Hello everyone, and a big thanks to helping me a few months back. With your help, I rebalanced my finances and got rid of a car payment. Now a new dilemma, and I need some advice as I am on the fence. We are a family of 5 living in a small town in Ohio, we currently live in a tiny house with no basement and we are out of room (triple bunk beds anyone?)! The real estate market is hot, so the question is should I afford this house or am I being a bit crazy?
Background: We love living downtown. Yes taxes are higher, and inventory is low, however this is a big quality of life boost as we are always out and about walking, exploring, playing, etc. We want to stay downtown so choices are limited.
Current Mortgage: $1202 (Owe $160K, I have $65K Equity)
Monthly Income: $7416 after tax, 401k, etc
Monthly Expenses: $5598
Monthly Savings: $1818
Debt: Student loan owe $27k (payment included in monthly expense)
401K - $127,000 contribute $21,000 a year
Roth IRA - $23,000
Saving Account - $10,000
Index Funds (no tax advantage) - $70,000
My plan is to retire at 55 (33 now), I work for the county government so my job is stable but I will not have any more increases in salary nor will my wife. I get VA benefits, so my plan was to put nothing down on the new house, roll the $65K from equity into an index fund to make 8% yearly.
New House - $320,000
New City Tax - $5500 ($2500 increase from current home)
New mortgage Payment: $2050 a month
So the question becomes, is this too costly of a house? Should I look for something smaller? This one is a dream home, 4 beds, big yard, basement, downtown, etc. Do you think I am stretching myself too thin?