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Another can I afford a new condo

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  • Another can I afford a new condo

    Pondering upgrading our condo. As aggressive mid to late 40's DINK savers, we have accumulated roughly 2.5M (1.2 taxable and 1.3 retirement accounts with a 75/25 stock/bond ratio). Wife earns 182K salary as a health care professional (about 10 years into my career) and I am software dev manager earning 160K salary plus RSUs of $165k. We save 48% of gross ($83K into retirement accounts including employer match and 160K into taxable). Current 3 years into a 15 yr mortgage at 3% with a balance of 290K leading to a monthly payments $2911 (PITI) plus HOA dues of $800 and RE taxes of $5500. Our place is a 900 sqft 1 bed and 1 bath with deeded garage parking spot worth 800K with city view. Live in Seattle, WA state (no state income tax, but that could change as the politicians have been itching to start a city tax or state income tax). No debt other than mortgage. 1 paid off car.

    2 bed and 2 bath 1200-1800 sqft condos typically with 1-2 deeded garage parking spots with city/water views run $1.5 to $2M with HOA $1200-2000 and $10,000-20,000 annual RE taxes. Our condo should net us $430K and we would put down 20-25% and finance for 30 years. We would need to spend another $4000 to 5000 per month for housing and decrease our savings from 250K to 200K . Would it be better to tap into our taxable accounts and put down a larger down payment? 30 year conforming jumbos are around 3.25% in our area. We currently don't itemize but would be able to itemize with new condo.

    I will probably continue their way up the corporate later with a promotion pending next year which would increase earnings another $50K annually from RSUs and increase his earning ceiling. The RSUs raise would vest in 2021, golden handcuffs. Maxed at their current pay grade, next pay grade band goes up to $700K total comp. Our goal had been on cutting back to part-time/retiring in 8 years as we approach FI. This new purchase would require us to work an extra 3 years.

    Both jobs are as fairly stable. If one of us lost a job we could afford the monthly payments, but be house poor but still save 20%. We both work hard and want to enjoy life, but not risk our financial futures. Guess we are looking for balance and enjoying the fruits of our labor. Are we crazy to make this financial commitment so close to the finish line? Should we wait a few more years and accumulate more before making such a purchase? Would love your insights!!
    Last edited by IPA Guy; 11-21-2019, 08:48 AM.

  • #2
    Originally posted by IPA Guy View Post
    Pondering upgrading our condo. As aggressive mid to late 40's DINK savers, we have accumulated roughly 2.5M
    yup great, stopped reading there.
    do whatever.


    • #3
      If that condo makes you guys happy, go for it. It seems like you both wrote the post because you reference both your husband and wife in the post, unless you have some non-traditional arrangement. Just realize that this a major consumption item, even if it were to go up in value, it is a going to eat up a lot of your wealth with the high condo fees and taxes you are quoting (even after you have paid it off and have no mortgage, you will still be paying 1-2K per month in taxes and fees from which you will receive nothing for). That's one reason that I don't think that condos are good investments, a paid for house would be a better vehicle to accumulate net worth but I don't live in Seattle and know nothing about city living. I'm sure the shorter commute probably balances out having to pay for condo fees. If I were you, I would spend down my taxable acct to the point where you could afford a 10-15 year mortgage, you don't want to be still paying for a mortgage in your 70's combined with having to pay the high taxes and condo fees, it will prevent you from retiring safely at a decent age.


      • #4
        Last edited by 28mm; 11-23-2019, 01:16 PM.


        • #5
          Yes you can afford it. Great position and savings rate. The end game is a little foggy here. Retire in 8 yrs(or +3). But it still leaves you with a long time on the mortgage. If your plan includes retiring the mortgage as well, then it makes sense if you planned to stay there. Work three more to live in your nesting place is perfectly fine. If you still had 20+ years on the mortgage, that’s a different story.


          • #6
            You can afford it. Just a little foggy on the mortgage and end game. Retire in 8 (or +3).
            Are you planning on retiring the mortgage in your calculations? The fog is on this end, not in Seattle. It’s never cloudy in Seattle is it?
            From your calc’s , better place is it worth 3 years is purely your choice.


            • #7
              Thanks for all of your thoughts. We are guessing the additional 3 years of work we would save enough to pay off the mortgage. We can see staying in Seattle, but we do love southern Cali.