Move up in house?

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Topic Author
NextMil
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Move up in house?

Post by NextMil » Fri Sep 13, 2019 7:07 pm

So bogleheads, how do you deal with moving up in house when it makes you anxious?

Built a solid NW, underpurchased by traditional standards vis a vis income to pay down house quickly and invest.

I hate my neighborhood and considering moving the family up in house. The new place is a dream home, but comes with dream home prices, but true to bogleheads I won’t over pay. Nevertheless it’s expensive, even with putting 33% down. Rates are low. I am in a HCOL and truthfully the total cost of the home would be equal to or slightly less than total NW.

Have kids. They would absolutely love the house.

I am currently on a 15 year paying like a 12 with 8 years left. Was thinking 30 year which would be the or close to currently what I am paying with additional principal reductions, but on a 30 year.

Normally I am super debt averse, but a big part of me is saying I didn’t work this hard to not reap some rewards and enjoy life.

WWYD?

Jags4186
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Re: Move up in house?

Post by Jags4186 » Fri Sep 13, 2019 7:09 pm

We could be more helpful if we knew actual numbers

Topic Author
NextMil
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Re: Move up in house?

Post by NextMil » Fri Sep 13, 2019 7:14 pm

Not comfortable giving numbers.

HornedToad
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Re: Move up in house?

Post by HornedToad » Fri Sep 13, 2019 7:20 pm

Depends on whether it’s moving from 10% of gross to 20% for monthly mortgage or more like 20% to 40%.

Since you won’t share numbers, but on 15 year mortgage, 33% down and presumably stable jobs, then do what makes you happy

If not stable jobs or drastically over extending affordability (>35%+ Piti to take home), then don’t

edgeagg
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Re: Move up in house?

Post by edgeagg » Fri Sep 13, 2019 7:24 pm

Given what we know, I know what I'd do:

(1) I view a house as a totally illiquid investment - after all, I have to live somewhere. Tying up NW in an illiquid investment doesn't seem like an optimal path.
(2) Isn't there a less dreamy house that is more affordable in the area? Frankly, my son's views on cars and mine are rather different so I'd certainly not buy one based on what he thought :wink: .
(3) What are the reasons for hating the neighborhood? Bad schools?

Compound
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Re: Move up in house?

Post by Compound » Fri Sep 13, 2019 7:29 pm

Given how much you dislike your current neighborhood, it seems a move is a good idea. Given the lack of details, it’s hard to comment much on the intended house purchase.

Planner01
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Re: Move up in house?

Post by Planner01 » Fri Sep 13, 2019 7:39 pm

It really depends on the numbers. The total net worth of a couple at 25 is very different than at 45.

We are in our mid 40s and buying a house close to our total net worth would not even be imaginable. At this point our goal is to pay off the house by the time I am 50. But if we were 25, that would be very achievable. The numbers behind your question matter.

Global100
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Re: Move up in house?

Post by Global100 » Fri Sep 13, 2019 7:58 pm

NextMil wrote:
Fri Sep 13, 2019 7:07 pm
Have kids. They would absolutely love the house.
Sounds like you could be moving your children relatively far away. Do they have very close friends in your current neighborhood? Ask them for their input. But it's another factor to consider if your current neighborhood is too dangerous for them, etc.

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Watty
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Re: Move up in house?

Post by Watty » Fri Sep 13, 2019 11:05 pm

NextMil wrote:
Fri Sep 13, 2019 7:14 pm
Not comfortable giving numbers.
Something to look at then is if buying the more expensive house still allow you to;
1) Max out your retirement accounts
2) Pay for your kids college education
3) Have the house paid off before you retire

Those would be read flags that the house might be too expensive.

It would be goo to look at what houses are available priced in between the house you hate and and the dream house.

HomeStretch
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Re: Move up in house?

Post by HomeStretch » Fri Sep 13, 2019 11:25 pm

Not enough info to weigh in on whether you can afford the new house. You will have to evaluate for yourself what impact it will have on your savings and future retirement.

barnaclebob
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Re: Move up in house?

Post by barnaclebob » Fri Sep 13, 2019 11:27 pm

NextMil wrote:
Fri Sep 13, 2019 7:14 pm
Not comfortable giving numbers.
How about %s then. What % of takehome pay will go to the house vs what it is now? My upgrade house price was about 2/3 of my met worth at the time and we put down 40% with a 20 year loan. My PITI is probably 40% of take home after putting 30% into 401k. Just refied and should have it paid off in 12 to 15. No children yet but I can put 2 through college and major life events via an inheritance or retire 5+ years earlier if we dont have any. Your numbers sound a little worse than that, i would be uncomfortable with any of my numbers being 10 to 20% worse.

JoeRetire
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Re: Move up in house?

Post by JoeRetire » Sat Sep 14, 2019 6:23 am

NextMil wrote:
Fri Sep 13, 2019 7:07 pm
I am currently on a 15 year paying like a 12 with 8 years left. Was thinking 30 year which would be the or close to currently what I am paying with additional principal reductions, but on a 30 year.

Normally I am super debt averse, but a big part of me is saying I didn’t work this hard to not reap some rewards and enjoy life.
Since the payments would be about the same, getting a 30 year mortgage at a good rate would make the most sense.

sd323232
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Re: Move up in house?

Post by sd323232 » Sat Sep 14, 2019 6:35 am

NextMil wrote:
Fri Sep 13, 2019 7:07 pm

Normally I am super debt averse, but a big part of me is saying I didn’t work this hard to not reap some rewards and enjoy life.

WWYD?
You sound like you dont have enough money to buy the dream house, thats why you posted here. May be build up your down payment for a year or two and then buy the house? 1-2 years is really not long time.

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Devil's Advocate
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Re: Move up in house?

Post by Devil's Advocate » Sat Sep 14, 2019 6:39 am

I would say your age matters. If paying on a 30 year and you are in your 30s you will have a 30 yr mortgage paid off in your 60s (if u dont prepay). If you are in your 50s and paying on a 30 yr mortgage then you would likely be paying off mortgage in your retirement which IMO is not prudent.


DA

Topic Author
NextMil
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Re: Move up in house?

Post by NextMil » Sat Sep 14, 2019 7:18 pm

Lender says that it would be about 20% of gross pay on a 30.

We are young members of the two comma club, and have young children.

House is ten minutes away from current home. Same school district. Neighborhood just has too much traffic.

I think that should answer most questions.

We worked hard to get here after a few years of mistakes. Want to not be a miser and enjoy life a little.

Topic Author
NextMil
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Re: Move up in house?

Post by NextMil » Sat Sep 14, 2019 7:20 pm

Also maxing retirement and would not change that and am one of the lucky ones who is self employed and can put more away.

Jags4186
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Re: Move up in house?

Post by Jags4186 » Sat Sep 14, 2019 7:31 pm

NextMil wrote:
Sat Sep 14, 2019 7:18 pm
Lender says that it would be about 20% of gross pay on a 30.

We are young members of the two comma club, and have young children.

House is ten minutes away from current home. Same school district. Neighborhood just has too much traffic.

I think that should answer most questions.

We worked hard to get here after a few years of mistakes. Want to not be a miser and enjoy life a little.
20% for just the principal and interest or 20% PITI?

Topic Author
NextMil
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Re: Move up in house?

Post by NextMil » Sat Sep 14, 2019 8:04 pm

Pretty sure all in, but does it matter? Going to do some modeling Monday with lender.

Planner01
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Re: Move up in house?

Post by Planner01 » Sat Sep 14, 2019 9:55 pm

20% of gross pay is not terrible, especially if you are young and your income will probably only going up as they years go by. I say go for it!

Jags4186
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Re: Move up in house?

Post by Jags4186 » Sat Sep 14, 2019 9:58 pm

NextMil wrote:
Sat Sep 14, 2019 8:04 pm
Pretty sure all in, but does it matter? Going to do some modeling Monday with lender.
Of course it matters. My PITI is half “PI” and half “TI”. If you’re in a similar position and your PI is 20% gross making your PITI 40% of gross...then no the house is too expensive.

surfstar
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Re: Move up in house?

Post by surfstar » Sat Sep 14, 2019 10:08 pm

Would it bring more happiness vs a larger portfolio and/or retiring earlier?

What are your priorities? Early retirement? Nice house?

Do what will make you happier in the long run. Sounds like you can afford it, if truly desired.

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Cycle
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Re: Move up in house?

Post by Cycle » Sat Sep 14, 2019 10:51 pm

I have only downsized.

2008 $205k, sold for $205k in 2015
2br/2ba 1200sqft

2015 $97k + $50k renovation (half a duplex)
2br/1ba 1100sqft (keeping the whole building as investment property)

2019 $173k third home + 10k renovation
2br/1ba 1007sqft

Our latest home represents 10% of our net worth, just signed PA today, cash offer, close in 2.5 weeks.

This home is downtown on a car-free pedestrian mall, with grocery and dozens of restaurants and a couple breweries a short walk away. a half mile walk down car free pedestrian plaza to a large city park. A Target department/grocery store is 3 blocks away. Pediatrician/gyno/dentist/eye doctor are all a short walk away. Daycare and gym across the street. NBA, MLB, NFL stadiums within a 10 minute bike ride. Our express buss stops out to Megacorp campuses are within a block, so our commutes are a breeze and bus fare purchased pre-tax. Multiple aBRT and light rail options nearby. Good public school district. Underground parking for my spouses car.

Since having an infant 8 months ago, I made the decision we needed to optimize free-time and safety for my family. Living in a walkable neighborhood is the best way to achieve these goals, for our circumstances anyways.

The duplex I rennovated is very nice and i frankly regret wasting all that time rennovating it only to enjoy it for four years; however, i decided the bandaid had to just be torn off and we had to get to a neighborhood with better pedestrian infrastructure. My lesson from this is to never put too much emotion into a property. Needs change. jobs change. There's no such thing as a forever home. what might be your dream home today will likely not be your dream home in 15 years.

When OP says "under purchased by traditional standards", does that mean keeping up with the Jonses? housing is an expense that should be minimized as much as possible while still meeting your needs. If you are ultra high NW, then your needs may be quite grandiose, like if you're ken griffin of citadel.
Never look back unless you are planning to go that way

sd323232
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Re: Move up in house?

Post by sd323232 » Sun Sep 15, 2019 10:02 am

surfstar wrote:
Sat Sep 14, 2019 10:08 pm
Would it bring more happiness vs a larger portfolio and/or retiring earlier?

What are your priorities? Early retirement? Nice house?

Do what will make you happier in the long run. Sounds like you can afford it, if truly desired.
I agree, the OP sounds like he already has made decision to buy house and wants to convince us, random people, that his decision is right. OP, go buy house, you will be ok!

rashad3000
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Re: Move up in house?

Post by rashad3000 » Sun Sep 15, 2019 10:21 am

I'm curious. This is a site full of strangers. People share their numbers all the time because it's a financial site. Why would someone feel uncomfortable sharing numbers? It's not like it's Facebook.

Topic Author
NextMil
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Re: Move up in house?

Post by NextMil » Sun Sep 15, 2019 6:07 pm

surfstar wrote:
Sat Sep 14, 2019 10:08 pm
Would it bring more happiness vs a larger portfolio and/or retiring earlier?

What are your priorities? Early retirement? Nice house?

Do what will make you happier in the long run. Sounds like you can afford it, if truly desired.
More interested in FI than FIRE. It would absolutely bring more happiness.

But I am still not sure. I have always been a DR must kill mortgage type, so adding hundreds of thousands in additional debt and extending term is really giving me pause. On the other hand, we slogged for years to build a solid financial position and with small children, it would be nice to enjoy a more relaxed and fun lifestyle and we hit some financial milestones already. I actually think even Dave would say it’s ok, but it still makes me nervous. Just not sure if it’s making me nervous because I have been in accumulation and debt killing mode for around a decade.

Tracker968
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Re: Move up in house?

Post by Tracker968 » Mon Sep 16, 2019 8:40 am

One other thing to keep in mind is how long will the kids really be with you? They grow up fast and move on to college etc. If you think the new place will really make a difference to them, then you should do it. Once they move out you only see then a few times per year. These are your best "family time" years so you should make the most of it.

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