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I saw this $699K worth of 2 bedroom condominium in La Jolla, Ca. For a downpayment I have access to:

  • $55K that I can get from the company stocks that I bought
  • $15K emergency funds but this will come from my mutual funds
  • 401K of $70K and ROTH IRA of about $19K.

I have $3K ESPP and RSU of $25K which I have to be in the company for 4 years for me to get this. I also have about $6K investment out of the country.

I earn about $120K/year before taxes. I lowered my 401K contribution to 8% from 11% to save a little more money for downpayment. However, I have 10% contribution to company stocks. I also contribute 3% to Roth IRA every month.

I am renting a condo for $1600/mo. I am single with no obligations. I am already 38 years of age and would like to have a sound investment. I have my sister and parents in Texas. My work is in San Diego.

$55K downpayment is not even 20% of the condo. I am not sure if this $699K condo is the right property for me considering my finances or should I get a different property where the $55K is the 20% of the property. I do not know whether La Jolla is a good place for me to live for life. I have been here for more than 3 years and found that this is very safe place though very expensive.

My questions:

  1. Should I buy this property and ask the agent to lower it to $500K? In this case, the downpayment is still not 20% though. Or should I wait until I have 20% money for downpayment?
  2. Is $15K emergency funds enough to set aside in case I lose my job? or Should I wait until I have enough emergency funds?
  3. Is La Jolla, the right place to invest a 2 bedroom condo for $699K for me? The HOA is $495/month

I still want to be able to travel though so I want a mortgage that is not too much for me with some amount left for a travel at least once a year.

What should I do with my dream of buying my first condo?

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    The life insurance sounds like it is whole life. This is a terrible investment. Ditch it, pick up the term life that you need, and invest the rest (or use it for mortgage purposes). – ChrisInEdmonton Jun 15 '14 at 21:38
  • One objective way of deciding is to use a rent or own calculator. The New York Times has a great calculator to help you with that: nytimes.com/interactive/2014/upshot/buy-rent-calculator.html – RohitJ Jun 15 '14 at 22:11
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    I hardly think it's realistic to "ask the agent" to lower a 700k condo to 500k. If we could all save 200k on a place to live by asking, we all would. – Kate Gregory Jun 16 '14 at 15:34
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There are far more questions to be addressed here than one answer can address. Let me work backwards, and start with the easy part -

"I make $120K/yr, what can I afford?"

You are making $10K/mo. A great income. A well written mortgage will allow you to use 28% for housing, that's the mortgage, property tax, insurance, and HOA. On $2800, let's take out $500 for prop tax, and just $300 for insurance. I'll even ignore HOA for now. The remaining $2000/mo will fund a mortgage of $400K. That's not close to a $700K condo.

A $550K mortgage would cost $2800/mo, and $3600 with tax and insurance, $4100 with HOA. Over 40% of your gross and a sign that you are in over your head.

The real question is why you'd want to do this. $1600/mo rent means you can save $2000/mo in addition to what you already save if you stay put.

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