Tuesday, May 17, 2016

Keeping Up with the Joneses - Part II

Earlier, I wrote about some of my friends and co-workers whose house purchases have caused me to suffer house envy.

Next on the list, Jessica and Tony.  Jessica and I used to work together and she and I are in the same industry.  Tony works in the engineering field.  They do not have any children together, Tony has children from his prior marriage and just recently concluded his support obligatins.  They live in the same county we live in.

Last year, they built a home that cost more than a million dollars.  The home is more than 5000 square feet and has four bedrooms along with a pool.  Taxes on the home are $20,000 a year.  They have a $1.1 million dollar mortgage mortgage.  Carrying costs, assuming 30 year mortgage and not including insurance costs (which in Florida are expensive), are $7000 a month.

As a comparison, taxes on our home are approximately $3500 a year.

Also, when Jessica and Tony sold their prior home they lost $125,000 on the sale.  They had bought pre-recession and the value of their prior home had not yet fully recovered.

What do you think about this type of real estate purchase?  On the one hand, Jessica and Tony have a gorgeous home in a great location.  On the other hand they have a $1.1 million dollar mortgage and that type of debt would keep me up at night.


Anonymous said...

How do they manage to pay this sum? I can't imagine. My husband and I want to buy a house but the perspective of paying thousands of dollars for twenty years makes me nervous. I am from Germany, and as far I know it is a good time to take out a loan here now. According to https://tranio.com/switzerland,japan,finland,germany,luxembourg/analytics/top_5_countries_with_the_lowest_mortgage_rates_5108/ Germany even holds the forth place among countries with the lowest mortgage rates this year. But I am so scared…

Anonymous said...

I think I used to be a member of the house envy crowd. However, I have learned of a doctor with a 5 million plus portfolio, $600,000 income living in a $600,000 home and another doctor with a $500,000 plus income living in a $680,000 home. This makes me feel house poor, like we spent too much for our much smaller income.

I would be very nervous with a million dollar mortgage. It seems like your friends are mature as the husband has grown kids. I prefer having our home paid off by retirement.

I have in-laws in a scary, scary million plus mortgage situation. They took out a million plus mortgage back in 2007. Their home dropped more than 1/3 in value. Wife has a good pension so they will be okay financially. One problem, they took out an 80/10/10 mortgage. The 10% second mortgage is a recourse mortgage, so it looks like they may have debt even after a foreclosure. Any ideas on what they should do? I have been searching for anything that can help them.


Anonymous said...

It blows my mind that 2 people without kids think they need a house that size. And to choose to be deep in debt to have it. Wow.

Sam said...

They don't have kids together, but Tony has two kids from a prior marriage. I'd assume they would want space for when the kids come to visit. One is in college and one is graduated from college.

kongponleu88 said...

this blog is great......
Please Click Here this post
Please Welcome to Casino online All Games
Wish all u Good Luck
Thanks You!!!

Jenna Catlin said...

I cant wait to read the next part. I am anticipating it greatly.
discount celtic woman tickets
celtic woman tickets online