4M house purchase
Thinking of buying a 4M house in the Bay Area. It’s nothing luxurious, just like a regular home anywhere else. We’re drawn to it due to short commutes and good schools.
Here are our financials
Net worth - 10M
Breakdown
Brokerage - 7.3M
Cash - 1.3M
401ks - 1.4M
Income
Base - 550K combined. This will continue
Variable - 2M (this year). Assume 0 for next year onward for job optionally.
Our non-housing spending is about 100K a year now, but we have a kid on the way. Late 30s
To fund the 4M house we’d put down 1.3M cash now, use this years variable pay to pay down another 1M so in a year we’d be left with 1.7M mortgage and 2.3M in.
But even that has 15K+ a month burn at 5% interest. Seems crazy to be spending that. Even fully paid of it’s a 6K a month burn.
Just wanted to get a quick vibe check of the buyer profile here for these homes. I am wondering if we are overdoing it.