high mortgage?

[shelly3girls]

To the OP. I think if you describe the size and style of the house, people in your area may be able to give you a ballpark number of expenses including utilities which may really help your decision. Maybe you did it already and I missed it?

 

[mrsltg]

In reading this thread, and others like it, I realize DH and I have been so foolish. Who knew the secret to great financial success was pawning your kids off on family for free childcare as opposed to the $1000/per month, per kid for care!!!! Wow! This year we'll spend $24,000 in cold hard cash on childcare and private school. Next year, we'll add another $1000 to that per month. I guess I should ask my parents to move next door so I can stop paying all of this money and instead be wise and save it all!!!! Imagine what I could do with $36,000 per year in extra money?!?

I always find the 'high and mighty' is backed up by the cheap and free when it comes to finance. Every family has a different budget and every area has a different market. I would love to live somewhere where housing is 1/4 of what it is in the DC area. Unfortunately, our jobs, especially dh's, tie us here for a few more years. I would love to live somewhere where childcare would not surpass the cost of most people's mortgages. Oh well. I want my kids to have the best so I'm willing to sacrifice.

OP - keep your chin up and work through those numbers with your DH. I agree that kids get more expensive as they get older, however, it's not a requirement that your kid be on the travelling whatever team or that they need hundreds of dollars per month devoted to whatever activity they choose. Only you know what you are comfortable with. Good luck with your decision.

 

[holbear]

I can give you an estimate of an electric bill. It's not pretty. Since Pepco raised their rates 70% our bills are ridiculous. The past winter's months averaged $450-550 a month. Spring has been much better.. $250-$350. I'm afraid of what summer will bring..

We are in Maryland (Mont. county) in a 5 bedroom, 3400 sq. foot home. Our home is all electric. During winter I kept the thermostat at around 72.

 

[KelNottAt]

I can give you an estimate of an electric bill. It's not pretty. Since Pepco raised their rates 70% our bills are ridiculous. The past winter's months averaged $450-550 a month. Spring has been much better.. $250-$350. I'm afraid of what summer will bring..

We are in Maryland (Mont. county) in a 5 bedroom, 3400 sq. foot home. Our home is all electric. During winter I kept the thermostat at around 72.

Good information.

I'm a little closer to the OP and on BGE, like her. We're on budget billing and pay $210/month for 5,000 sq ft, all electric. When the rate increase kicks in, we'll be looking at $315 per month (I guess).

But, our reality may be irrelevant for her situation. Her RE agent has access to the seller's actual utility costs for past 12 months. Hopefully the house has been occupied so the data can actually be useful.

 

[abcboys]

Did anyone see on HGTV last night. The couple had 2 children 2600 sq. foot house and they said they were "outgrowing it". Oh brother. My house is smaller, I have 3 kids and we live very comfortably!!! They were either going to add on or move.

 

[barkley]

Good information.

I'm a little closer to the OP and on BGE, like her. We're on budget billing and pay $210/month for 5,000 sq ft, all electric. When the rate increase kicks in, we'll be looking at $315 per month (I guess).

But, our reality may be irrelevant for her situation. Her RE agent has access to the seller's actual utility costs for past 12 months. Hopefully the house has been occupied so the data can actually be useful.

we found that private parties can call local utilities and find out the average monthly consumption over the past year we did this on houses we were considering and figured in how our use would compare to the current owners (we had younger kids who would'nt be in the shower for hour long stretches-had smaller clothes that would take fewer loads of laundry vs. the teens that lived there ). what was realy telling was the water bills-if the house had realy beautiful landscaping you could tell the real cost of that upkeep in the months right before or when the house was on the market-those bills were often double or triple what they paid in previous months (when they were'nt trying to make it look it's best).

 

[crisi]

I haven't read through all the posts - got to about page five, so if someone has brought this up, forgive me.

Your hubby makes just over six figures.
You will be returning to work in the near future.

You are about to hit the point at which the IRS figures you are rich and you won't qualify (you may not already) for some credits. Then you'll hit the point at which your deductions are capped. And there is always the potential for AMT.

We got rid of our mortgage because our AGI is high enough to cap our deductions - we make them out in just paying state taxes and property taxes - the mortgage interest was doing us ZERO good as a tax deduction. We do make quite a bit more than you do (and I thought money was tight with two kids and a $1500 mortgage - so I think you are pretty much nuts - but then, we save quite a bit and I'm pretty fiscally conservative).

What this means is that your tax bill may be going up in the fairly near future - which may tighten your wallet just at the point at which you believe it will expand.

There is a point where taxes are really onerous - and in my opinion its somewhere just North of your current income - where you aren't really "rich" but you are "rich enough" for the politicians to start removing your credits figuring you really don't need an educational credit for your kids. It clears up when you get to the point where much of your income is taxed at lower capital gains or dividend rates (always subject to change at the whim of Congress) - but with three young kids and a huge mortgage, you won't be moving money into income producing investments to avoid the taxes any time in the near future - so you are going to be stuck in the hard spot tax wise.

 

[BellePrincessBelle]

In reading this thread, and others like it, I realize DH and I have been so foolish. Who knew the secret to great financial success was pawning your kids off on family for free childcare as opposed to the $1000/per month, per kid for care!!!! Wow! This year we'll spend $24,000 in cold hard cash on childcare and private school. Next year, we'll add another $1000 to that per month. I guess I should ask my parents to move next door so I can stop paying all of this money and instead be wise and save it all!!!! Imagine what I could do with $36,000 per year in extra money?!?

I always find the 'high and mighty' is backed up by the cheap and free when it comes to finance. Every family has a different budget and every area has a different market. I would love to live somewhere where housing is 1/4 of what it is in the DC area. Unfortunately, our jobs, especially dh's, tie us here for a few more years. I would love to live somewhere where childcare would not surpass the cost of most people's mortgages. Oh well. I want my kids to have the best so I'm willing to sacrifice.

OP - keep your chin up and work through those numbers with your DH. I agree that kids get more expensive as they get older, however, it's not a requirement that your kid be on the travelling whatever team or that they need hundreds of dollars per month devoted to whatever activity they choose. Only you know what you are comfortable with. Good luck with your decision.

I never said the child care I recieved was free. People assumed and we all know what they say about assuming something. I paid market rate but was able to have care at off hours. My mother is single and needed to have an income. So who's the high and mighty one. I made sound financial choices end of story. We still pay her well for housekeeping.

 

[barkley]

I haven't read through all the posts - got to about page five, so if someone has brought this up, forgive me.

Your hubby makes just over six figures.
You will be returning to work in the near future.

You are about to hit the point at which the IRS figures you are rich and you won't qualify (you may not already) for some credits. Then you'll hit the point at which your deductions are capped. And there is always the potential for AMT.

We got rid of our mortgage because our AGI is high enough to cap our deductions - we make them out in just paying state taxes and property taxes - the mortgage interest was doing us ZERO good as a tax deduction. We do make quite a bit more than you do (and I thought money was tight with two kids and a $1500 mortgage - so I think you are pretty much nuts - but then, we save quite a bit and I'm pretty fiscally conservative).

What this means is that your tax bill may be going up in the fairly near future - which may tighten your wallet just at the point at which you believe it will expand.

There is a point where taxes are really onerous - and in my opinion its somewhere just North of your current income - where you aren't really "rich" but you are "rich enough" for the politicians to start removing your credits figuring you really don't need an educational credit for your kids. It clears up when you get to the point where much of your income is taxed at lower capital gains or dividend rates (always subject to change at the whim of Congress) - but with three young kids and a huge mortgage, you won't be moving money into income producing investments to avoid the taxes any time in the near future - so you are going to be stuck in the hard spot tax wise.

i know several women who when they looked at the tax implications of going back to work (let alone the travel, childcare and other expenses) found they would be losing money in the household budget. i found it interesting when my first child was born-my employer was trying to cut costs and offered a voluntary time off program. we could cut our hours significantly but still earn ft benefits and leave time, retain perm. ft status for employer pension contributions... our cpa ran the numbers and pointed out how lowering my earnings would drop our tax rate, move us into a bracket where we could take advantage of the different credits we would'nt otherwise be eligible to-i lowered my work schedual to 50% and we saw more net income than when i worked full time (plus the daycare savings were incredible).


we got hit once with amt-that was enough for us

 

[hinodis]

My question to the OP is why is it so neccessary to have the "big" house and the expense to go with it. I moved to my area because of the "great" school district. Guess what??? My kids are in private schools. Turns out things really changed around here. Its an upscale suberb with a struggling school system. I hope your not measuring your success with the size of your home. We have an income over six figures. I live in a 2700 square foot home that we built and my payment is 840 a month with tax and insurance. I am building equity and I feel my home is a reat investment. I have a kid in college, one in private high school and one in private elementary. Thankfully we don't have to put all our money into our house. Life is full of financial surprises, best to be prepared. You need to think long and hard before you jump into this. Talk to people who are older and more experienced in life.

 

[crisi]

i know several women who when they looked at the tax implications of going back to work (let alone the travel, childcare and other expenses) found they would be losing money in the household budget. i found it interesting when my first child was born-my employer was trying to cut costs and offered a voluntary time off program. we could cut our hours significantly but still earn ft benefits and leave time, retain perm. ft status for employer pension contributions... our cpa ran the numbers and pointed out how lowering my earnings would drop our tax rate, move us into a bracket where we could take advantage of the different credits we would'nt otherwise be eligible to-i lowered my work schedual to 50% and we saw more net income than when i worked full time (plus the daycare savings were incredible).


we got hit once with amt-that was enough for us

Not for us. Its WAY better for us financially that we both work - just the 401k and health care benefit bump we get from both working - even if I took nothing home - but after taxes, commute costs (I can work from home in my jammies if I want), and childcare (which is almost done and now really cheap in comparision) I'm still taking enough home that we could live on just my income - which means we put a lot into savings - which is starting to pay off in more income coming from dividends, munis and long term capital gains (and less taxes). I think that for people on the financial edge of staying home (and are doing it for financial reasons - because if emotionally you want to stay home, that's a different and very subjective calculation) choosing to stay at home is often a good short term decision, but sometimes a bad long term one - you "Mommy track" your income and career, lose years of 401k contributions and matches that are going to sit around and compound for you, and increase the family financial risk in a recession if unemployment increases (or - nowadays - pretty much anytime someone wants to cut some costs).

But for the OP, she may plan on working and discover that the combination of after school care, commute costs and taxes (not necessarily even a higher bracket - just the loss of credits) may mean that they choose not to have her return to work, because certainly the numbers CAN work out that it doesn't add any value to the family to work. And if they are counting on the income bump to ease the budget in a few years - and don't get it - that may be a problem.

 

[jennilouwho]

I have had 3 friends spend 50 percent of their take home on a house and all three ending up in foreclosure. Two were because of very unexpectant layoffs. I personally could never take that risk.

I do think it's interesting to see what everyone thinks they "need" space wise. We have a 1600 square foot, 4 bedroom, soon to be 2 bathroom home and plan on having 3 more children in addition to the one we have. We can easily live in that with 6 people. My husband recently found a new job with a generous salary increase. We decided to stay where we are at so that we could have a nice retirement and so that when the kids are older, they will be forced to interact with us in our "small" house.

 

[jtoast]

okay I am freaking out we are about to buy a house. It is a big step up from our townhouse that we live in now it will double our mortgage. So my DH says it is a good move because in a few years he feels we will have less buying power so I trust him. .

If you have less buying power in the future that means that something has changed for the worse in your credit profile (paycut, even more expenses to increase utilization, etc). it makes no sense to me to say "I will be less able to afford it in the future so I better buy it now."

I personally would be thinking how can I reduce my expenses so that my standard of living doesn't significantly change.

 

[bigbabyblues]

You've gotten tons of advice, and I don't have any to add except what you've already done, think it through, talk to your DH and make the decision that's right for you and your family.

I can't believe how high home prices are for some of your areas! We live in a very rural area, about an hour to the nearest city, and it's a small one. Our house is 2600-sq feet (smaller than op is looking at, but still), full basement and 1-car garage with a nice-sized lot on a quiet, dead-end street, and it was only $80,000. That was huge to us at the time, our payment is just over $500/month. We don't have choice of public schools here, there is only the one set of district schools, but they aren't great. My ds goes to private school.

 

[barkley]

Not for us. Its WAY better for us financially that we both work - just the 401k and health care benefit bump we get from both working - even if I took nothing home - but after taxes, commute costs (I can work from home in my jammies if I want), and childcare (which is almost done and now really cheap in comparision) I'm still taking enough home that we could live on just my income - which means we put a lot into savings - which is starting to pay off in more income coming from dividends, munis and long term capital gains (and less taxes). I think that for people on the financial edge of staying home (and are doing it for financial reasons - because if emotionally you want to stay home, that's a different and very subjective calculation) choosing to stay at home is often a good short term decision, but sometimes a bad long term one - you "Mommy track" your income and career, lose years of 401k contributions and matches that are going to sit around and compound for you, and increase the family financial risk in a recession if unemployment increases (or - nowadays - pretty much anytime someone wants to cut some costs).

But for the OP, she may plan on working and discover that the combination of after school care, commute costs and taxes (not necessarily even a higher bracket - just the loss of credits) may mean that they choose not to have her return to work, because certainly the numbers CAN work out that it doesn't add any value to the family to work. And if they are counting on the income bump to ease the budget in a few years - and don't get it - that may be a problem.

despite the average cost of a moderate home in our area being 500k-the bulk of the women i spoke of in my post did not have the skills. education or opportunity to work in jobs that had great if any benefit packages at all. working for them was in retail, preschool teaching or other jobs that paid bare minimum wage at best (so it was a benefit tax wise-and not deterant if they had large employment lapses).

as for me-i worked in a profession that did have great benefits-but it was still beneficial tax wise to reduce my hours. the difference child care wise was (for 2 kids) $800 a month (and we were topped out on the day care tax credit many thousands below that), the tax savings for dh and i (because my reduced income bumped into a much lower bracket) was around 10% (not insignificant when you're talking the tens of thousands), add in being able to qualify for the base child care credit, the child deductions and all the the other tax credits/write offs that higher incomes are ineligilble for-i have to contend that saveing over $30,000 a year in taxes ends up being allot more than most people can comprehend earning on the best 401K account (best i ever got agressive-high risk was well below 20%-if someone's able to contribute and realize now or deffered that rate tax free i want to see the numbers).

 

[goofyforlife]

as for me-i worked in a profession that did have great benefits-

Me too... I have always held the largest corporate kinda job that gave great benefits while DH's career has been in smaller privately owned offices and the benefits cost $$$ for a family plan (and barely had dental or pharmacy coverage if at all)

i work for the county right now and benefits are what's really keeping me here. We even get a pension if we stay/put up long enough.

 

[photo_chick]

I am goign to chime in on school districts...... What is in general a great district can have "bad" schools within it. Around here people judge the schools and the districts by test scores (I strongly oppose teaching the test myself) MY DD's school is considered a "good" one, not excellent. THe district overall where I am is considered ok. It is not a bad district it is just very large and diverse and that gets you students at both end of the spectrum. Back to my DD's school... her school, and the middle school she will go to have outstanding GT programs and great teachers. Her school has a great principal and administrative staff too. THe high school is on par with the rest of the area, they also have a reat honors program in place.

ON the other end... what is considered one of the best school districts in the area has many drug and gang problems. BUt their test scores are great though! Houses run 20% more per sf there as well.


My point is I see a lot of people lately (not signaling out here, but the world in general) judging schools on paper... I don't think you can really do that. It is the staff and teachers that make the school. So if schools are a big priority in where you live I would go investigate the schools your kids will be attending yourself. ALso like others have said, what is great now might not be in a few years. Be prepared to move if that is an issue for you as well because all it takes for a school to go downhill fast is a bad principal.

 

[eliza61]

We are moving to Catonsville were are you guys located? It is in the Oak Forest area if you are familar. It is a five bedroom 600,000 house. Does that still sound like a high payment for a house around that price. My husband feels like rates and housing prices will go up and we won't be able to get the same kind of house for the price we can get it for now.

Depends on the house, my sister is buying a house in the fentonville MD area that is almost 900 K to rich for my blood but it is a gorgeous house. The price of the house is not really the issue, If you are uncomfortable with the payment. WAIT! #1 cause of divorce is no longer infidelity, it is money stress. even if you do "grow" into the payment, that won't be for 5 -10 years. That's a long time to worry over the house payment. Follow you instincts, talk to your husband.

 

[ceecee]

Be careful! Just because you qualify doesn't mean you can afford it. I would not want a 30 yr mortgage at that amount. We did a 15 and ours is paid for. That gives DH and I much peace of mind. Now we can save for retirement and college funds. We did a mortgage calculator that told us how much of a "house we could afford" Maybe if we bought nothing else! It was 5 times our mortgage at the time! There are articles in the paper all the time about lenders/mortgage companies that let people borrow more than they can afford. It's okay if you want to be house poor, of course ANY payment depends on your income and job security.