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Discussion Starter #21
Okay, I make about 60K gross per year, which is about $3800/mo after tax.

Cost of home is 800K... down payment @ 60% down is 480K, which gives a mortgage of 320K @ 1.99%.

Monthly payment: $1354
Property tax: $300
Utilities: $150
Insurance: $50
Cable, phone, etc: $125
Maintenance: $200 (I can do most things myself)

Total: $2179
 

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Okay, I make about 60K gross per year, which is about $3800/mo after tax.

Cost of home is 800K... down payment @ 60% down is 480K, which gives a mortgage of 320K @ 1.99%.

Monthly payment: $1354
Property tax: $300
Utilities: $150
Insurance: $50
Cable, phone, etc: $125
Maintenance: $200 (I can do most things myself)

Total: $2179
How much do you currently have saved up for the downpayment?

Is this a house you're looking at buying? Can you rent a portion out?

Have you considered a 30 year amortization vs 25?

A further examination of your situation is obviously required, but don't be surprised to learn that you might be better off to put down less, have money for emergencies and living, and the rate of house appreciation outpaces the house carrying costs. The numbers work out even better if you're no longer paying rent, and instead having a renter help. Not to mention you could be eligible to deduct certain expenses as you claim the rental income.
 

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Okay, I make about 60K gross per year, which is about $3800/mo after tax.

Cost of home is 800K... down payment @ 60% down is 480K, which gives a mortgage of 320K @ 1.99%.

Monthly payment: $1354
Property tax: $300
Utilities: $150
Insurance: $50
Cable, phone, etc: $125
Maintenance: $200 (I can do most things myself)

Total: $2179
Putting your mortgage on 30 years gains you an extra $50k. For roughly the same payment, you would obtain a mortgage of $370k so DP would reduce to $430k.

30 years may seem long, but you have more cash on hand. As you save more money, take advantage of prepayment options and apply extra cash to your capital which automatically shortens your amortization. As your income increases, you can double-up payments, apply accelerated payments or increase your payments - all dramatically reduce your amortization.
 

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Discussion Starter #25
James, I have looked but it seems like renting would cost just as much as (or possibly more than) buying. Houses in the Fraser Valley seem to rent for between $2200 and $2500 a month, at the low end. Perhaps you could find something for less, but there would probably be a good reason for that.
 

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Discussion Starter #26
I didn't consider the 30 year mortgages as not all banks offer them... but I agree, that is something I could look at. Definitely seems to change the math a bit.

I have about 440K saved up...
 

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I didn't consider the 30 year mortgages as not all banks offer them... but I agree, that is something I could look at. Definitely seems to change the math a bit.

I have about 440K saved up...

You have a tonne of runway available. You're just not considering your approach correctly.

Call up a mortgage broker your friends and family might recommend. You'll be surprised by the number of options available to you.
 

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James, I have looked but it seems like renting would cost just as much as (or possibly more than) buying. Houses in the Fraser Valley seem to rent for between $2200 and $2500 a month, at the low end. Perhaps you could find something for less, but there would probably be a good reason for that.
You'll be spending almost $2200 on monthly costs if you buy (although part of that will be principle), PLUS spending 480k on the downpayment. 480k is the equivalent of $1600/mo using the 4% rule. So your rent would really be $600/mo if you count in the fact that you don't have to spend the 480k. I know you'll get back the 480k eventually when you sell the place, so it's not entirely a fair comparison, but it is something to think about. That 480k will keep compounding in investments if you decide not to buy.
 

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I didn't consider the 30 year mortgages as not all banks offer them... but I agree, that is something I could look at. Definitely seems to change the math a bit.

I have about 440K saved up...
I don’t know any bank that doesn’t offer 30 years. The only time it’s not offered is if you are putting less than 20% down.
 

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Discussion Starter #30
My bad... I was lead to believe that they are less common than they perhaps are. For some reason, Tangerine won't let me enter 30 years no matter how big of a down payment I enter.
 

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Tangerine’s calculator is not very complete. I guess they figure most people put less than 20% down so not to get anybody's hopes up, they limit the calculator to 25 years.

Most other calculators include loan to value so you will get the option to change amortization accordingly.
 

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James, I have looked but it seems like renting would cost just as much as (or possibly more than) buying. Houses in the Fraser Valley seem to rent for between $2200 and $2500 a month, at the low end. Perhaps you could find something for less, but there would probably be a good reason for that.
That sounds like a pretty good deal to me. A whole house?

To me that sounds attractive versus buying and taking on a big debt. Plus all the maintenance costs, transaction friction (buying & selling), property taxes, plus being stuck in the place with no ability to ditch it if you don't like it. And did I mention the weight of having a mortgage?

As @Spudd mentions, if you rent, then you also have a massive amount of money that can be invested. And you can actually invest it in a diversified portfolio, instead of pumping it all into a single house.

I think you might be underestimating maintenance costs at only $2400 a year. It costs a lot of money to maintain a home due to occasional but guaranteed major expenses. It doesn't necessarily happen in the first year or two, but eventually you get dinged by those and I think they average out to a lot more than $2400 a year based on what I've seen with my family's properties.

Both paths are valid -- doable -- but myself, I would rent the house at $2200 - $2500 and keep investing my money, and not take a mortgage. Though I will admit a big factor here is what I think I can get from my investments, and my comfort with market investments.

If you ask anyone in banking or lending, they will of course tell you to get a mortgage.
 
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