Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm mostly just typing out my thoughts here, but any input is certainly appreciated!
Last year my wife and I sold our house and moved across the country for a new job. We timed things well and made a slight profit out of it (30k) and now we're feeling ready to buy a second home. We moved to an area with semi-affordable real estate (Detroit Metro), so unlike where we came from (Salt Lake metro), we can actually afford the home we want, but... do we want to? We're 29, we have one kid and we'll have a second one in a year or two. We won't have three kids (unless we get surprised with twins or something).
All we really need is a 3 BR, 1000 sq.ft bungalow with a basement (for an office) and a detached 1 car garage (2-car if we're lucky), in a safe are with good schools near nice parks to play in. (This would be Clawson or Berkley for those familiar with the area). Well, with 30k down, we can get that for ~$650 a month, or ~$900 on a 15 year loan, with no PMI and I'd have a 15 minute commute. The things we could do and money we'd save with a $650 a month house payment... Wow!
But if we got the house we want we'd have a 2000 sq.ft. 2-story colonial with the necessary bedrooms, plus an office for each of us, two family rooms, an attached 2 car garage and a big private yard to play in, also in a safe area but with even better schools (Rochester Hills or Utica/Shelby for those familiar with the area). Unfortunately with 30k down we're pushing the maximum of we can afford and looking at a ~$1500/mo house payment. That would include PMI, higher taxes, but not increased transportation costs, as I'd double my commute. We can afford that, but that's a lot of money not being saved.
When I write it all out like that I feel like splurging for the house I want would be a terrible idea, but man I'd love some of those houses we've looked at in the outer suburbs. The post-war bungalows, while quaint and perfectly sufficient, are kind of boring. They'd make me feel like, "I went to college, got a STEM degree and all I live in is a house built for factory workers in 1950s? What am I doing wrong?"
I'm sure many of you have come across this first-world-problem before. How have you handled it? Do you wish you'd have done it differently?
I'm mostly just typing out my thoughts here, but any input is certainly appreciated!
Last year my wife and I sold our house and moved across the country for a new job. We timed things well and made a slight profit out of it (30k) and now we're feeling ready to buy a second home. We moved to an area with semi-affordable real estate (Detroit Metro), so unlike where we came from (Salt Lake metro), we can actually afford the home we want, but... do we want to? We're 29, we have one kid and we'll have a second one in a year or two. We won't have three kids (unless we get surprised with twins or something).
All we really need is a 3 BR, 1000 sq.ft bungalow with a basement (for an office) and a detached 1 car garage (2-car if we're lucky), in a safe are with good schools near nice parks to play in. (This would be Clawson or Berkley for those familiar with the area). Well, with 30k down, we can get that for ~$650 a month, or ~$900 on a 15 year loan, with no PMI and I'd have a 15 minute commute. The things we could do and money we'd save with a $650 a month house payment... Wow!
But if we got the house we want we'd have a 2000 sq.ft. 2-story colonial with the necessary bedrooms, plus an office for each of us, two family rooms, an attached 2 car garage and a big private yard to play in, also in a safe area but with even better schools (Rochester Hills or Utica/Shelby for those familiar with the area). Unfortunately with 30k down we're pushing the maximum of we can afford and looking at a ~$1500/mo house payment. That would include PMI, higher taxes, but not increased transportation costs, as I'd double my commute. We can afford that, but that's a lot of money not being saved.
When I write it all out like that I feel like splurging for the house I want would be a terrible idea, but man I'd love some of those houses we've looked at in the outer suburbs. The post-war bungalows, while quaint and perfectly sufficient, are kind of boring. They'd make me feel like, "I went to college, got a STEM degree and all I live in is a house built for factory workers in 1950s? What am I doing wrong?"
I'm sure many of you have come across this first-world-problem before. How have you handled it? Do you wish you'd have done it differently?
What is wrong is thinking you are better than 1950's factory workers and you are too good and above living in a home built for them.
You want to be a bragger about the home you are going to rent from the bank for 30 years, go right ahead that is your choice however, in my opinion the only home you should purchase is the one you can pay cash for.
Knowing the difference between wants and needs is very important in life, wants in a home come with added monthly and yearly expenses to heat, cool, taxes, insurance as well as to maintain. IMO people really need to know what they need and work up from there instead of putting themselves into a larger debt. Why not buy a less expensive home and put the rest away in a 401k or some other investment instrument for yours and your children's future.
You should buy a house where mortgage, taxes, and insurance are 28% to 30% of your gross income and put at least 20% down. You likely won't ever again see these historically low interest rates. If you buy a cheap ranch, it will be worth a cheap ranch when it's paid for. If it is a much nicer home, you will have created far more equity. The caveat is that you need to have stable employment and income. With 28% allocated to housing, you should be able to contribute appropriately to your 401(k) or equivalent. 20 to 30 years from now, your house will be paid off and your retirement will be funded.
The reality that very few of the "frugal living" types admit is that living far below your means often results in crummy schools, lousy neighbors, and a bleak day-to-day existence.
If you can afford a home that will have better schools, neighbors that are more professional, and something that brings a little joy to your labors the benefits are totally worth it!
My guess is that you'll end up hating that cheaper home every minute you live in it because you passed on the nicer one, and I think at some point you're going to want to sell it and get something better. That will probably cost you more in the long run. I think GeoffD gave good advice. If the house you want fits into the criteria he outlined, I think I'd go for it.
As an alternative, you might look for a house that's a compromise between the two. Maybe less square footage than the bigger one. Maybe in some need of updating (ie, stripping wallpaper, new countertops or appliances, new bath fixtures, replacing stained carpet with laminate, etc -- nothing structural).
... in my opinion the only home you should purchase is the one you can pay cash for.
The home I can "pay cash" for is a trailer in Eastside Detroit, because welcome to the life of a typical young-adult in 2015.
Quote:
Originally Posted by David Aguilar
What is your household income?
Currently 60k/yr. When my wife works, more like 90-100k/yr. There is no established timeline for how long she's taking off work, for family, but I anticipate 3ish years, so it's probably best to only go off my income for now.
Quote:
Originally Posted by chet everett
The reality that very few of the "frugal living" types admit is that living far below your means often results in crummy schools, lousy neighbors, and a bleak day-to-day existence.
If you can afford a home that will have better schools, neighbors that are more professional, and something that brings a little joy to your labors the benefits are totally worth it!
The thing is we currently live in an apartment in the less expensive neighborhood, and it's actually really nice. It's mostly young professionals and the schools are rated by GreatSchools in the 8-9 range, it's just that the outer-ring towns have schools in the 9-10 range. Unlike many metros, the Detroit inner-burbs aren't bad neighborhoods, quite desirable really (this is because all our bad neighborhoods are in Detroit itself. Anyone with money leaves the city.) There are tons of tear-down/rebuilds going in and plenty of beautiful 2,000+ sq.ft. homes, it's just that those are out of our price range here, but we can afford those in the outer-burbs.
Quote:
Originally Posted by Linda_d
...Which one does your spouse prefer?
She's as back and forth as I am. She prefers the neighborhood and demographic of the small quaint homes and the idea that we could take more expensive vacations or save more, but loves the look and space of the bigger colonials.
The reality that very few of the "frugal living" types admit is that living far below your means often results in crummy schools, lousy neighbors, and a bleak day-to-day existence.
If you can afford a home that will have better schools, neighbors that are more professional, and something that brings a little joy to your labors the benefits are totally worth it!
I agree. Sometimes there are more important things in life than squirreling away extra $$, and getting your kids into a better school district is a good investment in their futures. In a better school system, your kids are much more likely to be in a better peer environment. That sounds rather snobby, but kids pick up a lot of attitudes from their peers, maybe more than from their parents, as adolescents.
I will add that it's more likely that the cheap little house will depreciate in value rather than appreciate, especially in an area with affordable housing prices, simply because a lot of people can afford to by-pass that little house/old neighborhood for newer/larger/nicer homes further out.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
