Hi everyone!
[TL/DR] - Skip to the bold section!
Been a long time follower in MMM, well not a long time but for about 6 months. My girlfriend and I are in a bit of a dilemma right now regarding housing.
I'm 25 this year, working for a large tech company for the last year as a contractor(my whole tech career - 5 years - has all been contract work). I am on track to becoming a full time employee at this company(my aim is to be a FTE). I make under 50k a year right now, however from the start of my career since living in Seattle(5 years now), I have seen over 70% increase in wages. If I do get FTE, ill see another 60-100% increase in wages. I have no college education, however I am very tech savvy and am motivated to learn and do well, so anything above what I make now I feel is just gravy.
My girlfriend just graduated college for nursing and has gotten a job at Seattle Children's hospital. She hasn't started working yet, and will be starting end of August. She will be making more than I will(at current rates), however she currently has no income until she starts working. This means we are living(and have been for the last 4 years) on pretty much my income alone. In the last 2 years alone, I have seen just over 30% increase in wages. Since the increase, the GF hasn't taken money from her parents for food, rent/misc things and has relied on me to support both of us. She does have a large savings account(in stocks), and has given me some funds to help pay for rent and cover food costs. This large savings account has not only helped support me and her for her share of cost of living, but has pretty much supported her during the summers when she's out of school.
Once she starts working, our combined income will be above/about 100k a year. Not bad for a couple at our age in my view.
Now that I've gotten our current financial state out of the way, onto the real questions and breakdowns
Currently we have a large savings account(above what our combined income will be) that is heavily invested in the stock market. Once the GF starts working, we are considering about buying a house however I am reluctant to say this is a smart decision.
We have one car, a 2002 honda civic. I try to hypermile as much as I possibly can, the car is fully paid off so our only expenses are gas(about 25 bucks bi-weekly). Insurance is currently covered by the GF's parents.
Based on a combined income of $100k - a savings account say of $120k(returning roughly 15%/year) and a potential house valued at $450k, we would be looking at putting down $90k at 20%.
This means if we had $120k in stocks(savings), we will have a remaining amount of $30k left over after purchasing the house(if the closing cost and everything equaled $450k) and a mortgage payment $2,187.45(based on mortgagecalculator.org), or $1,701(based on Zillow.com) per month for a 30 year mortgage.
Potential Mortgage payment(excluding tax/insurance/repairs):
$2,187.45 x 12mnths = $26,249.4
$1701 x 12mnths = $20,412
Current Rent & Parking:
$1495 x 12 = $17,940
$125 x 12 = $1,500
Total: $19,440/year for renting
The dilemma that I am trying to figure out is, paying an extra 6k/year towards a mortgage payment & taxes/insurance, say another 6k, so a total of 12k(feel free to correct me on this!) per year on top of the base mortgage payment?
We are seeing roughly $200/year increase in our rent, and based on the current housing market in Seattle, it likely that rent will continue to be on the rise due to tech companies moving into the area. We also are seeing house prices sky rocket due to the lack of number of homes for sale.
SO! What do we do? We live in downtown, about 30 minute walk from my office, and about 10 minute walk to the shuttle for the GF to get to the hospital. I hate paying rent as I dont see anything really come out of it, yet spending $90k on a downpayment + having a higher monthly payment also doesn't seem attractive. If we buy a house, our savings account will drastically be reduced, and in a market where stocks are at an all time high, i'm tempted to say that pulling the cash now is a great time, however if the market falls, i'd suspect the housing market to fall as well, which means either way we will be down.
So any advice, from people who have more experience that we do would be great!