Budgeting & saving for new house

[stretchad]

The previous responses to the latest budget & house threads have me wondering about buying a new house...maybe I'm being more aggressive than I should be?

Background - No kids (but are trying). We live in Seattle so it's expensive when it comes to houses however no State income tax and property taxes aren't bad.

Right now, we own a house in our old city we're trying to sell. I expect to net about $50-$65k when we sell it.
We are planning to rent until at least March (that's when our 6 month lease is up), and at that point will have another $35k saved so in total about $85 - $100k for a down payment.

With that kind of downpayment (~15%) on a $620k house, we'll end up with about $5000 a month extra, after all our expenses and 401k savings.

So, given that we still have a sizeable amount left after expenses with the purchase price I list above, would you go ahead and buy? OR, would you keep renting and save more (roughly another $35k every 6 months)?

[stretchad]

PITI would be roughly $3300 a month. And yes, theoretically if we have a larger down payment we could avoid PMI (20% down on 620-650k mortgage would be ~$130k).

I'm not certain what daycare is like in our area - maybe $1500 a month? I do know that if I stay with my current company, they have subsidized on site daycare, but I'm not sure of the costs.

The $5k that we have left at the end of the month covers the PITI of $3300 a month, plus any increase in utilities. It does NOT factor in daycare & kid expenses.

[gt7301b]

I'd wait - just because six months in a new city isn't enough time for me to know where I want to live.

[kadams767]

I think it depends on what the rest of your budget looks like. Are there areas that you will be able to cut back once you have daycare? Or areas that will be gone by that time (paying off a car or loan, for example) and would free up some more money?

[stretchad]

Dec 9, 2012 13:54:39 GMT -5 kadams767 said:

I think it depends on what the rest of your budget looks like. Are there areas that you will be able to cut back once you have daycare? Or areas that will be gone by that time (paying off a car or loan, for example) and would free up some more money?

We can cut back a couple hundred from our eating out budget, and our fun money budget. Also, we don't have much left on the student loan & car. Before relocating, we were aggressively paying these down, but since we're in save mode right now we are just paying the minimums. When they do go away, that'll free up just about $600. So between all of those things, we could probably free up another $1000 or so in relatively short time.

Who knows when the daycare expenses would actually start. We've been TTC for 3 years now, and are undergoing fertility treatments without much luck. We might end up child free not by choice.

[heygrey]

in your situation i think i'd wait another 6 months and save the extra $35k to put yourself in the 20% down range. if it would take years i'd tell you to buy sooner than later, but since it's really such a short time and makes such a huge difference, i'd wait.

[Balki.Bartokomous]

So the $5k that's left over is not really left over because that's before you've paid the mortgage. Am I understanding that right? If that's the case, I'd wait to buy.

What's your total HHI? If you bought this house, can you afford it on one income?

[stretchad]

Dec 9, 2012 15:32:28 GMT -5 Balki.Bartokomous said:

So the $5k that's left over is not really left over because that's before you've paid the mortgage. Am I understanding that right? If that's the case, I'd wait to buy.

What's your total HHI? If you bought this house, can you afford it on one income?

The 5k is after we've paid the mortgage.

Total HHI is 232k. If we bought it on my salary alone yes, we could afford it but would not save anything and would have zero personal funds.

More I'm thinking about it, the more I think to keep renting and save. Then it just becomes a question of how long to rent - 6 months or a year. Place we're in now is 6 months because the landlord wants to sell in the spring, and we thought we'd sell our house faster, and be able to save more but it just hasn't happened that way.

[Roc A Bee]

I would wait until your old house sells then use that towards your DP.

[Balki.Bartokomous]

Dec 9, 2012 16:10:52 GMT -5 stretchad said:

Dec 9, 2012 15:32:28 GMT -5 Balki.Bartokomous said:

So the $5k that's left over is not really left over because that's before you've paid the mortgage. Am I understanding that right? If that's the case, I'd wait to buy.

What's your total HHI? If you bought this house, can you afford it on one income?

The 5k is after we've paid the mortgage.

Total HHI is 232k. If we bought it on my salary alone yes, we could afford it but would not save anything and would have zero personal funds.

More I'm thinking about it, the more I think to keep renting and save. Then it just becomes a question of how long to rent - 6 months or a year. Place we're in now is 6 months because the landlord wants to sell in the spring, and we thought we'd sell our house faster, and be able to save more but it just hasn't happened that way.

Oh, ok. Hmm. I think I'd still wait until you can save up enough of a DP so that your monthly payment can be made on your income alone.

We're pretty conservative (well, DH is, and I've come around after a few years), and the more stressed out at work we get, the more important it is to me to be able to live on one income so that I know that either one of us can quit if we want to.

I also think the fact that your home hasn't sold yet is a good indicator that the market's not moving quickly, so maybe that will make you feel better & not feel like you need to buy now.