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Old 10-20-2014, 02:45 PM
 
2,606 posts, read 2,683,568 times
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I am sure this question has been asked several times before,but I have to ask.

  • Is it better to get starter home which will make small dent in your expense & buy a bigger home later in life when the price might be higher & god knows what your financial situation will be like?
  • Or is it better to find a bigger house now which you can just barely afford & consider it a onetime investment for future and suck it up. No moving, no worry about house price going up or down, no need to sell old home…etc

Here is my situation:

I make 90K/year, 7yrs in the job, no loans, no kids, have anold car, have 2 family house fully paid rented out. ..etc.. So no financial struggle or loans. Ihelp my family out often but no mandatory obligation. I am newly married & my husband is oppositefrom me. Makes 30K/yr, has 16K in loan,current job is 2 yrs old only.

We are house hunting & there are 2 types of house we aredebating over:
  • A starter/midlevel home that cost ~150K +/- 50K in mid-incomecommunity with average school district. I know in future we will need to move to better school district when wehave kids old enough for school.
  • Forever home cost ~250K +/-50K house in upper-middle class community that has greatschool.


Based on our combine income we can afford the higher endhouse right now. But I am worried whenkids come alone & our expensive goes up, will we be able to live in theexpensive house. What if I can't manage kids/work & choose to stay home, there is no way his income can managethe expensive house. But his income alone can manage the starter home. But if webuy a starter home now, in 10 years the 250K house will be 350K. Who knows what the future will be like &if we will even have money for down payment? Shouldn’t wetake the risk now while we are young & without child instead of leaving thebig investment for later?

I would hate to be chained to work due to mortgage & I am conservative by nature but sometimes I can be tooo conservative. I am not sure what the best move is
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Old 10-20-2014, 02:55 PM
 
628 posts, read 2,036,435 times
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I would think you should be able to easily afford the $250k home cost--I assume you have a decent downpayment?
My husband and I make less than 80k combined and our home was slightly more (we had a decent 50k downpayment) and have no problem affording it (no kids) So I would think at combined income of $120k even with kids you should be able to swing it just fine if you have a decent downpayment?
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Old 10-20-2014, 02:57 PM
 
2,645 posts, read 3,307,274 times
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I think it's entirely a personal decision, and there are as many different preferences as there are people. I can only say this: I'm nearing my mid-50's. Friends who bought "starter homes" and stayed in them had both flexibility with their jobs and they're paying off their houses right about now. We bought a starter home, then moved up. That left us stuck in the "both have to work" situation and we opted to move back to a starter home so one could stay home with our son. All that buying and selling, we are still about 15 years from paying off our house. I sorta wished we'd just stayed in the starter home and could be thinking about retiring soon. In retrospect, it really wasn't all that small, and the neighborhood was just fine.

Is there not something in between? Maybe a starter home in the neighborhood you desire?
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Old 10-20-2014, 02:58 PM
 
Location: Brentwood, Tennessee
49,932 posts, read 59,552,039 times
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Quote:
Originally Posted by keraT View Post
god knows what your financial situation will be like?
To me, this ^^ is the most important part of your post.

I only hear newlyweds talk about the concept of a "forever home." Life is (usually) SOOOOO long, and you have no idea what changes it will bring, especially since you don't currently have kids. Kids change everything. Save yourself the drama of thinking about a house as a "forever home."

Think ONLY in terms of investment. What is the best investment for you two now? What can you comfortably afford that will provide you the best ROI in the few years when you do have kids and know more about what your needs will be?

Last edited by BirdieBelle; 10-20-2014 at 04:23 PM.. Reason: Typo
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Old 10-20-2014, 03:12 PM
 
Location: Texas
1,029 posts, read 1,479,418 times
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I've bought a forever home three times now. The first one I lived in for only 3 years - and we moved before we had children to fill it. I hope this one is really it because I hate moving.

I was in a situation similar to yours. I could buy a house for about 200k in an okay school district or for 100k more than that in a great school district. I bought the less expensive house.

My kids are smart; they will be fine in an average school district. W're on track to pay off the house in 14 years and have extra savings.

The earliest you will have a child in school is 6 years from now. You don't know what the local school districts will look like then. You don't know whether your child(ren) will need the special magnet school, or the school with the best sports, or the school with the best drama program, or the school with the best acommodations for kids with physical or mental challenges.

You don't know what your financial picture will look like then. A job change caused me to leave my first forever home.

Buy a small house that fits the family you have now and in 5-10 years decide what suits the family you have then. If it's time to buy a larger house, hopefully you will have saved the extra money for a larger downpayment.
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Old 10-20-2014, 04:02 PM
 
Location: Las Vegas
14,229 posts, read 29,902,516 times
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I've bought 4 or 5 forever homes. Hoping this is my last one!

My best advice is to buy something you can easily afford in a school district you can live with. Then if you can afford more later, great. If you can't, your location is OK for the kid's school. Then you are OK either way. No one has a crystal ball and can say for sure what the future will bring!

If you are willing to do some remodeling or have a lot big enough for an addition down the road you may be able to get more for your money now!
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Old 10-20-2014, 04:24 PM
 
Location: Port Charlotte
3,930 posts, read 6,395,260 times
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Just consider what you can afford. Figure 25% for PITI-35-40% total debt. As a couple you gross $120K, and so as a 2.5 to 1 ratio, you could afford up to $300K in home. Especially with todays low interest payments. And that is something to really consider. Rates are going to go up. Not down. It is better to buy up than settle if you can reasonably afford it, and from your scenario, you can. Especially as you are getting the additional income from the duplex with no debt load on it.
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Old 10-20-2014, 04:31 PM
 
1,835 posts, read 3,240,869 times
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Do what is most comfortable and will leave you with some wiggle room. However from a real estate investment point of view, the better the school district, the better the resale....Homes tend to appreciate More rapidly in areas where the schools are solid...that tends to be the already gentrified and nice areas.

I always say buy the cheapest home in the nicest area you can afford.
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Old 10-20-2014, 04:45 PM
 
9,891 posts, read 11,673,828 times
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Something to consider, a lot of people went for the bigger home before the real estate bubble burst, and homes in their area are nowhere worth what they paid for the home a few years ago and homes are still being foreclosed on that were bought before the prices crashed. There is no guarantee that home prices will increase.

Buy a home that will fit into your plans, that you can afford to own. You have said, that if you start your family you will not be able to afford the bigger home. If you plan a family, why put yourself in a position you have to work which you say you do not want to do, or have to sell the home as you will no longer be able to afford it.

Overbuying is what got an awful lot of people in trouble.

Note how many people have said they have bought forever homes, time and time again. In all probability you will not be in the home you buy now, 10 years from now. So just buying it to be a forever home, is not a wise decision.
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Old 10-20-2014, 04:46 PM
 
Location: Salem, OR
15,490 posts, read 40,182,593 times
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Well if I am reading your comments right, you can buy a $200,000 home at the high end of the middle income community or you can spend $200,000 at the low end of the upper class community. Buying the worst house in the best neighborhood is typically the best for resale.
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