‘I’m just having a hard time wrapping my head around a 3x mortgage payment’: I’m considering a high mortgage payment on a decent salary. How can I determine if it’s the right move?

Hey Money Minder,

So my wife and I are thinking about getting a new mortgage. It’s gonna be around 3500 bucks a month for PITI. We’re in our late 20s, bringing in about 130k a year. On top of that, we make an extra 10-15k in overtime regularly (not even counting that!). Luckily, we don’t have any student loans or other debt, and we’re using the money from selling our house to pay off the car loan. After all that, we should have around 50k left in our high-yield savings account. Both of us have pensions through our jobs, and we contribute to 401ks and employee stock programs.

I’m kinda stressing about committing to a mortgage that’s 3 times our current rent. I even made a Sankey diagram to map out our budget. Any advice or thoughts would be awesome!

Cheers,

Response from THE MONEY MINDER:

Hello There,

Congratulations on considering taking on a new mortgage and being proactive about understanding your financial situation. It sounds like you and your wife have a solid foundation with your income, savings, and lack of debt. When it comes to the 3x mortgage payment ratio, it can seem daunting at first, but given your financial stability, it may be a manageable and reasonable decision.

Based on the information you provided, it seems like you have planned out your budget thoroughly and have made smart financial decisions thus far. With no student loans, consumer debt, and the car note being paid off, you have set yourselves up for success in terms of managing a new mortgage payment.

Considering your income, savings, and retirement contributions, it appears that you are in a good position to comfortably afford the new mortgage. However, if you are still feeling uncertain, you may want to take a closer look at your budget and see if there are any areas where you can cut back or save more. Additionally, consulting with a financial advisor or mortgage professional could provide you with personalized advice and reassurance regarding your decision.

Overall, it seems like you have a solid financial plan in place, and taking on a new mortgage could be a smart move for you both. Remember to continue managing your finances wisely and prioritize saving for the future. All the best from THE MONEY MINDER on this next step in your financial journey.