Author Topic: Pay off mortgage early or buy new house ?  (Read 1541 times)

Mahoney1988

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Pay off mortgage early or buy new house ?
« on: March 01, 2020, 11:08:31 AM »
A question I have been battling with since I have a growing family. Would you recommend paying mortgage off early or moving closer to work?

I've been living in my current house for going on 4 years now. I have already been trying to make additional payments to principal since living here along with doing some small remodel projects. My loan is a fixed interest rate at 3.75% which I believe is one of the best I have heard of. The house was right at $50k and that's a pretty average price for my area for a house. The town and surrounding towns close to where I work houses are average over $100K for houses that look similar to my house maybe a bit better. I'm always torn if I should just buy a Prius and deal with the drive or save on vehicles and maintenance and just move closer?

My only thing is I drive 45 mins to work and 45 mins how and sometimes longer leaving. I work at Toyota and we currently have close to 7,000 employees so leaving the plant is hectic and not to mention time consuming driving basically 2 hours every day. I know this is silly because some people drive way further to work than I do. I don't really mind it too much but wasting 2 hours a day driving could be better spent on my family.

My house was really just 2 bedrooms when I bought it with a full basement not really finished. There was one room started but not finished when we purchased the house. I have since made a full bedroom out of that room making three bedroom and have enough room to make one more bedroom down there for my family.

What are your thoughts on this ? Everything we own besides our house is now paid off and I really really really want to retire early.

Kwill

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Re: Pay off mortgage early or buy new house ?
« Reply #1 on: March 01, 2020, 12:29:54 PM »
It might help to have more information. How close to retiring are you? Does your spouse also work, and would moving affect that? Have you been tracking your expenses and income so that you know how more money toward the house would affect you?

A two-hour round-trip commute sounds miserable. I'd want to move closer if it were me, especially if I had a family. If at some point you do retire early, you could sell the more expensive house and move somewhere cheaper. But you can't get back the lost time.

I bought a tiny place that was as close to work as I could afford. I don't have a guest room or anything, but I do have a 15-minute bicycle ride to work on a cycle path through a nature reserve. The place is stupidly expensive for a small apartment, but it's a huge difference in quality of life. I'm hoping I can recoup the cost when/if I eventually move, but at least in the meantime, I have a lot more time, fresh air, exercise, and opportunities for social activities.

Mahoney1988

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Re: Pay off mortgage early or buy new house ?
« Reply #2 on: March 08, 2020, 04:15:04 PM »
I'm turning 33 this year and my wife does not work. Moving closer wouldn't affect much of anything beside saving gas money that could go to investments to retire earlier. My current job you can retire after 20 years or 25 years depending on what benefits you need or want in retirement. I just started in December with the company I am with.

I really don't know if I will stay for that many years I'm not sure yet. I want to retire as soon as I can. For now just starting at this new company and growing our family has put a hamper on how much I can put into investments. At this rate I think the only way I will be able to retire is get investment properties for rental income.

SwordGuy

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Re: Pay off mortgage early or buy new house ?
« Reply #3 on: March 08, 2020, 06:21:32 PM »
If you want useful (and probably correct) advice, go to the Case Studies sub-forum and fill out a proper case study.  There's a sticky message at the top that tells you how.

Fishindude

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Re: Pay off mortgage early or buy new house ?
« Reply #4 on: March 09, 2020, 08:38:30 AM »
I'd stay where you are an soon have a paid off house, rather than double your housing cost for a little convenience.
Along with the higher cost housing you will also probably have higher taxes, more upkeep cost, etc.

Get something comfortable that gets decent mileage to drive to and fro.   

zolotiyeruki

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Re: Pay off mortgage early or buy new house ?
« Reply #5 on: March 09, 2020, 02:57:32 PM »
I'd stay where you are an soon have a paid off house, rather than double your housing cost for a little convenience.
Along with the higher cost housing you will also probably have higher taxes, more upkeep cost, etc.

Get something comfortable that gets decent mileage to drive to and fro.
I dunno, regaining an hour of time every day is more than "a little convenience" in my book, not to mention the financial cost of the commute.  My last job was 25 minutes from my house.  Nothing crazy, but my current job is <10 minutes, and I love it.  More time with the family, less time and money wasted on the road, more opportunity to ride my bike to work when weather permits.

OP hasn't mentioned anything about what housing is like closer to work, so it's hard to run the numbers.  SwordGuy is right--a full case study would be most helpful.

@Mahoney1988 right now, interest rates are crazy low, especially with the emergency measures taken in the last week.  Refinancing wouldn't make sense for you, since your mortgage balance is so low, but if you're thinking about moving, mortgages are way cheap right now.

Zette

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Re: Pay off mortgage early or buy new house ?
« Reply #6 on: March 10, 2020, 12:08:51 AM »
One thing to consider is how old your child(ren) are, and the quality of the schools close to work.  Are the places close to work family-friendly in terms of places to play, school quality, and general liveability?  If your wife wants to homeschool, where are the clusters of other families who do so?  If the other factors are in your favor, moving closer would definitely give you more family time.  If not, you might find yourself motivated to move back as the kids get into school age.

soccerluvof4

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Re: Pay off mortgage early or buy new house ?
« Reply #7 on: March 20, 2020, 03:30:23 AM »
There are so many things to consider, as others had mentioned I would do a full study so people can have more information to provide you with the best ideas they can come up with