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Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: oldtoyota on May 29, 2014, 09:39:58 AM

Title: How Best to Calculate How New Home Purchase Will Delay Retirement?
Post by: oldtoyota on May 29, 2014, 09:39:58 AM
Hey all!

Sometimes, I think about moving to another home. The neighborhood I'd like to move to has homes that are more expensive than the one I have. What I'd like to do before I buy is figure out how much longer I'd have to work to pay for the additional expense. Once I have this info, I can make a more informed decision.

Here's what I am thinking (using fake numbers).

Current Home: $200K
Potential Home: $300K

We would sell the current home and have more than enough to pay 20% down on the new home. Credit is good so expect good loan rate.

I am thinking I would need to use the current mortgage percentage rate, take the down payment into account, and calculate the new overall long-term cost of the new loan as well as how that would affect me on a monthly basis.

Am I missing anything?

Title: Re: How Best to Calculate How New Home Purchase Will Delay Retirement?
Post by: ak907 on May 29, 2014, 09:47:21 AM
The spreadsheet I created should help answer this question:
http://forum.mrmoneymustache.com/share-your-badassity/rent-or-buy-a-house-spreadsheet/msg243224/#msg243224
Title: Re: How Best to Calculate How New Home Purchase Will Delay Retirement?
Post by: bo_knows on May 29, 2014, 10:10:55 AM
Unless you plan on selling your residence and moving to a cheaper area after retirement hits, all you need to do is figure this as a different "expense" by your standard mortgage calculator, and calculate your time to retirement how you do now.

I'm actually doing the same thing, as we're looking to move from a townhouse to a single-family house next year.  It basically means saving $700 less per month, BUT we plan on moving to a cheaper area at some point after that.  I conservatively only consider the sale of that future home to be a net of the difference between the purchase prices ($100k) and add that to my portfolio at retirement.  In reality, the value should increase over time.
Title: Re: How Best to Calculate How New Home Purchase Will Delay Retirement?
Post by: oldtoyota on May 29, 2014, 11:02:28 AM
Unless you plan on selling your residence and moving to a cheaper area after retirement hits, all you need to do is figure this as a different "expense" by your standard mortgage calculator, and calculate your time to retirement how you do now

Thanks to you both!

I will check out the spreadsheet.

The above is what I was thinking the answer would be, and I wanted to make sure before taking the plunge. Much appreciated!