Lots of details here, but I want to make sure everyone has the full picture before weighing in. I'm looking for an answer if this is a smart financial decision for me and my family.
Family Background/Income:
- I currently make $95K per year in a very stable position. Expected (not definite) to increase 10-20% in the next few years.
- My wife is not currently work and stays home with our new baby.
- After 401k (5% which maxes company match) and company stock plan contributions (10%), my after tax take home pay is $4400 per month.
- Current mortgage is $1450 per month.
- Other mandatory monthly expenses (car payment/insurance, student loans, cell phones, utilities, gas, groceries, household supplies) are about $2000.
- The rest of the monthly budget (~$900) is usually spent on non-essentials, such as shopping, restaurants, bars, home improvements, etc.
- Generally we have little to nothing left over each month, with our primary savings being from the stock plan contribution. I contribute roughly $800 per month at a 15% discount and I can sell after holding for 1 year. Company is extremely large/stable.
- We currently have about $80K available for a down payment on a new house after selling our current home, selling company stock, and combining with cash savings (leaving $15k in emergency fund).
House in consideration:
- Listed at $529K. Estimating we could purchase for $500k.
- Taxes are $14K per year. $1,165 per month.
- Down payment of $100k and estimated closing costs at $16K. $116K to close.
- $400k finances at 4.125% would be $1,939 P&I per month.
- Homeowner insurance estimated at $2,400 per year, $200 per month.
- House is 4100 sqft (current home 1500) with 10 acres (current about .25). Built in 1790. Estimated utilities and maintenance of an extra $200 per month over current bills (in northeast so high winter heating bills).
- Overall estimate of $3300 mortgage plus $200 extra in maintenance/utilities. Roughly $2000 over current payments.
The twist:
- Obviously this seems way out of our budget. $2000 over our monthly budget, and we're short $36k cash needed for the down payment/closing.
- The twist is that this is my wife's parents have offered to help us buy this house, as it is the house my wife grew up in.
- They have offered us $100k to help us buy this house. This would cover the $36K shortage to close and leave us $64K leftover.
- The $64k could either go towards the mortgage ($336K mortgage) or be used to cover the $2k shortage each month. Best case this buys us 3 years.
After our savings run out, our options are:
- My wife goes back to work.
- I'm making significantly more money.
- We ask our in-laws for more help.
- We sell the house (gaining very little equity).
Does anyone see anyway this makes financial sense? We think the offer of $100k would only really apply to this house as it has sentimental value. So if we decide against it we may be, giving that up.
TL;DR Considering buying a house with a mortgage $2,000/month over what we can afford. In-laws have agreed to give us $100k to help us make it work. Don't see how we make it past 3 years.
Submitted August 10, 2017 at 04:27PM by housingquestion2017 http://ift.tt/2vryhhc
