Suggestion Flower Mound 550k home or Lantana 420K home? (insurance, mortgage)

[Moms-son2012]

Hello,

We are family with 1 kid. I and DH are first time home buyers. We make around 150K annually, with take home of 9K per month. Addition background- we have stable jobs, and will be growing well in our company in coming years. Our kid will be out of day care in a year. We own our cars which are of recent years but not very luxurious, and we don’t have any other debt too.

We are looking for new homes in Flower Mound (property tax rate- 2.2%) and Lantana(property tax rate 2.8%)

In flower Mound, a move-in ready,new home is around 550K (with all bells and whistles) on a decent 10,000 sq ft lot, and build of 3200 sq ft. It is located in a prime locality,and kids attend established Exemplary elementary, Middle and High school.
We are putting around 20% down (exhausting all our resources like 50% loan on 401k) and our Mortgage + property tax +insurance +HOA- approx. around 3400 per month with current Mortgage rate of 4.2%
Both I and my husband work in vicinity of 6 miles from Flower Mound location i.e., around 10 min drive each way.

In Lantana – We are getting a new,to be build home for 425K (with all bells and whistles) on 6000 sq ft lot and 3000 sq ft build. Schools are new and have good rating too.Our commute to and from Work will be 15 miles i.e., around 30 to 40 min drive each way during peak hrs.

We will be able to put 20% of down payment (not exhausting all our resources) and our Mortgage + property tax + insurance +HOA- approx. around 2800 to 3000 per month with current and estimated future Mortgage rates of 5%.
Now- since we have to travel additional distance to work, we will be spending more on gas- approx. 250 more per month, our Insurance premium will increase too, and so is our vehicle maintenance.

Any suggestions from experts here? are we really stretching our budget?

Thank you,

[stephwin]

I'm not a fan of 401k loans unless you are in a really dire situation, and I don't consider a house purchase to be one of those situations. How soon could you pay it back?

Are you dead set on a new build? Can you get a cheaper home in FM without using your 401k? Obviously the FM location is better for your commute and the schools are great, so it's a tough call.

And what do you mean by "exhausting all of our resources?" Will you still have savings in case of emergencies? You'll still need some in the bank and I think I remember my lender requiring 3 months of payments in savings after our down payment. If a bad storm hits and your house gets damaged, you would have to pay 1% of your home's value to get any repairs done. So that could easily be $4000-5000 out of pocket. Would you have that?

[NP78]

There are a lot of factors that influence your home buying budget, so it is hard to comment on that.








Having said that, it looks like the best location for you would be Flower Mound. Closer to work, lower property taxes, good schools, etc.


If $425k is the budget you feel comfortable with, I would probably look at Flower Mound at that price. Just my two cents.

[Moms-son2012]

Thank you- Yes we will have around 15 K in saving to fall back, incase there is emergency. We are thinking of 30 yr conventional for now.

And in flower mound, no new build is at 425K, and we may have to look at 20 yr old build too.

[lifofifo]

If you're a first time buyer and buying a new built, you will have to spend a lot of money to set everything up. Furniture, appliances, window treatments, landscaping etc. This all can easily add up. You'd have to budget at least about $20k for that.

If you're buying a new built, make sure you use a realtor that gives the maximum cash back. Personally, I don't feel the realtors add a lot of value when you're purchasing a new built. We got around 5% (minus $1000) back when we purchased our new built home ~2 years ago and that money really helped at the time.

If I were in your shoes, I'd probably look at older homes under $450k in FM.

[UnfairPark]

Originally Posted by lifofifo

If you're a first time buyer and buying a new built, you will have to spend a lot of money to set everything up. You'd have to budget at least about $20k for that.

If you're buying a new built, make sure you use a realtor that gives the maximum cash back.

If I were in your shoes, I'd probably look at older homes under $450k in FM.

Listen to this advice.

[Rakin]

Who is the builder? There a few I'd stay away from and that makes a difference.

[SouthernBelleInUtah]

New isn't all that great. Look at older houses that have already settled and have mature landscaping. You get a much better bargain!

[stylishmommy]

Flower mound schools are better !! Choose Fm

[TurtleCreek80]

A 50% loan on your 401k is not a financially smart move. Can you even take a loan that big? I think my 401k limits loans to $50k/2 year term or something along those lines.

Also, a $15k emergency fund is not enough for a family of 4. Even if your jobs are super stable, you NEED a minimum of 3-6 months living expenses. Your mortgage company is going to expect you to have 6ish months of PITI in the bank which pretty much eats up your $15k.

I think you're biting off more than you can chew for a first time home buyer. With a $150k salary and inadequate savings, I'd be looking in the $300-350k range not $400-550k.