So this site has been a total inspiration and wake-up call for me, and I’ve already done a lot to tighten up my budget. (In the past, my budget was more like a guideline than a rule, and I’d 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 I’m paying ridiculous property taxes on a house with 3 acres of land
that I don’t even use AND it’s an hour’s commute each way to my job. FACE PUNCH.
So now I’m looking at selling my house and buying a new one that’s closer to work and has lower taxes. I’ve found a house that I really like and I probably should make a move on it very soon if I don’t want to lose it, but I’m suffering from decision paralysis because this is a huge commitment, I’ve never bought or sold a house before (I inherited mine from my dad), and I’m struggling to figure out how to manage the financing. I’m really not super savvy about money matters or real estate, so I’d welcome any advice.
First, current case study numbers (amounts are monthly):
Me: 47, female, single, no kids, 3 cats
Salary | $4,200 |
Pretax Health Ins. | $58 |
Pretax Vision/Dental Ins. | $4 |
Employer-sponsored HSA | $70* |
FICA base salary/wages | $4,068 |
|
Life/LTD Insurance | $15 |
Paycheck income before tax | $4,053 |
|
Federal Total Income | $4,068 |
Federal tax | $528 |
State/City tax | $114 |
Soc. Sec. | $252 |
Medicare | $60 |
NJ State Disability Ins. | $22 |
Total income taxes | $976 |
|
Income before other expenses | $3,077 |
|
|
Monthly Average Expenses: |
Property Tax | $833 |
Home/Rent Insurance | $70 |
Car Insurance | $132 |
Car Maintenance, Registration, etc. | $30 |
Charitable contributions | $25 |
Dentist | $80 |
Electricity (incl. heat) | $220 |
Entertainment | $18 |
Fuel/Public Transport | $100 |
Service contract for furnace | $36 |
Groceries | $300 |
Home Alarm System | $60** |
Household; Maintenance | $100 |
Internet | $86 |
Medical (Doctor, Hospital, etc.) | $300*** |
Medicine (OTC + Prescription) | $100 |
Miscellaneous (includes eating out) | $120 |
Pets | $300**** |
Phone (cell) | $60 |
Recycling/Trash | $5 |
Subscriptions (paper/magazines/etc.) | $2 |
Water/Sewer | $5 |
Non-mortgage total | $2,982 |
|
Loans: | |
Geothermal loan | $83***** |
|
Total Expense | $3,065 |
|
|
Assets: | |
House (paid off) | worth $400-500K |
Investment account | 429,000 |
IRA | 82,700 |
Beneficiary IRA | 33,500 |
TSA 1: 403b | 40,600 |
TSA 2: 403b | 61,200 |
HSA | (site is down rn so I can’t check current total, but it’s 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; it’s from my last year’s W2, and my employer apparently made a mistake on it.
** Yes, I’m 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 I’m 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 isn’t quick to sell. Now I’m trying to figure out how best to proceed.
Note that the house I’m looking at is currently listed at $279K, with property taxes of about $400/month. A buyer’s agent that I consulted with estimates that my house could go for something in the range of $400K-500K. Zillow’s Zestimate is $569,558, which I think is too high—my 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.
4. ???
So what say you, Mustachians? What would you do?