‘My offer has been accepted for a home, but am I stretching too much?’: I want to ensure financial security if my wife stops working. How can I make this work?

Hey Money Minder,

So, I make 100K, the wifey brings in 60K. Got one kiddo and aiming for a second.

After all the deductions, I take home $4600/month, not counting my wife’s moolah.

Living in a 250K crib with 75K overdue. I’m thinking of renting it for 2K a month.

Got 100K in the 401K, plus 30K spread out in HSA, ROTH IRA, and stocks. And then there’s 90K in CD for a down payment, with an extra 40K stashed away for emergencies. Maxing out that 401K like a boss.

Snagged a 385K house with plans for a 90K down payment. Looking at a $2,675 payment per month for this baby, including insurance and taxes, at 5.85% interest with no points.

Only debt is $465 left on my car, which will be history in a year.

If the wife decides to quit her job after baby number two, can I handle the mortgage just with my salary and that sweet rental income?

Looking to manage the payments solo and throw in 10-15K extra each year from the wife’s paycheck, or maybe restructure for lower payments as long as she’s working.

Any red flags you see with my plan? Would love your advice.

Edit: Huge thanks for all your feedback. Just to clarify, wifey isn’t planning to quit anytime soon. She’ll keep at it unless circumstances change drastically. I just want to make sure I can handle the mortgage on my own. She’d only stop if we decide against daycare for the little one.

Also forgot to mention a side gig bringing in 20K a year, and pops is gifting 25K for that down payment in January. Going to use it to adjust the loan for more comfy payments.

Testing out the rental game because I don’t want to ditch that sweet 3% mortgage with just 75K left to pay off.

Later Money Minder!

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the initiative to plan ahead and seek advice on your financial situation. It’s great that you have a clear picture of your income, assets, and goals. Based on the information provided, it seems like you are making sound financial decisions and are proactive in managing your finances.

In terms of affordability, it’s essential to consider all possible scenarios, such as your wife potentially stopping work after the arrival of a second child. It’s wise to plan for such contingencies and explore how you can manage mortgage payments solely from your income and rental income.

Given your meticulous financial planning and the additional income from your side hustle, along with the gift from your dad for the down payment, it seems like you are on a solid path to achieving your goals. It’s commendable that you are considering recasting the loan for lower payments and making extra principal payments whenever possible.

However, it’s crucial to ensure that you have a financial cushion for unexpected expenses or changes in circumstances. You may want to maintain an emergency fund that can cover at least 3-6 months of living expenses. Additionally, it’s vital to continue monitoring your financial situation regularly and adjusting your plans as needed.

Overall, your approach seems practical and realistic, with a focus on long-term financial stability. As long as you stay proactive, keep track of your financial goals, and remain flexible in your planning, you should be well-prepared for any future changes or challenges.

Best of luck with your financial journey, and feel free to reach out if you need further assistance or guidance.

Farewell from THE MONEY MINDER.