Buying too much house?

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Chrisk327 said:   I say if you're building it, might as well build with a basement. I don't know how costly it is in NC, but here in the northeast, the delta in price basement vs no basement isn't huge and would be certianly less than a garage.

I think it comes down to what you want to do. Lets be honest here, none of us are paying your bills. you'd be more comfortable monthly paying for a 300K house, and less so paying for a 600K house. It is certianly doable. I currently have a bigger loan with more in taxes and a similar paycheck. On the other hand, If I was living in a lower cost area than I am, I would definitely be looking much cheaper than what I have, but my situation is for my own thread.

I don't think its a terrible decision, however is your wife definitely going to work once you have kids? should you be factoring that income in completely? If there were nice housing stock in the 300K range, I'd probably be more inclined to go with that, however, the reason why I would say you'd be OK, are taxes don't seem bad, and you have 20% down and cash reserves, with those, I'm thinking you can handle it, if that was what you wanted to do


No real frost line issues in NC, so many track developers build slab on grade to minimize excavation costs. 99% of the basements here are walk out, built because the lot is on a severe slope and you actually need to do some digging. So within a particular sub-division a developer will have a batch of sloped lots slated for basements and another batch that are either slab on grade or short walled crawlspace.

toddpublic said:   This is a track builder, there's just a few plans to choose from and that's it. There's a smaller floor plan that is a possibility and would be around $25k less. My wife wasn't thrilled about the layout but this may have to be one of those "it's this or nothing" situations.

Does the neighborhood have any resales or already built spec houses the builder is looking to sell quickly? (you may be able to leverage down the price) Also, are you currently working with a realtor? If not, try to find one who will rebate part of their commission to you? [I believe Redfin has now opened up shop in NC]

cheapdad00 said:   Does the neighborhood have any resales or already built spec houses the builder is looking to sell quickly? (you may be able to leverage down the price) Also, are you currently working with a realtor? If not, try to find one who will rebate part of their commission to you? [I believe Redfin has now opened up shop in NC]

They don't have any already built inventory, it would have to be built for us. Yes, we're working with a realtor who's a friend of ours, so that's a possibility.

Have you considered keeping your current house and just finding some shop space to rent until you have a family?

Haven't really seriously considered that. Ultimately, there's more motivating this move than just me having some shop space. Right now we have a 1-car garage and 3 cars, it'd be nice to have some more room there so my wife can park indoors. We'd like to have some more yard space so my wife can do the gardening she wants and the list goes on.

toddpublic said:   Haven't really seriously considered that. Ultimately, there's more motivating this move than just me having some shop space. Right now we have a 1-car garage and 3 cars, it'd be nice to have some more room there so my wife can park indoors. We'd like to have some more yard space so my wife can do the gardening she wants and the list goes on.

Yeah, but what you are talking about is buying a 1,000 square feet more of house than you'll ever need -- that's the problem.

Can you afford it? Unquestionably yes.

Can you afford it AND work toward early retirement/financial independence? Probably not given current circumstances.

So, just depends what your long-term goals are.

I think it's perfectly fine to have a 3300sqft home. If you can afford it, if it fits your needs, and you will be staying there for at least the next 7 years or so, go right ahead. Only you can justify the "value" of living in such a home with its amenities.

If this is your forever house, and you can afford it, do it now. Don't worry about the naysayers. You have to spend your money somewhere. You won't use anything as much as you use your house. Don't have regrets on this.

I am speaking from experience after just finishing my house <6 months ago.

JaxFL said:   3300 sq ft is a lot of house for even a family of 4. It really depends on the lifestyle, the area, etc... In our area, only old starter houses have 2,300 sq. ft.

I certainly agree that the OP should purchase what he wants, needs and can afford, but I would just stay away from suggestions that 3,300 sq. ft. is something extravagant.

toddpublic said:   I've read that your housing expenses should not exceed 28% of your monthly gross incomeBy the way, it's a little more nuanced than that. In general, the DTI (Debt to Income) ratio needs to be somewhere in the 32% to 36% to be considered "safe." Lenders generally assume that 28% of that will consist of the housing expense and the rest will be comprised of other revolving debt, such as car payments, credit card bills, student loans, etc.... In other words, if you are otherwise debt free, from the lenders' standpoint it doesn't matter if your housing DTI takes up the entire 32%-36%. What it's also saying is that if you are otherwise completely debt free, a housing DTI of 28% is actually very, very conservative.

As others have already correctly pointed out above, the whole 2.5-3 times your gross annual income metric is a very crude approximation, as it fails to take into account critical factors such as interest rates, downpayment size, property taxes (depending on the area, there can be an enormous swing in property taxes), etc... It has always had very limited applicability but has an especially limited applicability now when interest rates are this low. Under this 2.5-3 times your gross annual income metric, a person putting 3% down, getting an FHA loan with its MI and barely qualifying under its DTI guidelines is looked upon exactly the same as the person putting down 50%, getting a conforming loan and having DTI ratios that are half as high as the permitted ratios, even though the default risk associated with the latter is not even in the vicinity as that of the former.

stanolshefski said:   toddpublic said:   Haven't really seriously considered that. Ultimately, there's more motivating this move than just me having some shop space. Right now we have a 1-car garage and 3 cars, it'd be nice to have some more room there so my wife can park indoors. We'd like to have some more yard space so my wife can do the gardening she wants and the list goes on.

Yeah, but what you are talking about is buying a 1,000 square feet more of house than you'll ever need -- that's the problem.
Technically, very few of us really need all the space that we have. There are plenty of people around the world who have just a fraction of the square footage that's enjoyed by even some of our most poor folks out there. Hence, I think that the question is whether the OP wants it and, if so, whether he can afford it as well as whether it's a good value in his eyes.

Hi everyone,

Figured I'd post an update for those of you who might be interested. We decided to build with this developer but went with a different floor plan that offered all the same basic features we wanted but is sized at 2625 square feet, not including the basement. Price came to $420k. While I'm sure we could afford $450k, I feel more comfortable at this price. Plus, it'll allow us to do 25-30% down and have more spending money each month.

Thanks again to everyone who replied, it was all very helpful.

my general rule is, if one of you loses your job, can you still afford to make payments comfortably?

Besides the potential for job loss, or voluntary job quit to raise kids, there's also the spectre of divorce that lurks in about 50% of the marriages today. Consider that for a lot of us boomers, our parents raised us in houses typically around 1500 sq. ft. and we came out OK (most of us anyway) 2500 sq. ft. would have been considered BIG.

I'd think about a slightly smaller home than 3300 sq. ft. due to the above, and the much higher utilities and housekeeping that go along with a big home.

ledwards said:   Consider that for a lot of us boomers, our parents raised us in houses typically around 1500 sq. ft. and we came out OK (most of us anyway) And prior to that people used to live in caves and hunt for food.

In all seriousness though, I don't think that anyone is arguing that it's impossible to live in a much smaller house and still be very happy. Instead, I think that the discussion is over the amount of additional comfort that the extra square footage might provide and what the OP can afford.

Keep in mind I updated the thread a few days ago letting everyone know we decided to build with this developer only we're now doing a 2,625 sq ft house, which I think is very reasonable.

Thanks again for everyone's input.



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