Buy this house, or stay put?

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Topic Author
Anonymiss
Posts: 3
Joined: Fri Jul 31, 2020 8:02 pm

Buy this house, or stay put?

Post by Anonymiss »

Long time lurker... Want an opinion from the BH community.. Buy or no?

Situation:
Married, 2 kids (4, 2), wife pregnant with twins
Currently: Live in a 3BR, 2BR, 2000 sq ft.
Owe $340K on mortgage, approximately have $200K+ in equity (Zillow would say $255K)
Income: Single, wife SAHM, approximately 350K/yr (I am a physician, not ROCK stable income in my field but fairly stable, I do anticipate income of appx $300-325K this year due to the COVID downturn, employed W2 status plus two 1099 side jobs)
Savings:
$100K cash
Investments:
$300K 401K
$110K Roth IRA
$777K taxable
$30K - 529 for child A
$15K - 529 for child B
Debt:
Pay $400/mo for one vehicle at 0.9% interest, owe about $10K, no desire to pay off early at that rate
All student loans paid off
We will likely do private school for the kids which would run a total of $24K/yearly for all four kids (fourth kid is free, thankfully...) up through high school...

I had planned to try and stick it out with the four kids in our 3+2 for another year or 18 months, save up some more money given I don't think the economy is on really stable ground. Also think house prices might drop as a result. However, a 5+4 at 3400 sq ft just went for sale in one of the neighborhoods close to work+schools for $800K... wife wants to consider moving now (she's 7 months pregnant, seems like a great idea right..?). I'm worried about the economics of throwing so much down on a house in such a rush, but to find anything with 4-5 beds in our area will run 800-$1mil minimum, so I don't think the price is bad, I'm just nervous about doing this 12-18 months earlier than I planned on..

Do I need to worry about the finances of this? I am a BH through and through... like to save, do not like to spend cash... do not want to work self to death either to pay for stuff.. can I open the coffer for this or is this a recipe for house poor? Thanks all.
valleus
Posts: 2
Joined: Fri Jul 31, 2020 10:30 pm

Buy it

Post by valleus »

I’m in a similar situation to you op. Just buy it. At your income, the differences in waiting for a “sellers market” to cool down is plus or minus 5000. One year represents ~10% of your kids’ lives before they turn twelve. Is it worth it you for them to forego the bigger play area and better school for entire year or two just to possibly save 5 or 10k? Especially at your income and retirement savings level? Go for it!
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geerhardusvos
Posts: 1147
Joined: Wed Oct 23, 2019 10:20 pm
Location: heavenlies

Re: Buy this house, or stay put?

Post by geerhardusvos »

Anonymiss wrote: Fri Jul 31, 2020 8:15 pm Long time lurker... Want an opinion from the BH community.. Buy or no?

Situation:
Married, 2 kids (4, 2), wife pregnant with twins
Currently: Live in a 3BR, 2BR, 2000 sq ft.
Owe $340K on mortgage, approximately have $200K+ in equity (Zillow would say $255K)
Income: Single, wife SAHM, approximately 350K/yr (I am a physician, not ROCK stable income in my field but fairly stable, I do anticipate income of appx $300-325K this year due to the COVID downturn, employed W2 status plus two 1099 side jobs)
Savings:
$100K cash
Investments:
$300K 401K
$110K Roth IRA
$777K taxable
$30K - 529 for child A
$15K - 529 for child B
Debt:
Pay $400/mo for one vehicle at 0.9% interest, owe about $10K, no desire to pay off early at that rate
All student loans paid off
We will likely do private school for the kids which would run a total of $24K/yearly for all four kids (fourth kid is free, thankfully...) up through high school...

I had planned to try and stick it out with the four kids in our 3+2 for another year or 18 months, save up some more money given I don't think the economy is on really stable ground. Also think house prices might drop as a result. However, a 5+4 at 3400 sq ft just went for sale in one of the neighborhoods close to work+schools for $800K... wife wants to consider moving now (she's 7 months pregnant, seems like a great idea right..?). I'm worried about the economics of throwing so much down on a house in such a rush, but to find anything with 4-5 beds in our area will run 800-$1mil minimum, so I don't think the price is bad, I'm just nervous about doing this 12-18 months earlier than I planned on..

Do I need to worry about the finances of this? I am a BH through and through... like to save, do not like to spend cash... do not want to work self to death either to pay for stuff.. can I open the coffer for this or is this a recipe for house poor? Thanks all.
If I was in your shoes, $800,000 for a house seems very reasonable, I wouldn’t go with the $1 million though. I would try to stay put if possible. With COVID-19 I would not spend more than 2-3x your annual income, and with your transferred equity, 800,000 sounds just about right. Either way you seem like you’ll be OK, although moving while pregnant is difficult, but so is moving with four young kids unless you have help... best wishes!
VTSAX and chill
babystep
Posts: 244
Joined: Tue Apr 09, 2019 9:44 am

Re: Buy this house, or stay put?

Post by babystep »

Anonymiss wrote: Fri Jul 31, 2020 8:15 pm Long time lurker... Want an opinion from the BH community.. Buy or no?

Situation:
Married, 2 kids (4, 2), wife pregnant with twins
Currently: Live in a 3BR, 2BR, 2000 sq ft.
Owe $340K on mortgage, approximately have $200K+ in equity (Zillow would say $255K)
Income: Single, wife SAHM, approximately 350K/yr (I am a physician, not ROCK stable income in my field but fairly stable, I do anticipate income of appx $300-325K this year due to the COVID downturn, employed W2 status plus two 1099 side jobs)
Savings:
$100K cash
Investments:
$300K 401K
$110K Roth IRA
$777K taxable
$30K - 529 for child A
$15K - 529 for child B
Debt:
Pay $400/mo for one vehicle at 0.9% interest, owe about $10K, no desire to pay off early at that rate
All student loans paid off
We will likely do private school for the kids which would run a total of $24K/yearly for all four kids (fourth kid is free, thankfully...) up through high school...

I had planned to try and stick it out with the four kids in our 3+2 for another year or 18 months, save up some more money given I don't think the economy is on really stable ground. Also think house prices might drop as a result. However, a 5+4 at 3400 sq ft just went for sale in one of the neighborhoods close to work+schools for $800K... wife wants to consider moving now (she's 7 months pregnant, seems like a great idea right..?). I'm worried about the economics of throwing so much down on a house in such a rush, but to find anything with 4-5 beds in our area will run 800-$1mil minimum, so I don't think the price is bad, I'm just nervous about doing this 12-18 months earlier than I planned on..

Do I need to worry about the finances of this? I am a BH through and through... like to save, do not like to spend cash... do not want to work self to death either to pay for stuff.. can I open the coffer for this or is this a recipe for house poor? Thanks all.
Every husband knows that wife is always right :wink:

Moving from 540k home with 200k equity to 800k home. Why do you think it is too much money needed? Let us say you do 200k down from the previous home equity and take a mortgage for 600k.

The additional mortgage amount is 260k=600k-340k and assuming an interest rate of 3%, it will be about $850 per month additional amount. I am ignoring the tax saving from the itemized deduction. I agree with you about no rush to pay-off the car but when it does then your monthly cash-flow will increase by another $400.
OnTrack2020
Posts: 657
Joined: Mon Mar 20, 2017 10:24 am

Re: Buy this house, or stay put?

Post by OnTrack2020 »

Anonymiss wrote: Fri Jul 31, 2020 8:15 pm Long time lurker... Want an opinion from the BH community.. Buy or no?

Situation:
Married, 2 kids (4, 2), wife pregnant with twins
Currently: Live in a 3BR, 2BR, 2000 sq ft.
Owe $340K on mortgage, approximately have $200K+ in equity (Zillow would say $255K)
Income: Single, wife SAHM, approximately 350K/yr (I am a physician, not ROCK stable income in my field but fairly stable, I do anticipate income of appx $300-325K this year due to the COVID downturn, employed W2 status plus two 1099 side jobs)
Savings:
$100K cash
Investments:
$300K 401K
$110K Roth IRA
$777K taxable
$30K - 529 for child A
$15K - 529 for child B
Debt:
Pay $400/mo for one vehicle at 0.9% interest, owe about $10K, no desire to pay off early at that rate
All student loans paid off
We will likely do private school for the kids which would run a total of $24K/yearly for all four kids (fourth kid is free, thankfully...) up through high school...

I had planned to try and stick it out with the four kids in our 3+2 for another year or 18 months, save up some more money given I don't think the economy is on really stable ground. Also think house prices might drop as a result. However, a 5+4 at 3400 sq ft just went for sale in one of the neighborhoods close to work+schools for $800K... wife wants to consider moving now (she's 7 months pregnant, seems like a great idea right..?). I'm worried about the economics of throwing so much down on a house in such a rush, but to find anything with 4-5 beds in our area will run 800-$1mil minimum, so I don't think the price is bad, I'm just nervous about doing this 12-18 months earlier than I planned on..

Do I need to worry about the finances of this? I am a BH through and through... like to save, do not like to spend cash... do not want to work self to death either to pay for stuff.. can I open the coffer for this or is this a recipe for house poor? Thanks all.
2,000 square feet is plenty of square footage for your family, even with twins on the way. And you will not need all those bedrooms for kids until they are older, nor will you need more bathrooms--for a while anyway. Are your 4- and 2-year-olds boys, girls, or a boy and girl (this may make a difference regarding bedrooms)? You will, however, need to make sure your wife has a vehicle which is majorly suitable for maneuvering car seats and kids in and out of easily. I would use this time to save up more money toward future home purchase, although I understand your wife wanting to make the move now because it will be more difficult moving with four younger children in a few years. Although, personally, I would delay home purchase--3400 square feet would be a lot of space for 6 people.
wilked
Posts: 1785
Joined: Thu Mar 24, 2011 1:50 pm

Re: Buy this house, or stay put?

Post by wilked »

I would 100% move if it meant moving to a school district where you didn’t have to pay for private school. Is that an option?
User avatar
Watty
Posts: 20718
Joined: Wed Oct 10, 2007 3:55 pm

Re: Buy this house, or stay put?

Post by Watty »

Anonymiss wrote: Fri Jul 31, 2020 8:15 pm ...2 kids (4, 2), wife pregnant with twins

.. wife wants to consider moving now (she's 7 months pregnant, seems like a great idea right..?).
So you would be moving when she is 8 months pregnant with twins when she might be on bed rest or getting ready to have the twins a bit early.

Then you would get to deal with selling your house about the time you have newborn twins. Even if it is not anything serious complications are also more common with twins.

You can almost pay cash for the new house with the money in your taxable account so you can afford it one way or another but it would be insane to buy a new house now. Wait until after the 1st of the year.
Last edited by Watty on Sat Aug 01, 2020 8:20 am, edited 1 time in total.
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8foot7
Posts: 2315
Joined: Mon Jan 05, 2015 7:29 pm

Re: Buy this house, or stay put?

Post by 8foot7 »

I see the issue here. Your wife is nesting.

The new house is a fine idea. But right now is a terrible idea. Moving, selling, fixing, adapting — these are things you and your wife will not have the time and energy for with two newborns on the way. Not to put too fine a point in it, but your wife has reached the conclusion of her ability to contribute usefully to the day to days at this stage of her pregnancy. (That’s no slight. She is making two new human beings and is probably in pain and discomfort 100% of the time.) that means all of this would largely be on you.

This is the time to pull the Pregnancy Brain card and talk your wife down from this idea until a few months from now, when you have some routines.
Topic Author
Anonymiss
Posts: 3
Joined: Fri Jul 31, 2020 8:02 pm

Re: Buy this house, or stay put?

Post by Anonymiss »

Thanks for the advice all.

To answer a few questions..

We would likely do private school regardless of location but want to be in decent proximity (although the public elementary school in this neighborhood is a good option).

Currently have two boys, twins are one boy one girl.

Based on your responses I am reassured by the financial aspect of the decision but still worried about the logistics of moving. I work about 70 hours a week and my wife is going to try and take too much of this on. She says her parents can come help move but they are almost 70 and that seems like a totally unfair imposition. I don’t think it’s going to be much easier to move with 4 kids once they arrive but at least she’s not going to put herself into preterm labor and will be allowed to lift some things without running any serious risks, since I know she’s going to try to do too much...

Saw the house today and it’s nice but the sellers need a leaseback for 30-45 days and they have 10 showings today... to avoid the leaseback we would have to go in over ask.. doubt this will work out. Thanks for the input all.
delamer
Posts: 10551
Joined: Tue Feb 08, 2011 6:13 pm

Re: Buy this house, or stay put?

Post by delamer »

I am going to put in a dissenting voice — I don’t think taking on a new major financial obligation in the middle of this pandemic is a good idea.

There are just too many unknowns.
Texanbybirth
Posts: 1396
Joined: Tue Apr 14, 2015 12:07 pm

Re: Buy this house, or stay put?

Post by Texanbybirth »

Stay where you are. Money isn’t the issue. I wouldn’t want my wife trying to move at 7 months pregnant in summer, and it sounds like you will not be around to help much. 70 year old parents won’t be as much of a help as you/they think. I can’t imagine moving with two newborns (they always come early) or getting settled into a new house. In 18-24 months you’ll be hopefully getting a little more sleep, and there is ALWAYS another house out there for your family.

We’re expecting our 4th in December. Congrats on the big growing family! :beer
“The strong cannot be brave. Only the weak can be brave; and yet again, in practice, only those who can be brave can be trusted, in time of doubt, to be strong.“ - GK Chesterton
Topic Author
Anonymiss
Posts: 3
Joined: Fri Jul 31, 2020 8:02 pm

Re: Buy this house, or stay put?

Post by Anonymiss »

Thanks Texan, congrats to you too! I share your thoughts..

Del I felt the same way... economy feels sort of like a house of cards and I would hate to buy before a big downturn. Even if there ends up being no downturn, so what?.. no harm in that really..
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