Dilemma here. I've done the math and I can afford a $700k place with a 10% DP. I'll have $70k of cash saved by end of year. I don't have much cash because I've exclusively being saving in 401k and IRAs over the years, and minimizing cash on hand. It's just recently I've been slowing down 401k and saving cash instead.
To double that cash amount and get to $140k, I'd have to forego 401k savings (outside of the minimum I'd put in to capture company match) for about 1.5 more years at my current savings rate.
What I'm struggling with is, is it even going to be worth it to save that much and forego 401k for 1.5 years, when it seems like even a 20% DP might not be competitive in the Bay Area? What I mean by this is, I'll have 10% pretty soon. Realistically, is a 20% DP going to make me THAT much more competitive than a 10% DP when competing against people putting in all-cash offers? Hope that question makes sense.
Not to mention I'm not completely convinced I want to buy or not. I'd like to kinda test the waters a bit, but not fully committed to the process. So again, saving $140k of cash sitting in a low returning savings account is not the most appealing thing to me.
My hunch is to just save a comfortable 10% DP, go back to maxing out 401k/IRAs, and just seeing where that takes me. If it's not good enough, oh well I will keep renting and see what happens. Does this seem like the correct path? Any suggestions or opinions would be welcome, thanks.
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