My wife and I are in the process of selling our current house (and recently sold a rental too) and are starting to peruse houses in our new city (Mpls). In the neighborhood where we are looking there are anything from 900 square foot $140,000 home to about 1800 sq. ft. $240,000 home. My wife and I are trying to balance the idea of moving into a smaller, more affordable, more mustachian place (we have two kids and a dog) with the cost benefit of taking advantage of historically low interest rates to buy into a home where we will be for awhile (read:bigger). At the same time, we both like the idea of acquiring jobs that provide us either PT work or work that allows us to spend plenty of time with each other and our kids in the coming years. This has brought up a few questions for me:
1) Size: I'm curious what people think is mustachian and reasonable for square footage for a four person family with kids headed to their teens (5 and 2 now). We currently live in an 1850 sq. ft., 4 bedroom home but mostly use the main floor (900 sq. ft, 2 bed) and the basement houses occasional guests and a TV for once a week football games (it wouldn't kill me if we didn't have space for this). I assume that we may need to consider a different space with (eventually) teenage daughters? My mustachian side leans toward smaller, and lower mortgage but living in MN, where winters force many inside for long periods of time, I'm a wishy-washy about size thinking low interest rates and a little more room might be worth the extra $$$. A lot of this stems from the increase in time spent at home since we've had children, making me think it may be worth a little more of an investment. What kind of considerations have you made in balancing the size of your home with the needs of your family?
2) Costs: I've run a few scenarios in a Excel spreadsheet on my future mortgage. Emotionally I'd like to get much of it paid off leaving us with a low monthly rate, but know that if we just put down 20 percent it would leave us with more money for more liquid investments and access to more money should we need it during our cross country move and job search. We'll have a healthy amount of cash after selling these two houses in Denver, so I could likely put down upwards of 50% on the Mpls home and still have 20-30 grand left over from the sales to help with the transition. All that said, the difference between a $150,000 mortgage and a $230,000 mortgage at 4% is ~$300 a month at 20 percent down and ~$225 at 40 percent down (and I think we are more likely to secure a 3.8% rate). That doesn't seem like a big difference for what could be a lot more accommodating of a home for a growing family that may be forced indoors for a good portion of freezing cold winters. Any suggestions for thoughts to consider when approaching this?
3) Are you living in a colder climate in a smaller home? What types of things do you do during the winter months to make a smaller space feel more livable? We are presuming that if we went with a smaller home/lower mortgage that it would free up some money/time for getting outdoors more, maybe a membership at the Y, and some gear for winter sports (x-country skiing, skating, etc)
4) Do you live in a small home with children? How do you utilize the space in a way that allows your kids enough room to play while also providing a space for the adults to escape to some quiet? As I mentioned before, we'd really like to get the space right on this house - just enough space without having under/un-utilized space throughout the house or feeling cramped. We are pretty minimalist in terms of our stuff in the house. (But the garage is a different story. :) )
I'd really appreciate any input from your experience on these questions,
Thanks in advance,
onemorebike