So this site has been a total inspiration and wake-up call for me, and Iíve already done a lot to tighten up my budget. (In the past, my budget was more like a guideline than a rule, and Iíd make up any shortfalls by periodically taking money out of my investment account; not such a great plan.) And as part of the process of reviewing my finances, it suddenly struck me that Iím paying ridiculous property taxes on a house with 3 acres of land that I donít even use
AND itís an hourís commute each way to my job. FACE PUNCH.
So now Iím looking at selling my house and buying a new one thatís closer to work and has lower taxes. Iíve found a house that I really like and I probably should make a move on it very soon if I donít want to lose it, but Iím suffering from decision paralysis because this is a huge commitment, Iíve never bought or sold a house before (I inherited mine from my dad), and Iím struggling to figure out how to manage the financing. Iím really not super savvy about money matters or real estate, so Iíd welcome any advice.
First, current case study numbers (amounts are monthly):
Me: 47, female, single, no kids, 3 cats
|Pretax Health Ins.||$58|
|Pretax Vision/Dental Ins.||$4|
|FICA base salary/wages||$4,068|
|Paycheck income before tax||$4,053|
|Federal Total Income||$4,068|
|NJ State Disability Ins.||$22|
|Total income taxes||$976|
|Income before other expenses ||$3,077|
|Monthly Average Expenses:|
|Car Maintenance, Registration, etc.||$30|
|Electricity (incl. heat)||$220|
|Service contract for furnace||$36|
|Home Alarm System||$60**|
|Medical (Doctor, Hospital, etc.)||$300***|
|Medicine (OTC + Prescription)||$100|
|Miscellaneous (includes eating out)||$120|
|House (paid off)||worth $400-500K|
|TSA 1: 403b||40,600|
|TSA 2: 403b||61,200|
|HSA||(site is down rn so I canít check current total, but itís under 5,000)|
I have two credit cards, one MasterCard that I use for lots of things, and one store card that I only use to take advantage of sales; I pay off the balances every month.
* This number is borked right now; itís from my last yearís W2, and my employer apparently made a mistake on it.
** Yes, Iím ditching this ASAP!
*** High due to an out-of-network psychiatrist/therapist.
**** I know...
***** 0% interest; current principal is about $6,400.
So! First, I have to acknowledge that Iím a lucky, lucky cat, and I owe a majority of my resources to my parents (both now deceased). I have quite a lot of assets. But because my actual salary is rather low, when I put out my first feelers toward a mortgage lender, he sounded very dubious and reluctant to take me on, especially since I might be carrying two houses for a while if mine isnít quick to sell. Now Iím trying to figure out how best to proceed.
Note that the house Iím looking at is currently listed at $279K, with property taxes of about $400/month. A buyerís agent that I consulted with estimates that my house could go for something in the range of $400K-500K. Zillowís Zestimate is $569,558, which I think is too highómy house is a 2BR, 1BA ranch in an area of McMansions.
1. Continue trying lenders and push harder, maybe bringing them some proof of my investment assets, which I can withdraw from to cover the gap until my house sells.
2. Straight up take money out of the investment account, buy the house, and replace the money when my house sells. This avoids dealing with lenders, but I lose the earning potential of that money, plus it looks like I might get hit with capital gains taxes.
3. Make my purchase contingent on selling my house.
So what say you, Mustachians? What would you do?