My husband and I are planning to buy our first house. We are both 25 years old, have jobs, and are currently living with his parents. We earn a total of $170K before taxes and have saved $140K since we’ve never had to pay rent or a mortgage before. I have a car loan with monthly payments of $900.
We’re about to buy a house that costs $680K, located in a high cost of living area in NY. Luckily, my father-in-law is helping us with a 20% down payment, which amounts to $136K. My husband and I will handle the closing costs, repairs, and any other expenses. The house is in good condition but we want to make some renovations costing about $70K, although we’ll start with just the essentials and renovate gradually.
The $4700 monthly payment includes the principal, insurance, interest, and taxes. Do you think we can manage this financially? I’m quite anxious as I haven’t discussed this outside our family circle and I’m looking for some external advice.
Shay said: @Jai
The car loan’s interest rate is 6.1%, and I owe $37K.
With $140k in savings, paying off a 6.1% car loan makes sense. Next time, negotiate based on the purchase price and if buying new, take the dealer loan for a discount and then pay it off right away.
Shay said: @Jai
The car loan’s interest rate is 6.1%, and I owe $37K.
6.1% isn’t the worst, but it’s not great either. You’d generally be better off investing that money, but you’ll want to be debt-free before you start remodeling. Also, don’t make any large purchases or changes to your credit until after the house closes.
Between your mortgage and car payments, that’s $5,600 a month. Add about $500 for maintenance and $300 for utilities, plus all your other expenses. It might be doable, but it will limit your ability to save for retirement or handle a job loss. You’ll need to be careful with your budgeting. Are you okay with being a bit stretched financially?
@Jordy
$6k a year might be reasonable just because of how much variance there is from year to year. Some years you might not have anything major come up, other years you might have to drop $12k+ on a new roof or HVAC.
Jo said: @Elliot
$500 a month for maintenance seems high, what are you planning to maintain that costs that much?
In a new-to-you house, sounds pretty fair for the first couple years. People typically neglect houses before they sell and you usually have some things to do that can’t wait too long
Jo said: @Elliot
$500 a month for maintenance seems high, what are you planning to maintain that costs that much?
You’d be surprised at what inspectors miss or simply go negligent on.
We paid our inspector to do a foundation inspection on a crawl space, dude just went into the entrance of said crawl space and took pictures from there and said “yep it’s good” fast forward a month later I’m forking out 20k for foundation repairs
@Linden
We have different views on what’s reasonable. Many people are broke because they buy things they can’t afford. You’re making a good salary but a $900 car payment plus a mortgage is a lot.
Jai said: @Linden
We have different views on what’s reasonable. Many people are broke because they buy things they can’t afford. You’re making a good salary but a $900 car payment plus a mortgage is a lot.
The struggle isn’t because of the car payment. It’s because they’re buying a house that’s more than they can afford.
@Linden
They’re making $170,000 a year and buying a $680,000 house, which is reasonable given the down payment help. The tight budget is due to the $1,000 a month going to a car.