Factors in moving to be mortgage free instantly

[Bullseye]

It recently occurred to me that if we moved 25 minutes drive away from where we are now, we could instantly wipe out our $180k mortgage, and ever since then, I've been infatuated with the idea, and my wife is on board as well, although we both have anxiety about moving.  It would be to a place we looked at moving before, with a small town feel, somewhere we've never lived, but that seems like a very appealing lifestyle (the town is surrounded by conservation lands/trails on three sides, but attached to a big city (Hamilton, Ontario), and very walkable/bikable.  We're both 37, kids 6 and 7. 

Pro's

- No more mortgage, versus 12 years left with wife working 25 hours a week, and me about 15-20, if we stayed put.  I also consider our ability to maintain these hours and incomes not very secure in the longer term, though.  With no mortgage, we'd be able to live same lifestyle working 10 hours per week each (both of us have incomes that can be scaled fairly easily), or with just one working 20 hours or so if other couldn't work or find work.  We already have enough retirement savings to be fine at 65, so we're just working to cover living costs till then and save for earlier retirement, if we ever choose to. 

- We could drop to one car for sure, and be able to walk or bike most places.  Our current area is also quite bikable, but not as 'scenically' bikable (suburban vs town/urban in new area), and not easily walkable to shops.

- We would be moving to a smaller house (1,700sq ft to 1200-1300), so less to clean, less space to heat, less house repairs and maintenance (which I despise).  We used to live in a house this size, and are okay with that part.

- When our kids grow up, they might actually be able to afford a house in the new area.

- Life is an adventure, and change is good! 

Con's

- we are very established where we live now, we know every neighbor, and most friends are bike distance away.  We aren't moving so far that we couldn't easily see friends with a 25 minute drive, but we'd definitely lose the interactions that happen so frequently here like, 'hey, want to go for a ride in 5 minutes?', 'hey, let's do a dinner night with a course at each families house, biking between each!'.  And the spontaneous beers with neighbors when we are both out with kids outside that turn into invites for dinner and late night socials.  This familiarity and sense of community is a major factor, obviously.

- the uknowns.  Maybe new neighbors will be terrible and make our life hell.   Maybe kids won't adjust well to new school.  Maybe we'll decide the new area isn't as nice as we thought, 'grass is always greener', etc

 - life is uncertain, and change is scary!  ;)

We're pretty much changing our minds on this every hour right now, so looking for any advice, any other factors we might have missed, etc.  Plus, it's also always good to just get your thoughts written down on 'paper', so even if no one responds, it's still helpful!

[matchewed]

From what I'm seeing in your pro/con list you are listing a large amount of wishy/washy items. I'd put some hard math behind some of these things. If your primary driver is the elimination of the 180k mortgage you still have to live somewhere, you still have to either pay rent or taxes or home insurance. I'd hammer those details out and understand what you are spending now, and what you will be spending if you move. This will help on the more financial aspects of this decision. Although from what I'm gathering in your post financial matters aren't your biggest concern but it is your very first point.

You haven't referred to work commutes so I'm assuming you don't have it. In that case is the elimination of a car is something you could do either way?

You also seem to value the relationships you have built in the neighborhood you currently reside in. Unless you have established, or establish, some connection with these relationships like a dedicated ride day or some such you very well may have those relationships fade a bit  if you move. It is a risk and one only you can really figure out whether it is one or not depending on the relationship you have with your neighbors.

If you are leaning towards the move, then talk to the people in the neighborhood you're looking at moving to. See if they are terrible.

Change is only as scary as you let it be. :)

[Bullseye]

Thanks for the reply!

Sorry I wasn't clear on the financial details...we'd be moving from a house where we have a $180k mortgage, to one we own where we have no mortgage, as we'd have enough cash to pay for it after selling current house.   Most other expenses would remain roughly the same, except for the one car we'd drop.  We'd be able to manage on one car fine, as we'd be working less.  We track expenses to the penny every year, so we're pretty good in this area.  Current annual spending is $55k.  That would drop by $20k without mortgage payments, and another $5k without second car costs, so we'd need $30k per year to live same lifestyle. 

Clearing the mortgage is our biggest motivator, for sure, as it frees us up to enjoy more time with our kids when they are still young, do more day trips, road trips, local exploring in creeks and woods, etc.  We are afraid of being frugal for the next 10 or so years till mortgage paid off, and then missing out on epic adventures with the kids that we currently don't have time for (wife works weekends, I work weekdays, generally).  We've considered cutting back work now and putting mortgage payoff till after kids are grown, but as I mentioned, we're concerned about our longer term ability to generate enough income then to do so. 

[WageSlave]

Since you already have the detailed numbers, it sounds to me like a "soft" question, one based more on your family's values rather than the math.  From what you've said, if having more time to spend with your kids is truly the most important thing in your life, then I don't think there's any question.  E.g., if you move and your new neighbors suck, does it really matter once you consider all the extra time you get with your kids?

On the other hand: I think that now is a good time to have low-interest debt, particularly in the form of a home mortgage.  In other words, what if you look at your mortgage as an investment, rather than an expense?

You said you have only 12 years left: can you refinance the balance into a new 30-year fixed-rate loan?  The downside, is of course, that you're deliberately moving the endpoint much farther away.  The upside is that it should reduce your monthly payment (i.e. increased cash flow).  I'd also argue that you now have an inflation hedge: your mortgage payment will get cheaper over time thanks to inflation.

You might want to run the math on a scenario like this:

• Refinance for 30 years.  Assume monthly mortgage payment goes down.
• Keep working the same as you are now.  Assume monthly cash flow goes up due to decreased mortgage cost.
• Add the extra cash to your investment stache.

There could be some combination of (1) extra investment contributions, (2) number of longer-hour working years, and (3) investment returns that allow you eventually start paying the mortgage with your passive income.

The above scenario is slanted towards the goal of building more wealth, at the expense of keeping your current working hours.

You could also potentially use the refinance as a "split the difference" solution: if you can get your monthly mortgage cost down, you can scale your work down accordingly.  The downside is of course that you now have the mortgage hanging over your head for 30 years instead of 12.  But it's a smaller payment, and if inflation ever ramps up, your payment will go down in real terms.

If this is an option for you, you could also rent out a room in your current house.  If you're willing to give up 400 or more square feet in a move, then that means you could give up that much space in your current house.  You might be able to build a little apartment.

Another idea, which is possibly completely off the table, but: you said your job income can be scaled: any chance of you  and/or your wife being able to scale it up dramatically for two or three years to knock out the rest of the mortgage?  What if you took turns, e.g. you did a couple hard-core working years, then your wife did a couple of the same?

[Bullseye]

Thanks, some good thoughts! 

I'm in Canada, though, so very different mortgage situation here.  No tax deduction, and no 30 year mortgages.  Also, our focus is on simple living more than building wealth.

I like the idea of refinancing to lower the payment and cutting back on work, but I feel it is a riskier idea than just clearing the mortgage and being done with it for life. 

Your last point is the other one we're considering that I didn't mention...my wife has been part time (or on 1 year mat leaves) for 8 years now, and she is willing to go back full time dayshifts to allow us to stay where we are and still make extra payments on the mortgage.  Kids are in school days, anyways.  However, she see the appeal of being mortgage free now and not NEEDING to go back to full time.

But you're right, if our #1 thing is more family time, we have to put community and friends second and make the move.  Tough choices!

[SunshineGirl]

Interesting situation. How are the schools where you are vs. where you would move to?

And, for what it's worth, I, too, live in a great neighborhood similar to what you describe in terms of friendly people. What I found is that as the kids grow, your interaction with the neighbors lessens dramatically. It was really the young age and the elementary school experience that kept us connected, but once everyone started going off to different middle schools, and as kids became involved in varying activities, our social group shifted away from neighbors.

I do think, subjectively, that there is a definite plus for kids staying in the same house/neighborhood their whole childhood. It's rare these days, but I think it's meaningful for them. Do your kids love the neighborhood? Their school? Are their friends "good kids" and are their relationships deep?

Is there a different and perhaps better time to make the break from your house/neighborhood -- like, do kids all go to different middle schools?

Having time on weekends for trips, etc., is a good goal, though....

[SunshineGirl]

Actually, as I re-read your posts, I decided that were I in your shoes, I would NOT move from where you live, but I MIGHT try to shift both your work schedules to the same days, whether that means your wife has to go FT or not. At least, try that first and see how it feels. The intangibles that you would be giving up are huge.

[BPA]

If the area is Binbrook, then I teach at the local public high school.  My son goes there and loves it.  My daughter loved it when she went there too.

Message me privately if I'm right and you would like some more info.  I live in upper Stoney Creek.

[Deano]

I think the area would be Dundas. Binbrook had a small town feel...but now it feels more like Anywhere, Canada/US. It's become a suburb....it's not a town like Dundas. If memory serves me correctly it's not surrounded by conservation on three sides as well. Stony Creek is much better IMO, I like it a fair bit.

Dundas is a great little town, I lived there for 10 years. It's a touch yuppy/uppy these days, but still a fantastic place to live. Loads of people from Toronto have done the same thing as you're thinking of. You must have some serious equity, because Dundas is not really that cheap. If I could offer any other advice it would be to sell up now or wait a few years. I think real estate is in for a shocker soon.

Like the other poster said, you can PM me if you're interested in Dundas, I no longer live there but I'm there once or twice a week and still work there on occasion.

[Bullseye]

Sunshine Girl - thanks, some good food for thought!  Especially about things changing as kids get older.  Indeed there are serious intangibles at play here, but the benefit is a big mortgage disappearing instantly, and freedom opening up for us at 37.  You can see why we're struggling.

[Bullseye]

Deano nailed it, it's Dundas!  I will PM you, thanks.

[BPA]

My friend teaches at Highland Secondary.  If you have any questions, I'll ask her for you.

My ex is from Dundas.  Nice place.