Cmoney2011cmoney2011 wrote: ↑Fri May 31, 2019 9:14 amNew wrinkle.
Let's say we can buy the land and delay construction for 2.5 years.
Let's say the interest rate on the land loan is 5.5% and we pay off the entire balance in 24 months.
Let's say at the end of 2.5 years we have 1 mil saved to put down (including value of land, current home equity and cash).
We'll have paid about 55k in interest for the land loan over 2 years, but will have acquired 1 million in equity for the property.
Interesting question. If you're sure the location is what you want, wait for 2-4 years and decide about the construction at that time. The carrying costs on the raw land shouldn t be too high. Pay off the land loan asap.
In a few years you still have the option to build the originally planned big house, or find a smaller house somewhere, or build a less expensive house. The land would probably be a good investment to hold a long as you would like.
Two points for consideration.
1. Maintenance costs for a big house will be big. And a big house will be a major step in lifestyle creep. If a big house rather than a more modest house is necessary for your happiness, than by all mean buy the land and accumulate for a few years before building.
2. If you acquire a larger, comfortable home, less expensive than your current plan, you might have more room later on to acquire a vacation home. My family took this route, and our vacation home, on the beach, has become more valuable than our main home. And with the kids gone, we re living in les then half of our current home. Go figure.
I have partner who built a large house a few years ago. He is now a bit of a slave to the house with the large mortgage. And the house is so nice, it could be hard to sell. You shouldn t have these concerns, but these are the tendencies that people experience when building/buying big houses. Maybe something to think about before your next upgrade!!
My daughter and her husband might be in your financial situation in a couple of of years. I m going to recommend that, with possible changes in their economic situation in the future, that they accumulate as aggressively as they can while conditions for this are favorable.
Best of luck to you guys.