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How much house?

Home Mortgages and Home Buying How much house?

  • Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3032
    Joined: 09/18/2018

    •First year out
    •Expect to make $250k
    •No guarantees

    You are just beginning. “Expect” and “wants” are being confused by the “Trust”. Reality is you are talking about spending future earnings with a false sense of security, using your Trust as collateral. Rent what you actually need for your family, get your earnings ramped and go from there. Your life will be better served if you plan on building the Trust rather than spend it. It’s not large enough to support a family nor replace your earnings.
    I don’t mean to be harsh, but you need to make your own way. Buy a house when you have earned your way. You goal is to build your financial security, the Trust is a head start.

    Avatar hightower 
    Participant
    Status: Physician
    Posts: 1485
    Joined: 12/07/2016

    It’s going to be tough to do, but the best course of action is to wait about a year after you’ve started your new job and make sure that it’s going to be a good fit.  It may seem like a perfect job now, but you’d be surprised how much that can change after working with a new group for a year.  Not only that, but you need to have a solid understanding of what your salary will actually be moving forward.  You don’t want to count your chickens before they hatch.

    As far as how much house…I would still stick to the 2x your income for the size of your mortgage.  So, if you end up making say 350k a year? then you can afford up to a 700k mortgage.  Meaning with a proper 20% down payment you can shop for homes in the 900k range no problem.  Anything more expensive than that would require a larger down payment.  I like this rule because it prevents you from putting too much of your net worth into a home.

    As you’re aware, you are very fortunate.  You’re starting your career as a wealthy individual.  It takes most of us many years to hit 1 million net worth (I’m still not even close, lol).  It’s great you’ve found this site because following the general conservative mindset here will help you remain wealthy for the rest of your life.  Congrats and let us know what you decide!

    #233961 Reply
    Liked by artemis, hatton1, Tim
    Avatar BCBiker 
    Participant
    Status: Physician
    Posts: 235
    Joined: 01/10/2016

    Easiest and most common mistake people talk about on here is buying too much house at the wrong time. My spouse was excited to shop for houses 6 months into my attending job. When we looked at change in cash flow, the value for the sacrifice didn’t make sense for us.  I don’t think you will have the same cashflow issue if numbers pan out from job but $1M houses are expensive (far beyond the mortgage) and the longer you own one, the more expensive it will be. No one needs one and once you have one it probably won’t increase your happiness as much as you expect it will. You will retire wealthy either way most likely as you are 80-90% there before you sign your first attending note.

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    Why do you say he’s 80-90% there? I would say he just started the first quarter and is up a touchdown.

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    He is on this website. If he were on the Maserati forum, I would drop that to 30-50%

    #233999 Reply
    Liked by Tim, Vagabond MD
    Avatar SLC OB 
    Participant
    Status: Physician
    Posts: 559
    Joined: 06/23/2018

    Why are you buying your forever home right away? Maybe get a starter in the 650-750 range. What area do you live in?

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    I initially thought my forever home would be my current 7500 sq footer. Kids likely to move out for college next 2-5 years.

    Now I would be thrilled if it was a 1500 sq footer. No pool. No landscaping. No more stuff. Minimal hassles.

    Trying to get the wife on board…struggling. I may never get into my forever home.

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    I agree with the sentiment entirely but would only change 7500 to 3500 for my own circumstances. It’s going to bet tough to get my wife to downsize.

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    Funny that it seems to be the “wife” that wants to stay in the larger home….

    I have to say, being the “wife,” my motivation to stay in the bigger home would purely be the adult children having lots of space to bring their partners/children/families back home for visits. My kids are still at home but that would be my only motivation for staying in a larger home…. however it would be a STRONG motivating factor that would make my poor husband have lots of house projects on a home way too big for the two of us! 😉

    #234003 Reply
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3471
    Joined: 01/21/2016

    @SLCOB

    My wife has similar concerns, this hypothetical future, 10 years from now: our two kids are married and each have three kids, and everyone comes in from out of town to our house for Thanksgiving. I think that there are many solutions to this that do not require holding and maintaining a home that is twice as large as we will need as empty nesters.

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3032
    Joined: 09/18/2018

    Empty nester problem:
    What do you do with 7 TV’s when you downsize?
    Not one of them match, so I can build one of those walls that is so impressive. Seven football games at the same time!
    Sometimes we keep rooms to collect stuff. My wife is a “closet hoarder”, closets can hold a tremendous amount when not being used for clothes.

    #234080 Reply
    White.Beard.Doc White.Beard.Doc 
    Participant
    Status: Physician
    Posts: 936
    Joined: 02/06/2016

    The details of your new job are a very important part of the house buying decision.  A large percentage of new docs do not end up staying at their first job as living that first job ends up being quite a different reality than interviewing for that first job.

    If your crystal ball is 100% accurate that the new job is going to be great, then you are ready for the house purchase.  If the new job is a bit of an unknown, like just about every first job, buying a house now could wrap the anchor of 100-200k in potential losses around your neck if your new job is not what it seems.  And caution with non-compete clauses if you are a homeowner.  I have seen the non-complete clause lead to family and real estate disasters with forced sales/moves against everyone’s will due to the need to earn a living.

    To me, the potential job risks seem much greater than potential housing risks, but these two issues are intimately intertwined in your circumstances.

    #234088 Reply
    Avatar fasteddie911 
    Participant
    Status: Physician
    Posts: 304
    Joined: 05/31/2016

    Wait and see.  Why are you committing to the area for 10yrs?  You don’t know how the job will pan out, if you’ll like the area, or life throws you a curveball.  Wait a year or so, let that 1M grow, then re-evaluate.

    #234242 Reply
    Avatar mjohnson 
    Participant
    Status: Physician
    Posts: 49
    Joined: 05/05/2019

    Keep in mind the costs of furnishing the home when buying. It is easy to make due with current sofas/beds, etc when renting but after buying we need (want) to update all of that as well. Also, maintenance can have unexpected, high costs as well.

    #234246 Reply
    Liked by wa2106
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1823
    Joined: 02/11/2019

    My furniture is still a hodgepodge of crap from family and Craigslist. I am 4 years out of training and the only matching sets I have is our bedroom and very recently a living room.
    If you are the type of person who cannot make do with what you have it can get very expensive to furnish a house.

    “Never let your sense of morals prevent you from doing what is right.”

    #234250 Reply
    Avatar artemis 
    Participant
    Status: Physician
    Posts: 588
    Joined: 12/02/2016

    Keep in mind the costs of furnishing the home when buying.

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    And it’s not just furniture.  Don’t forget snow shovels/snowblower (if you live in a snowy area), lawn mower, garden tools, hoses, 6′ and taller ladders, basic hand tools, etc.  Renters usually don’t need or have any of that stuff, but homeowners do!

    #234550 Reply
    IlliniGopher IlliniGopher 
    Participant
    Status: Physician
    Posts: 104
    Joined: 05/03/2017

    I bought a house 2 years into my job.  I have been at my job for 5 — going to stay 20-30 years.

    That said, why rush when you don’t have kids yet?  RENT!  As a parent of a 2 year old, we are already thinking of moving 3 years from now.  Similar to liking your job — family planning can change your home needs.  Good luck.

    "Comparison is the thief of joy." - Teddy Roosevelt

    #234566 Reply
    Avatar Gamma Knives 
    Participant
    Status: Physician
    Posts: 169
    Joined: 06/25/2017

    I always find it a bit disappointing when someone creates an account and a thread and then seems to disappear shortly after. FWIW (if poster is still reading) I would definitely agree with the advice of waiting year for the reasons described by previous posters.

    #234761 Reply
    Liked by Peds
    mkintx mkintx 
    Participant
    Status: Physician
    Posts: 58
    Joined: 01/08/2016
    My furniture is still a hodgepodge of crap from family and Craigslist.

    Click to expand…

    Our living room furniture is 14 years old, and has definitely seen better days.  My spouse notices this and is bothered by it.  I only notice when it is pointed out.  We all have different priorities!  The thought of shopping for and buying furniture fills me with dread.  Reason enough to never move or buy a big house, lol.

    #234797 Reply
    Liked by Lordosis
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2484
    Joined: 08/01/2016

    I am in residency with one year left, starting to look at housing for next year. Will be paid as a percentage of production but am told it is reasonable to expect income of ~$250K to start, with the expectation for significant growth over the first five years. I am married with kids, and we are extremely fortunate. We have zero debt, and have net worth of ~1M in assets through a family trust. We want to move to an expensive area and will commit to staying for at least 10 years.

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    I could have sworn that when the OP posted his occupation was listed as Resident, Dentist, on the left side. I assumed both were the same but could have been a resident married to a dentist. Now that status has disappeared. Or I am starting to have delusions.

    In any case, one other point I wanted to make was that the selling of assets might trigger taxes, especially capital gains. Instead of spending it now why not let it grow and be used for OP’s retirement or children’s education and he/she could like like a resident and save for mortgage over a couple of years. This might teach him money management and budgeting early in his career.

    #234802 Reply

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