pretty mobile. There are *currently* a lot of jobs that I would be valid for in the Denver area if I were to lose my job.

Don't get me wrong...I would much rather have more than 6 months tucked away after this purchase...and that is certainly what we will be working on after the purchase (if this does in fact happen). It has been very nice the last few years having plenty to fall back on in case of emergency. Moving from that position to one much more vulnerable is certainly why I was nervous on the whole matter.

 

[PricklyPete]

We were able to finally come to a happy compromise....we officially put the house under contract.

 

[highland145]

We were able to finally come to a happy compromise....we officially put the house under contract.

:thumbsup:



Austria is sad.

 

[PricklyPete]

:thumbsup:



Austria is sad.

Thanks Highland!

Yes, there will always be a little part of me that wishes we had headed over there... but we have mountains here in Denver too. ;-)