Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Mediocre cheap house VS. more expensive nice house
So my husband and I have been looking for a house for quite a while now. We have been approved to go up to about 175,000- however we decided we would like to keep it around 100,000 because we would be saving more and we wouldn't have to worry if one of us lost a job. The houses we have seen are ok, they are in ok neighborhoods, and each one has a decent amount of work that needs to be done. Our realtor just found out that an Alden Dow house (he is a well known architect) is going to come on the market in a wonderful location... So we saw the house and it is great- we both think it's pretty awesome. They will be listing it at 135,000. So- should we buy a mediocre house, save more, but have a challenging time selling it in the future or should we spend more on a great house (we would still be saving, just not as much) in a great location. Advice please!
Re: Mediocre cheap house VS. more expensive nice house
This can be a black and white answer. Crunch the numbers.
One one salary (since you said this would be important to you), can you afford payments, taxes, insurance, and some utilities on 25-28% of that income's after tax amount???
For example, if the numbers are based SOLELY on your job and you make $60k per year after tax, then your monthly housing cost should be around...
$1,250 on the low end and $1,400 on the high end.
($60,000 at 25% = $15,000. Divide that by 12 months to get $1,250.)
Also, why would you have a hard time selling it in the future? FYI: At this point in the economy, it's not advisable to buy a home unless you plan on being in it for 10+ years.
In addition, it's listed at $135k, but it could possibly go for less. How much less, that's too hard to know.
Do you plan on kids while living in this house? Daycare can often be as much as a mortgage per month. Figure those numbers into your budget. If you plan on staying home, figure your budget with one salary.
off the cuff, without crunching the numbers, I would say to go with the more expernsive, more desirable home, hoping you can get it for about 130k.
Overall, you can't beat the interest rates now, and you might not be able to get into a home like this again, for that price.
Obviosusly, I assume wehre you live that cost of housing is low, so I am not as familiar with the trends... but you should, as pp said, plan to be in the home at least until the market rises, which as experts are claiming, won't be until 2019-2022.
As it stands right now, we can afford it. However we wouldn't be able to if one of us lost our job... I know that others don't find it as important based on one salary alone- so.... I am stuck on that.
In terms of selling it in the future.... We wouldn't plan on moving for a long, long time... But we think in terms of resale, we would like a more desirable location. Also, the fact that it is a Dow house is appealing. We love the architecture and Dow houses normally go quickly.
If you are planning to stay in it for a very long time, go with the more desirable location. We were in a similar situation, and decided we are not settling in the area/neighborhood but willing to settle on houses with less square footage, less features.
Do you have kids? Would one of you want to be a SAH parent once you did? If so, you should plan on finding a house suitable for one salary. That flexibility can be nice.
Do you work in unstable fields where losing a job is a real possibility? Or do you have secure jobs? If you're in an industry where you can be cut at a moment's notice, of course stick to what you can afford on one income, but if you have no expectation of that, I don't see why you need to make a decision solely based on that when there's a house you love and can afford.
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Thinking of doing cosmetic updates to a dated home? These were our costs.
I agree with Brina.
Go for the nicer home. Nicer/newer might mean less $ on repairs and remodeling as well. You can't change a houses location either -- and it sounds like you enjoy the newer home. So long as you concentrate on saving for the "what if" moments (in case a job is lost), you should be okay. Run the numbers and figure out exactly how much you'd be going 'backwards' if one of you lost a job. Plan to save so that you can have about a year of cushion. have a talk, and decide if working part time during a job loss situation is feasable to supplement income (grocery store, drug store, retail job, self employment, etc)
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Also, if you do work you will need to pay for childcare. My mortgage is actually less than what I pay for one toddler in daycare.
We had the same decision (except ours involved less sqft/better neighborhood versus more money/bigger home.) We opted for the smaller home in order to be more financially secure for our future child. We have never once regretted our decision.