Home Shopping/Mortgage Rates
Home Shopping/Mortgage Rates
Anyone out there actively shopping for mortgages/homes in the US? What are you getting for a rate as of late? How's it going? We are shopping for homes so we haven't locked a rate. It's insane out there. We've only put an offer on one house (tons of crap out there right now) but were beat out by a cash offer with inspection waived. Even if we do end up getting a home I'm worried we're going to be one layoff away from losing it.
We've owned our current home and remodeled the kitchen and bathroom but due to its size it hasn't appreciated as much as other houses on the market. Buying a bigger home seems like a worse idea by the day with the high rates and low inventory. I kind of wish we would have bought too much house when we bought the first time instead of buying a starter home.
Edit: I'll add our budget and income and you all can tell me if I'm worrying for no reason:
Combined income: $245k
Emergency fund: $40k
Debts: $1150 car payments
Large monthly: $1800 daycare
Max budget: $650k Down payment (all equity likely): $130k
We'll be using some of our savings and a 401k loan for the down payment and then recasting the mortgage/paying off the 401k loan after the sale of our other home.
If you feel that you'd be one layoff from losing the house, perhaps it's just too much to take on at this point? That sounds like a lot of stress. If I had to pick between a smaller home that I can afford, and buying a bigger place that puts me on a super tight budget, I'm picking the first option.
I also recently bought a starter home (1.5 yrs ago) that I've quickly "outgrown". But the fact is with current rates, it doesn't make a lot of sense financially for me(and probably many others) to "upgrade" yet.
The general rule is less than 28% gross income on housing. I've lived close to that 28% in an apartment and it was terrifying. We weren't able to build savings at all. A house? Absolutely not. Too many hidden expenses. Within the first year alone most homebuyers have a large expense. Then there's property taxes, surprise repairs, maintenance, etc etc.
I live in a middle tier neighborhood in a low cost of living city. Most of the houses are still selling within days on the market. I'd keep your starter home and build up your savings.
We have a good amount of savings, I'm just financially conservative. We have another baby on the way and no space so now is the time it seems. We aren't in a rush though.
Whether you can afford the house depends on a lot of factors, including
- how safe your job is ( is it two jobs that bring about 122 each in two different industries, or a single job in a risky industry for instance)
- when you plan to retire, which impacts how much you have to save / and how much you can spend today.
- your risk tolerance
- how much you have in your savings, specifically emergency fund, vs how much time it would take you to find a new job if you lost either of yours.
That being said, there are some points in your description that may be concerning:
- car payments seem high, but maybe you really enjoy cars and don't really spend much on other things, so it might not be an issue when looking at the big picture.
- Emergency fund seems low. If you borrow 520k to buy a house, your mortgage payments will be, with a standard 30 y and assuming you can get 6%, $3118. If you count that + the car payment, + daycare, it gives you about $6000 monthly. If you add other regular expenses such as food, bills, etc, and multiply by 6 months, you will likely get a number that is significantly higher than $40k for an appropriate emergency fund.
Now, maybe you have savings elsewhere. With such a high income, even if you spend $10k a month, that is still only half your salary so you should be able to save significantly. Six months from now your emergency fund could be doubled, and you would be in a better financial situation.
Hopefully that is helpful. It's hard to give a proper answer without all the facts, (but you obviously don't want to share all the facts with strangers). Those are some points you can consider when making a decision
If you're worried about layoffs you should know that 401k loans put you in a precarious position if you do get laid off. Not only would you lose your income but you would also need to repay the loan or else it becomes a taxable distribution with penalty.
This is my new account because vlemmy went caput. The 401k loan would be need to be paid off by next tax season as far as I understand. That's a non issue because the loan would be paid immediately after the sale of our home anyway. If I get laid off before we close on our new home then we don't close and I repay the loan. There's no situation where the loan would be outstanding.
If you're worried about layoffs you should know that 401k loans put you in a precarious position if you do get laid off. Not only would you lose your income but you would also need to repay the loan or else it becomes a taxable distribution with penalty.
If you're worried about layoffs you should know that 401k loans put you in a precarious position if you do get laid off. Not only would you lose your income but you would also need to repay the loan or else it becomes a taxable distribution with penalty.
If you're worried about layoffs you should know that 401k loans put you in a precarious position if you do get laid off. Not only would you lose your income but you would also need to repay the loan or else it becomes a taxable distribution with penalty.