Author Topic: I would prefer a less expensive house, buuut...  (Read 4667 times)

kevj1085

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I would prefer a less expensive house, buuut...
« on: January 12, 2017, 06:46:28 AM »
We moved into a new neighborhood and bought a house 2 years ago, 1900 sq ft for 275k. We are down to 169k 2 years later and I refinanced to a 15 year loan at 2.875%. My plan is to pay it off in about 5-6 more years, but all I can think about is how in about 2 more years we could have enough invested into it to move to a slightly smaller house for say 160k and have it fully paid off. Yes the neighborhood is nice but I love the idea of the house paid off.

Well here is where it gets tricky. This new neighborhood just so happens to have ENTIRELY new families w kids in abundance at the exact same age as our 2 children (3 years and 1). Every single day when we get home from work there are kids our 3 year old is friends with outside playing, and he calls them his best friends and we are friends w all the neighbors. He and my wife and I truly have excellent friends right outside our front door on any given day. This I believe is something you luck into and can't buy, as I have lived places where you hardly even ever know your next door neighbor. I couldn't imagine leaving this place at this point for my son and daughters sake, they absolutely love it, at least the son.

How do you decide, financial savings but possibly being isolated vs a few more yrs but tons and tons of friends for your kids to grow up right next door to?

YoungGranny

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Re: I would prefer a less expensive house, buuut...
« Reply #1 on: January 12, 2017, 06:52:57 AM »
Ultimately I think you need to determine what is important to you and your family. Personally, if I were to FIRE having a network of people to have fun with, learn and grow with may be fairly valuable to me. However, if you want to FIRE sooner so you can spend more time with your kids as a family unit then you need to consider the alternative. Also, is there any further cuts you could make in your spending to pay this house off 1-2 years faster? If you could pay it off in 3-4 years would it make the decision easier? That may be something to consider.

KCM5

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Re: I would prefer a less expensive house, buuut...
« Reply #2 on: January 12, 2017, 07:00:47 AM »
I wouldn't leave that. Social networks and connections are important.

And I say this as someone with excellent social networks who is planning on leaving in 7 years. It's kind of a bummer even thinking about it. But you're just talking about moving to a slightly cheaper house? Not even remotely worth it.

You determine what's worth it to you and your family. It's good that you're thinking about the costs and the benefits of your housing situation. In my mind, the benefits appear to outweigh the costs, but your family can determine what is valuable to you.

RetiredAt63

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Re: I would prefer a less expensive house, buuut...
« Reply #3 on: January 12, 2017, 07:16:57 AM »
Good neighbours are priceless.  Your house will be paid for in 8 years, or so, which is still definitely badass.  Numbers thrown around re moving suggest that it takes 5 years in a place before selling to break even (consider realtor costs, moving costs) unless you are moving out of a super hot market.  Enjoy your house and friends and concentrate on other aspects of your financial life.

NeonPegasus

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Re: I would prefer a less expensive house, buuut...
« Reply #4 on: January 12, 2017, 07:21:30 AM »
Don't leave it. There is more to life than FIRE and there are costs associated with selling your current house, buying a new one and moving so it may not be as beneficial as you think.

When my girls were born, there were multiple families on the street with kids their age. When my oldest was 6, she started being able to go down the street to play with other kids, etc. 3 years later, all of those kids have moved away. I hate it for my girls and they miss it. It's more than them having friends - it's having a reason to go down the street (and gain independence along the way); it's a reason to play outside for 3 hours (and learn all of those valuable interpersonal skills); it's a reason to learn to bike.

If I were in your shoes, I wouldn't trade it for the world.

Need2Save

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Re: I would prefer a less expensive house, buuut...
« Reply #5 on: January 12, 2017, 07:26:57 AM »
Do you feel compelled to draw a line in the sand right now?

Why not enjoy the situation while continuing to pay off your mortgage for a while?  If you decide to stay long-term and you pay your mortgage off, great! You can direct those extra funds to your other financial goals.  If you decide to sell in a couple years, then that's okay too.  A great community is very valuable to your quality of life. 

We've had super close neighbors that became our best friends and the best, most wholesome, almost sickening sweet neighborhood in the world.  But, sometimes those friendships evolve and loosen over-time and even your kids may prefer other friends as the grow older.  In the end, we decided to move away but we still cherish those memories.   Be flexible.  Do what feels best now and see what happens. 

boarder42

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Re: I would prefer a less expensive house, buuut...
« Reply #6 on: January 12, 2017, 07:30:10 AM »
Paying off a home at that interest rate any faster isnt really a good plan anyways.  You should be dumping money into the markets.  Have you evaluated why a house paid off is important to you.  If FIRE is your goal a paid off house at that rate is a detriment to your FIRE date.  You likely could knock those couple years off work by just investing the money vs trying to pay your house off.  I need to find a post here of a man who paid off his house and is disappointed he chose that path b/c he could have a lot more in investments.  There is a whole thread debating this but at your rate paying down your mortgage is an emotional decsion and mathematically detrimental to your FIRE timeline as well as safety of you stache in FIRE. 

boarder42

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Re: I would prefer a less expensive house, buuut...
« Reply #7 on: January 12, 2017, 07:34:40 AM »
Found it.

Obviously this is hindsite but the last 3 years havent been above avg market years.  They are around(slightly less actually) what you could expect the market to produce on avg over time.

http://forum.mrmoneymustache.com/throw-down-the-gauntlet/race-from-500k-to-1m!/msg1350853/#msg1350853




MayDay

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Re: I would prefer a less expensive house, buuut...
« Reply #8 on: January 12, 2017, 07:50:34 AM »
Our old neighborhood had loads of kids and I loved that. But we hated the neighborhood for lots of other reasons.

If you like the neighborhood then I'd consider staying. Obviously you can reevaluate at any time.  But if your overall financial picture is good, it might be worth staying until your kids are 12ish- at that age they probably won't play much with neighborhood kids anyway, and you'll have a better idea if they are really still close friends with those kids.

pbkmaine

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Re: I would prefer a less expensive house, buuut...
« Reply #9 on: January 12, 2017, 07:53:02 AM »
Stay where you are.

CheapScholar

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Re: I would prefer a less expensive house, buuut...
« Reply #10 on: January 12, 2017, 08:00:03 AM »
I'm inclined to say stay.  Do you earn enough to make the mortgage payments and also build wealth (401k/403b or IRA)?

I don't feel a 275k home is excessive in most parts of the country. 

Cwadda

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Re: I would prefer a less expensive house, buuut...
« Reply #11 on: January 12, 2017, 08:07:50 AM »
Stay.

MrsPete

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Re: I would prefer a less expensive house, buuut...
« Reply #12 on: January 12, 2017, 08:08:38 AM »
Stay.  You can always sell the house and go elsewhere, but you aren't likely to find this situation in another place. 

nobody123

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Re: I would prefer a less expensive house, buuut...
« Reply #13 on: January 12, 2017, 08:26:31 AM »
Stay.  If your kids are only 3 and 1, most likely the core of their friends will be in your neighborhood until they get to middle school, so you've got probably a solid 7 - 10 years of awesomeness, at which point your house will be paid off if your plan works out.  You can always 'cash out' then and move to a smaller place at any time, it's not like this is a forever decision.

Our first place was just fine, but in an older neighborhood with essentially zero kids and zero neighborly interaction.  We were good until our first turned 3, and then we moved into new construction.  We have a similar situation to you where almost everyone has young kids, we all get along because the kids all play together, etc.  I have a slightly too big house, but the neighborhood is worth it to us.  Had we not moved, I could have just about had my last place paid off by early 2019, so it's a bit sad that I'll be paying a mortgage much longer than that, but oh well.


historienne

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Re: I would prefer a less expensive house, buuut...
« Reply #14 on: January 12, 2017, 08:36:24 AM »
I would stay.  We just left a neighborhood like that.  In our case, we had to move cities for a new job.  I miss it SO MUCH, and while we are hoping to eventually recreate similar bonds here, I would pay a lot of money to still have our old neighbors. 

milliemchi

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Re: I would prefer a less expensive house, buuut...
« Reply #15 on: January 12, 2017, 02:45:12 PM »
I don't see how this is even a question. You save money to increase your quality of life, and here is quality right there in front of you, for both you and your spouse, and your kids. How can it get any better? You can't buy what you have there, btw.

meghan88

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Re: I would prefer a less expensive house, buuut...
« Reply #16 on: January 12, 2017, 06:14:04 PM »
It costs a lot to move.  Depending on what you negotiate with a real estate agent if you use one, it could cost you thousands in commission(s), plus there's probably land transfer tax, closing costs, moving costs.  So you'd need to add all that into your calculation.  Like some of the other posters said, try to cut other costs.  If you're able to save some extra $ now, maximizing the extra payments in the early years will cut the mortgage down a lot, even with a low interest rate.

AMandM

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Re: I would prefer a less expensive house, buuut...
« Reply #17 on: January 12, 2017, 06:27:22 PM »
Stay.
I say this as someone who took a financial hit to move to a place where we had the kind of tribe you describe.  No regrets. 

ltt

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Re: I would prefer a less expensive house, buuut...
« Reply #18 on: January 12, 2017, 06:52:57 PM »
If you love it now, stay for now.   It will change as the neighbors get older and the kids get older.  The friends they have now are not necessarily the friends they will have in a decade.  People move away, new people move in.

MsPeacock

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Re: I would prefer a less expensive house, buuut...
« Reply #19 on: January 12, 2017, 07:55:36 PM »
I don't see how this is even a question. You save money to increase your quality of life, and here is quality right there in front of you, for both you and your spouse, and your kids. How can it get any better? You can't buy what you have there, btw.

This.

Neighborhood is a lot of the value of your home, and will help protect the value of your investment in it. Stay.

CupcakeGuru

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Re: I would prefer a less expensive house, buuut...
« Reply #20 on: January 13, 2017, 09:39:00 AM »
We moved into a neighborhood with a lot of kids and nice neighbors when my kids were babies. Contemplated moving several times to reduce costs, but realized that having a nice support structure in our neighborhood has made our life more enjoyable. I dont have to "schedule" play dates or worry about the kids playing outside. We have hit the middle school years with our oldest and most of the kids want to come to our neighborhood because they can actually go outside and do stuff.

catccc

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Re: I would prefer a less expensive house, buuut...
« Reply #21 on: January 13, 2017, 10:05:11 AM »
Another vote for stay.  You've hit the jackpot for your family with these relationships!  Good neighbors that you can be friendly with are hard to find.  You can reevaluate in 5-6 years, but if things stay this way, I say stick with it.

And another vote for not paying off ASAP.  Are you maxing out your available retirement accounts?  Other tax advantaged accounts?  Maybe putting a little into 529s?  That mortgage rate is pretty darn low!

TOgirl

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Re: I would prefer a less expensive house, buuut...
« Reply #22 on: January 13, 2017, 10:10:16 AM »
I constantly struggle with this dilemma, and I've posted in this forum asking for advice before. We have a wonderful community, school, access to shops/public transit/major highways, great neighbours and friends, lots of kids... I have now set my sights to within the same neighbourhood - and am constantly looking at listings for houses that are a bit smaller than ours, and possibly a town house (with no fees) or a semi-detached house - either of those options would decrease our overall mortgage and costs significantly...wonder if that might be a possible solution for you?

nexus

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Re: I would prefer a less expensive house, buuut...
« Reply #23 on: January 13, 2017, 12:47:53 PM »
If you like your urban tribe, then stick with it. They add value to your life beyond what numbers can define and it will be hard to find that elsewhere.

boarder42

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Re: I would prefer a less expensive house, buuut...
« Reply #24 on: January 13, 2017, 01:14:41 PM »
still dont know why we arent addressing the real issue in this scenario of paying down a mortgage vs investing.  i agree the social aspect.  dont move.  but you can optimize in other ways.  Maybe its the consultant in me since its what i do but when a client comes to me with a question i have to figure out what the real goal is not just answer the question.  OP's question - super easy to answer 30 people did it already.  but OP could optimize their finances further by not paying a mortgage down.  and speed up FIRE.

abhe8

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Re: I would prefer a less expensive house, buuut...
« Reply #25 on: January 13, 2017, 01:15:58 PM »
Why decide today what I do it two years? Jus hard to know more his the friendships will play out or the markets. Enjoy your time, v save add much as you can, and see what comes.

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abhe8

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Re: I would prefer a less expensive house, buuut...
« Reply #26 on: January 13, 2017, 01:17:28 PM »


Why decide today what to do in two years? It's hard to know now how the friendships will play out or the markets. Enjoy your time, save as much as you can, and see what comes.



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mm1970

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Re: I would prefer a less expensive house, buuut...
« Reply #27 on: January 13, 2017, 01:36:36 PM »
We moved into a new neighborhood and bought a house 2 years ago, 1900 sq ft for 275k. We are down to 169k 2 years later and I refinanced to a 15 year loan at 2.875%. My plan is to pay it off in about 5-6 more years, but all I can think about is how in about 2 more years we could have enough invested into it to move to a slightly smaller house for say 160k and have it fully paid off. Yes the neighborhood is nice but I love the idea of the house paid off.

Well here is where it gets tricky. This new neighborhood just so happens to have ENTIRELY new families w kids in abundance at the exact same age as our 2 children (3 years and 1). Every single day when we get home from work there are kids our 3 year old is friends with outside playing, and he calls them his best friends and we are friends w all the neighbors. He and my wife and I truly have excellent friends right outside our front door on any given day. This I believe is something you luck into and can't buy, as I have lived places where you hardly even ever know your next door neighbor. I couldn't imagine leaving this place at this point for my son and daughters sake, they absolutely love it, at least the son.

How do you decide, financial savings but possibly being isolated vs a few more yrs but tons and tons of friends for your kids to grow up right next door to?
You know we had a similar discussion on here about moving to a cheaper place, etc.  I live in a 2BR, 1BA, 1100sf house in a bad school district.  I could "trade up" to a 3/2 ~1250 sf house.  It would be:
- much closer to work.  We currently live 10 miles from work, and we work a block from each other.
- the same price as our current house, so we'd have some closing costs and sales costs to consider
- a larger lot
- a better school district.

Many many people here told me that now is the time to do it, before kid #2 starts school!  THINK OF ALL THE DRIVING YOU'D BE SAVING.  But we haven't, and why?

I LOVE MY NEIGHBORHOOD.  There have been a lot of families starting here.  I have 3 neighbors, love them all.  Over the hedge has 2 boys that bookend my younger.  My older son has 3 classmates and three other friends within 1/2 mile.  Every Sunday (pm in the spring/summer, am in the fall/winter), 3-8 families in the 'hood walk to the big park at the end of the street and have a potluck.  We babysit for each other.  We dog sit and fish sit when people go on vacation.  The friends across the street and us go on camping trips.  I can walk to the beach in 20 minutes.  This is my tribe!

I've heard enough friends complain here and there about their neighbors that I'm hesitant.  Yes, we feel cramped (did I mention only one bathroom?  And no garage.)  But the hood.  It is grand.

RetiredAt63

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Re: I would prefer a less expensive house, buuut...
« Reply #28 on: January 13, 2017, 05:11:40 PM »
Yes, we feel cramped (did I mention only one bathroom?  And no garage.)  But the hood.  It is grand.

Tuck a powder room in someplace, that will take care of the morning rush.  Adds value, saves moving.