Author Topic: buy home to retire in now? or wait?  (Read 3298 times)

amyalmighty

  • 5 O'Clock Shadow
  • *
  • Posts: 4
buy home to retire in now? or wait?
« on: March 07, 2014, 07:55:13 AM »
My husband and I are in a great financial position right now.  Saving and investing about 40% of our salary at the moment.  We currently own a home with a payment of $1,300 a month with 12 years left on the mortgage.  We have about $60k in equity.  We both want to own some land near the city in which we live in.  There are several properties on the market right now that meet our requirements.  Problem is...our house payment will go up between $500-$1,000, which means $500-$1,000 a month LESS into savings and retirement in addition to adding 30 years of mortgage/interest payments. 

Our goal is to retire in 22 years, and we are on track to accomplish that. 

If we buy one of these homes, this will be the home that will allow us to have the life we desire.  I am just not sure it is worth the cost...

suggestions? 

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28279
  • Age: -998
  • Location: Seattle, WA
Re: buy home to retire in now? or wait?
« Reply #1 on: March 07, 2014, 08:21:16 AM »
What would be the reason for buying it now, 22 years early?
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

amyalmighty

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: buy home to retire in now? or wait?
« Reply #2 on: March 07, 2014, 08:22:24 AM »
in an attempt to pay it off PRIOR to retirement. 

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28279
  • Age: -998
  • Location: Seattle, WA
Re: buy home to retire in now? or wait?
« Reply #3 on: March 07, 2014, 08:25:56 AM »
in an attempt to pay it off PRIOR to retirement.

Oh.

Unless it makes sense number-wise as a rental, no, this very likely doesn't make sense.

Grow the cash in a good investment, and buy it in cash in 22 years, rather than buying it now and paying it off over the next 22 years.  In either scenario you end up with the paid off retirement home, but you'll likely do much better investing it than buying it now.

If the numbers do make sense as a rental (1% rule or better) and you're comfortable renting out your retirement home for the next 20 years, sure, that could make sense.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

amyalmighty

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: buy home to retire in now? or wait?
« Reply #4 on: March 07, 2014, 08:32:26 AM »
I guess I should have been more clear.  The plan would be to sell the current home, use $60k of equity to put down on the new house, and then live in the new house. 

KingCoin

  • Pencil Stache
  • ****
  • Posts: 783
  • Location: Manhattan
  • Achieved FI @ 30
Re: buy home to retire in now? or wait?
« Reply #5 on: March 07, 2014, 08:58:33 AM »
Why is your payment going up $500-1000/mo? Is it an adjustable rate mortgage? Can you refinance it?

When you say you want to own some "land", do you mean undeveloped land or land with a house on it?

How will moving out of the city affect commute?

What is the value of your current property vs the price of a property outside of the city?

When you say it might not be "worth the cost", what costs are you talking about?

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28279
  • Age: -998
  • Location: Seattle, WA
Re: buy home to retire in now? or wait?
« Reply #6 on: March 07, 2014, 09:04:29 AM »
I guess I should have been more clear.  The plan would be to sell the current home, use $60k of equity to put down on the new house, and then live in the new house.

Ah, I thought the house payment going up was because of a second mortgage.

In this case, probably all that's relevant is does it make sense to move financially versus staying put?  All of the things KingCoin brought up are relevant considerations to that question

Trying to plan your retirement home 22 years out is a tricky business, personally I'd shoot for what makes sense over the next 20 years (living where you are versus that other place), and when the time gets closer see what makes sense then.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

amyalmighty

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: buy home to retire in now? or wait?
« Reply #7 on: March 07, 2014, 09:12:14 AM »
Why is your payment going up $500-1000/mo? Is it an adjustable rate mortgage? Can you refinance it?

When you say you want to own some "land", do you mean undeveloped land or land with a house on it?

How will moving out of the city affect commute?

What is the value of your current property vs the price of a property outside of the city?

When you say it might not be "worth the cost", what costs are you talking about?

new house is on 9 acres vs. my current .33 acre. adds about 10 minutes to our current commute, and we will still be close to our current jobs, family, etc.  current property value is $160+, new is $350.

worth the cost of losing out of investing that $1,000 a month to purchase this house. 

KingCoin

  • Pencil Stache
  • ****
  • Posts: 783
  • Location: Manhattan
  • Achieved FI @ 30
Re: buy home to retire in now? or wait?
« Reply #8 on: March 07, 2014, 09:26:44 AM »
Why is your payment going up $500-1000/mo? Is it an adjustable rate mortgage? Can you refinance it?

When you say you want to own some "land", do you mean undeveloped land or land with a house on it?

How will moving out of the city affect commute?

What is the value of your current property vs the price of a property outside of the city?

When you say it might not be "worth the cost", what costs are you talking about?

new house is on 9 acres vs. my current .33 acre. adds about 10 minutes to our current commute, and we will still be close to our current jobs, family, etc.  current property value is $160+, new is $350.

worth the cost of losing out of investing that $1,000 a month to purchase this house.

I see. So you'd be up-sizing (and up-costing) substantially. Obviously, it's a bad move financially. Only you can answer whether the improvement in lifestyle is worth it.

I'd suggest that it's human nature to quickly adjust to a new situation. The long term happiness impact will likely be less than you imagine. So unless there's a huge upside to moving, I'd stick it out in your current situation as long as you can.

nicknageli

  • Guest
Re: buy home to retire in now? or wait?
« Reply #9 on: March 07, 2014, 09:30:33 AM »
Buying a retirement place 2 years early would be way too soon for me.  Too much could change in 2 years.  20+ years away is forever.  If it were me, I wouldn't gamble that I wanted to be in a certain place today but 20 years from now.

stpetesean

  • 5 O'Clock Shadow
  • *
  • Posts: 13
Re: buy home to retire in now? or wait?
« Reply #10 on: March 07, 2014, 02:36:43 PM »
Can you still be on track to retire as planned if you buy the house?  I don't see a problem buying a home you want to live in that "let's you live the life you desire" as long as it doesn't make you cash poor and put you in a situation where retiring is delayed due to house payments.