It's important to keep in mind that there are really three types of new constructions: 1) fully custom to be built; 2) spec (as in speculative) house that a custom builder constructs, perhaps b/c the builder doesn't have other projects; and 3) mass-built new constructions. The full customs (and perhaps also spec) can easily exceed original estimate, while the mass-built new constructions generally won't.I asked this question to the builder and they stated that any increase in price would be at their risk. I guess i'll look into this a bit further.We built one house in the past and ran over the expected cost 10-15%. I understand that this is so common , it should be anticipated.
You mentioned you are in a cheap, mid-sized, Midwest metro that has seen recent growth. That description is somewhat applicable to nicer parts of Milwaukee (what I'd call a low-to-middle COL small city) and Madison (what I'd call a MCOL large town), both of which are familiar to me. If your builder is the likes of Lennar, Encore, or Veridian, then those new houses are squarely in the third category mentioned above.
As for your original inquiry, while it's been beaten deader than a horse turned into glue, here are my two cents, as we also live in the Midwest, have similar household incomes, and are looking to buy a property ~$650k.
Your household income is likely in the 94th percentile of your area. As someone else mentioned upthread, you can spend big on one or two particular things, but you can't do so in all areas. There isn't that much inherently wrong with ~4.5% student loan paid on schedule and PMI when interest rate on a mortgage is much higher. In particular, if you are in the aforementioned small city or large town, housing prices have gone up quite steadily, and rent increases to the tune of 7-8%/yr are also common. All that is to say that you can go for it even with $1k/month of student debt.
Your seeming unwillingness to pare back on going out, spectator sports, and traveling, however, is telling. Those three alone totals to ~$30k/year, with your total annual discretionary spending totaling ~$36k, as compared to after-tax savings of ~$28k. Even assuming you had no student loan, and that you fully save the amount going to the loan, that ~$36k is still quite sizeable compared to ~$40k. Paring back the discretionary to $10k/year would give you a much greater latitude on doing things, whether that may be child care, extra principal payments, or something else. While it's true that this forum is generally rather tight with spending, that your current discretionary spending would exceed after-tax savings does not look good.
Statistics: Posted by InvisibleAerobar — Fri May 10, 2024 9:46 pm — Replies 80 — Views 4952