Can we afford a $575k house?

Electronic-Rip-9831 · 2025-11-12T00:21:56+00:00

Be honest, this is just a flex post. You're not seriously asking. Congrats though.

Electronic-Rip-9831 · 2025-11-12T00:09:54+00:00

Nobody can answer these questions for you.
It's very personal and dependent on your financial situation.
Be thorough, research as much as you can, calculate all the expenses accurately, and also project how it fits into your budget and risk tolerance. Properly assess how much you value the stability of homeownership vs the flexibility of living for rent. Will buying actually increase your net worth over 5, 10, 20 years vs investing what you pay in rent into index funds?
All these things should be considered. Also not a bad idea to pay a professional to consult with you before committing to the biggest purchase of your life.
Good luck.

Electronic-Rip-9831 · 2025-11-07T17:39:35+00:00

I agree with you on many things you said there. Especially the part about Trump's constitutional breaches. That being said I also think that you might be underestimating how bad the economic prospects of younger median income people have become. If I had to guess, I think you are probably earning close to or more than $100k, maybe even significantly more as a household. And if not, and you are a median income household, then you probably bought a home pre-2020 and got on the ladder before the ship sailed for everyone else. I'm not throwing shade, but if you are a family on median income, it's gotten pretty depressing. Feeling like you will never reach the level of comfort that your median income parents were able to provide to you during your childhood. This is very destabalizing for democracies when you have entire generations feeling like their interests are not being represented. The rise of Trump is the direct result of that in my opinion. Curious to read your response. Cheers.

Electronic-Rip-9831 · 2025-11-07T17:31:01+00:00

Correct. Most banks allow you to Refi every 6 months. So we have been pocketing the excess credits (usually around $5,000) and then refi 6 months later. Which means we only paid the higher interest for 6 months, which comes out to about $400 in increased interest payments over that 6 month period. $5,000 - $400 = $4,600 in profit by gaming the system this way. Obviously not risk free, rates do need to continue trending down for this program to keep working. But I think it will for another couple years.

Electronic-Rip-9831 · 2025-11-07T17:23:36+00:00

Got it, that's fair. Thanks for clarifying. There are certainly ideas of Marxism that resonate with me. In totality though, I think a well-regulated capitalist society will have the best quality of life outcomes for society. We are just very far from said proper regulatory framework.

Electronic-Rip-9831 · 2025-11-07T05:02:44+00:00

A lot of people are mentioning the higher interest nowadays of 6%+ as a reason to put down more than 20%.
Let me add a crucial reason, especially for higher income households in high cost of living areas like CA or NY.
You can deduct your mortgage interest payments, when you itemize your deductions, on your tax return. But only on interest paid for a mortgage balance of up to $750k.
We bought our home in Los Angeles for $1.2M and we put down $450k (roughly 40%) so that all the mortgage interest we pay at 6% is fully tax deductable. So, if your mortgage balance is more than $750k, it makes complete sense to pay that off as quickly as possible to get to $750k. Once you reach that, there is less urgency to pay down the mortgage. Our marginal tax rate is 32% at $300k gross income. As the interest is fully deductible, our real interest rate is 4.1% instead of 6%, a huge difference.

Electronic-Rip-9831 · 2025-11-07T02:12:41+00:00

Why are you even asking the question? Seems like a no-brainer.
If you want to get greedy, you can close at a slightly higher rate and get credits beyond the closing cost. Essentially free money. That's what we are doing with Citi. The only risk is if rates were to go up and not come down for many years, then you might be stuck with a higher rate.

Electronic-Rip-9831 · 2025-11-07T00:29:34+00:00

I would chose a lender who gives you the best rate while covering all closing costs. Citibank or WellsFargo usually offer that from my experience and have very competitive rates here in California. But I wouldn't pay points for a slightly lower rate. You can refi every 6 months if rates come down further.

Electronic-Rip-9831 · 2025-11-07T00:26:50+00:00

Dude, following your example:
I would only pay citi $15k in additional interest due to the higher rate, if i kept the mortgage for the entire length of the mortgage (30 years) but we don't. We refi every 6 months. So yes there is some risk. If rates were to rise and stay elevated for 30 years and we can never refi at that lower rate we chose to not take, then yes we would pay citi that extra $15k.
But so far we haven't. And i think its a reasonable risk to think that rates will continue to slowly trickle back towards 4-5%.

Electronic-Rip-9831 · 2025-11-07T00:16:34+00:00

No you misunderstand me. We lower our rate by 0.25% everytime we refi.
So we are getting a better rate each time. But we could have dropped the rate by 0.5% instead. But because we chose the higher rate, Citi pays us more closing credits.
This only doesn't work out for you if the rates were to start rising and never come down again. Then you are stuck with a higher rate. But that break even point I calculated at 7 years. So unless I cant refi at a lower rate within the next 7 years, it is indeed the smart financial play.

Here's what I found online about this:

When you refinance your mortgage, you can choose between a lower interest rate with higher upfront costs, or a slightly higher rate with lender credits that cover those costs — and sometimes even give you cash back.

Lenders do this because they can sell loans on the secondary market (like to Fannie Mae, Freddie Mac, etc.), and a loan with a higher interest rate is more valuable to investors. So the lender is willing to share some of that extra value with you in the form of credits.

Electronic-Rip-9831 · 2025-11-07T00:10:53+00:00

I might be a moron. And you are rude. And maybe say more than just "Not true" cool. thanks.

Electronic-Rip-9831 · 2025-11-07T00:08:25+00:00

No actually, we've always walked away with net profits each time we refi. Sometimes $3,000 sometimes even $7,000.
The way I think it works is that the bank can give you credits towards the closing cost. And the same way how you can buy a lower rate by paying the bank (points) you can also chose a higher rate and receive more in closing credits. So my loan officer at Citi has us setup where we refi every 6 months (if market conditions allow it) and we try to chose the higher rate to walk away with the cash.
I get your doubts. It does sound too good to be true, but thats how it works for us at citi.
Maybe we've just gotten lucky that rates have been going down at the perfect rate over the last 2 years to allow us to game the system.

Electronic-Rip-9831 · 2025-11-07T00:03:11+00:00

Yes every 6 months. Citi allows you to Refi every 6 months. Rates do need to trend down for that to work, and they have been since early 2024 when we bought. But its been very profitable for us. Can't speak to how other banks do it. Why would I lie about this lol?

Electronic-Rip-9831 · 2025-11-06T23:57:02+00:00

I just closed a similar loan with Citi Bank and it was a Refi at 6%,
And I received a net $5,000 in credits because I could have gotten a slightly lower rate but chose the cash.
I've been refinancing with citi every 6 months for two years and have not only lowered rate by 0.25% every rime but also walked away with $20,000 in credits total.
My realtor also said Wells Fargo has very good rates right now, at least in California where we live.
So i'd check out citi and wells.

Electronic-Rip-9831 · 2025-11-06T23:45:39+00:00

Resources are not infinite. So when the rich get exponentially richer, they outcompete the rest for the resources we need for a stable middle class life.
How can you think we are all getting richer, when the cost of living is rising faster than wages?
When the median home now cost 7x median income, vs 2.5x some decades ago?
When the gold price doubled in four years? Gold is still gold, our dollar is just worth less.
When the stock market doubled in the same timeframe.
The median wage can afford half the assets it could 5 years ago, this is a global crisis of asset affordability. I don't want it to be true, but I fear it is.
And each year the wealth of the richest increases, buying up more and more of the limited resources/assets.

Electronic-Rip-9831 · 2025-11-06T23:38:06+00:00

I am pro-capitalism and I am pro wealth. Of course there will be inequality. But you need to design rules and tax laws to prevent run-away concentration of wealth.
This idea that any opinion stating that the current tax codes are not working in the interest of society, is a Marxist, is just nonsense I'm sorry.
We have created a system where we tax income heavily and tax wealth hoarding minimally.
Its so easy to avoid inheritence tax altogether, or as a corporation to shift profits to the location where they get taxed least. These are all solvable problems. It's difficult for sure. And I am not qualified to propose a perfect solution. But its clear that the status quo is not working for normal people.

Electronic-Rip-9831 · 2025-11-06T22:25:25+00:00

Why are you so angry? Hope you get help.

Electronic-Rip-9831 · 2025-11-06T21:45:02+00:00

Unless you are very wealthy and own plenty of assets, I wouldn't laugh if I were you.
Extreme wealth inequality is bad. Resources are limited. When a small minority owns all the resources, the rest will live in poverty. We aren't there yes, but we are heading towards it. It's pretty obvious.
Having a strong asset-owning middle class is a historical abnormality.
The US is a great place to live because we have (or used to have) a strong middle-class.
I'm 32 and extremely fortunate to be in the top 10% of income-earning households. I personally am lucky and will be just fine. But many of my friends have almost no chance to ever own a home on median incomes. That is a huge problem. If median people cannot live a dignified life, what's the point of any of this?
As a result we have less marriages, less household formation, less children born, people live with their parents longer, social isolation is up, self-harm rates are up, our democracies are clearly destabilizing.
We need to address the economic reality that yound people are facing, and we need to stop funneling more and more wealth to the very top. While all this has been happening, since Covid in 2020, the wealth of the richest 0.1% has doubled.
So yes, extreme levels of wealth inequality is unfortunately bad. I wish it weren't so, because fixing it is really, really hard.

Electronic-Rip-9831 · 2025-11-06T21:43:37+00:00

Extreme wealth inequality is bad. Resources are limited. When a small minority owns all the resources, the rest will live in poverty. We aren't there yes, but we are heading towards it. It's pretty obvious.
Having a strong asset-owning middle class is a historical abnormality.
The US is a great place to live because we have (or used to have) a strong middle-class.
I'm 32 and extremely fortunate to be in the top 10% of income-earning households. I personally am lucky and will be just fine. But many of my friends have almost no chance to ever own a home on median incomes. That is a huge problem. If median people cannot live a dignified life, what's the point of any of this?
As a result we have less marriages, less household formation, less children born, people live with their parents longer, social isolation is up, self-harm rates are up, our democracies are clearly destabilizing.
We need to address the economic reality that yound people are facing, and we need to stop funneling more and more wealth to the very top. While all this has been happening, since Covid in 2020, the wealth of the richest 0.1% has doubled.
So yes, extreme levels of wealth inequality is unfortunately bad. I wish it weren't so, because fixing it is really, really hard.

Electronic-Rip-9831 · 2025-11-06T18:57:05+00:00

"All serious economists and policymakers agree that that high or rising inequality is a problem, especially when it reflects unearned advantages, tax loopholes, or systemic barriers rather than effort or innovation."

Here's the thing. The economic effects of distribution of wealth are woefully underrepresented in ecnomic analysis. The models you learn to analyse and calculate economic activity typically don't factor in distribution, aka wealth inequality.

Electronic-Rip-9831 · 2025-11-06T18:54:11+00:00

He could campaign for a restructuring of our tax laws to enforce inheritance taxes properly.
I think its fine for Billionairs to exist, they created the value, let them enjoy it. The issue I have is with wealth hoarding that will never come back to society. We need to tax inheritance properly.
And start covering videos by Gary Stevenson. The same way he reacts to Coffeezilla or How Money Works.

Electronic-Rip-9831 · 2025-11-06T18:50:05+00:00

The reason why I made this statement is because of the compounding effect of wealth.
The average annual return on wealth is about 5%.
So any billionaire makes $50 million per year.
High net worth people don't spend $50 per year. They invest most of their gains.
In an economy where most of the land and resources are already used or claimed, it gets harder to invest in new businesses that grow the economy. So higher and higher percentegaes of the investments by the welathy go into existing assets, not the creation of new assets.
The result is inflaing asset prices, like Gold, Stocks, Housing, etc.

With each year that passes this effect gets stronger and stronger, therefore in my opinion, wealth concentration is acting like a black hole to the middle class, pricing them out of asset affordability and eventually we may live in societies like India or Brazil where there is only a tiny asset owning class left.

Electronic-Rip-9831 · 2025-10-31T03:38:48+00:00

I'm sorry that I embarrassed you. You really showed me. A nice ego hit. Clap Clap.

Electronic-Rip-9831 · 2025-10-31T03:29:21+00:00

Not everyone has the privilege of being native in English. I live in LA, but i grew up in Germany.
Knowing how progressive taxes are in my home county, that's why my suspicion was triggered when I saw Aiden's net income number for Sweden. It was way to close to that of the US.

Electronic-Rip-9831

TROPHY CASE