Since relocating in 2021, my wife and I have been house hunting without success due to a competitive market. We’re worried we might miss out on homeownership. Our household income is $113k, with no debt. I save 21% of my $93k salary for retirement since my wife doesn’t have a retirement plan through work. We want to stay in our current school district where single-family homes start at $550k, and townhomes at $490k. I’m thinking of cutting my retirement contributions to the employer match to increase our mortgage budget to around $3600 monthly. Should I start the pre-approval process, or am I getting in over my head? Regretfully, we didn’t buy when the rates were lower.
That seems risky. You need room in your budget for unexpected expenses like childcare or home repairs. Living tightly can be very stressful.
Remember to include property taxes and insurance in your budgeting, which might push your monthly costs to about $4300. Ensure you can manage all living expenses comfortably with what remains after housing costs. A solid emergency fund is crucial, especially if using most of your savings for the down payment.
@Adi
I’ve been trying a budget trial run by adjusting my retirement contributions to simulate a higher mortgage payment. Our lifestyle hasn’t changed much, but it’s tighter financially. I’ve set aside $60-65k for upfront costs, but my emergency fund is lower than I’d like.
On a $113k income, affording a $500k+ house might stretch your budget too thin, especially without a 20% down payment. Reducing retirement savings can offer short-term relief but might compromise your financial future.
@Miller
Without retirement contributions, we could handle about $4.5k monthly, but that would leave no wiggle room for savings or unexpected costs. Currently, we’re more comfortable at $3.6k monthly, though it’s still a stretch.
@Eli
Consider adjusting your retirement savings to increase your housing budget, but ensure you’re not jeopardizing your long-term financial health.
Ray said:
@Eli
Consider adjusting your retirement savings to increase your housing budget, but ensure you’re not jeopardizing your long-term financial health.
Balancing retirement savings and home buying is tough. Maybe prioritizing homeownership for a few years is necessary.
@Eli
Owning a home can bring unexpected financial burdens. If your budget is already tight, unforeseen expenses could become problematic. Ensure you have a robust emergency fund.
Miller said:
@Eli
Owning a home can bring unexpected financial burdens. If your budget is already tight, unforeseen expenses could become problematic. Ensure you have a robust emergency fund.
Good advice. We’re considering more affordable options to maintain some financial cushion for unexpected costs.