Hello all,
I'm trying to decide whether or not to buy a house with my girlfriend. My details:
Me: Salary $80,000, take home of $4,600/mo. Zero debt. $2k in cash savings, $10.5k in 401K. Currently saving at a rate of $2-2.5k+/month.
Girlfriend: Salary $52,000, take home of $3,100/mo. Car loan of $9.5k, being paid at $850/month.
Current rent: $1,650/mo.
We are looking to buy a house worth <= $200k, which we would finance on a 30 year mortgage. Each month, we would pay an extra $1k to the principal, resulting in a payoff period of about 10 years. As far as I can tell, doing this is better than saving for two years, even with mortgage insurance and initial high interest, because rent is so expensive (we currently pay $1650/mo, and the best we could do in our area is around $1,250/mo).
I've attached a spreadsheet with my calculations. It includes a NJ first time home buyer grant, and I was hoping to buy without dropping any cash by negotiatnig closing costs into the sale. Please let me know if you spot something stupid I've overlooked. Keep in mind that my plan is to get a 30 year mortgage and just pay it off at a 10-year rate.
Now, once we buy a house, under this plan our savings profile will change from basically stashing $2k a month in cash and paying off $850 of car debt a month to stashing $1-1.5k a month in cash and paying off $850 of car debt a month.
My biggest reservation is that we are pretty cash poor currently. Should we delay buying until we have saved a minimum amount in cash and paid off the car? Or should we go ahead and buy right away to minimize the cost of rent?
I am also interested in general feedback on this plan. Maybe it's stupid to be putting such a high percentage of my savings into home equity?
Thanks all!