Hello everyone!
In about 2 years (yes I plan ahead perhaps too much) we will be buying our first house. We will also be relocating to literally wherever we want in the U.S. Right now, we have our sights set on Peoria, AZ area, although that could change. The cost of living is average there and housing costs are slightly above average. Job wise, we both work in health care and can find a job wherever there are nearby hospitals/clinics. Our take home pay is currently $9400 although this could change depending on the job market when we relocate. Hopefully not too drastic a change.
Anyway, since buying a house will tie up an enormous amount of our income for the foreseeable future, I am seeking general advice about house buying. For now, buying seems more attractive than renting despite the constant drain on finances a house seems to be. Most of the houses in the area we've been considering seem to be about $350k for 2,000 square feet in a decent school district. We plan to have two children, so 2,000 square feet seems reasonable for four people. We can use a VA home loan if we choose to, which will require no down payment or PMI. This makes buying more attractive to us, since we won't have to tie up so much money upfront that we would otherwise be saving/investing.
And I would plan on doing a 30 year loan, as with interest rates 4%-5% (by then, just guessing) I would rather put extra money towards investments rather than trying to pay off the mortgage quickly. Being optimistic about interest rates, $350k at 4% for 30 years is about $1700/mo. With HOI, property tax, possible HOA, and saving for maintenance, that easily puts us close to $2k a month for housing expenses. Right now we are paying $1k (renting a 1200 sq ft place in a cheap area - terrible schools), so this extra $1k a month makes me altogether nervous.
I hate the idea of so much of my monthly income being tied up in housing, but outside of just moving somewhere completely different, I'm not sure I can avoid it. Just about any modest sized home in a good school district seem as though it's going to eat up at least $1500 a month, whether you buy or rent.
Anyway, am I missing any grand Mustachian insights? I don't want a gigantic, luxurious home by any means, but even a modest-sized one seems a bit too pricy for my liking. I would be more inclined to wait and rent a cheap place for as long as possible, but again, concern about mortgage interest increase makes me feel we might as well just buy and get it over with.
How much are others paying for their homes, in regards to percent of your net pay? What suggestions do you have? Am I being too paranoid? $2k isn't the worst, I suppose, but it does seem expensive to me.
As a side note, we're currently living off roughly $3k a month and the other $6k is going towards debt/savings. So we're no stranger to living somewhat frugally, although we could certainly do a lot more to cut expenses. Eliminating at least most of our debt is our first priority, then we would like to still maintain a high savings rate. Kids and a high housing payment might just kill that. As far as our goals go, we aren't in any hurry to retire at 40 or something, we're fine working for the next 20 years or so at least. So having a huge savings rate isn't vital, but we value a high savings rate because we like the freedom having extra money gives us.
Advice? Thanks in advance!
