Hello. Long time, no post. This question requires some explanation, but I'll try to be brief.
My wife and I (both 30 years old) are currently renting. We've been looking for a house in the Northern Kentucky region (near the Ohio River) but the market is insane and we've been reluctant to jump into this when the bubble may burst, so to speak. For a while our plan was just to buy a house for the two of us, but our child-having plans have changed. With this decision comes school district considerations. Looking into ratings, reviews, etc. for schools, it seems that the general area we've been looking in has terrible ratings for schools overall. However, a couple elementary schools look good. We thought about buying a house in a specific area and living there until the child is ready for middle/high school and then move somewhere else.
So here's the main situation. We're followers of the "mustachian" mindset, but we are latecomers, so we won't be FIREd soon, but we're good with our money. We're ready to have kid(s) basically within the next year or so. I was trying to figure out the best financial situation for living in a house for x number of years, then selling, and not getting screwed. So I snagged a house off a realty website that will be in the ballpark price range as an example and started running some numbers.
Here's the house:
https://www.sibcycline.com/Listing/NKY/521389/267-Washington-Ave-Bellevue-KY-41073Here's the mortgage calculator I like using:
http://www.calcxml.com/calculators/mortgage-calculator?skn=606#resultsLet's make some assumptions here. Say I put down 20% (avoiding PMI), do a standard 30 year loan at the realty site's current default interest rate (5.125%), pay the minimum amount each month ($1,596.98), live in the house for 10 years, and then sell it for what I bought it for (value could go up or down, but who knows). That means the following:
House Value: $259,900
Down Payment: $51,980
Principal Paid over 10 yrs: $34,852
Interest Paid over 10 yrs: $89,227
Total Paid over 10 yrs: $176,059
Outstanding Principal Remaining: $173,068
I'm not worrying about tax/insurance b/c I'll pay that no matter where I liveIf I sell the house at this point for $259,900, it looks like I'd be losing a lot of money due to interest.
When I sell, I get back my down payment and my principal paid in ($86,832). I also get $173,068, but I have to turn around and give that to the bank to cover the remainder of the loan (right?). So that leaves me my $86,832. Cool. However, over the time I was there, I paid interest, so What I Have - Interest Paid = $-2,395.
Firstly, is my math right? I went from having a 20% down payment and dumping payments into the house to having < $0. Hopefully I'm just not considering something correctly.
I understand that, ideally, you'd want to sell at a higher price point, but I don't think it's realistic that the home values in the area we're looking in will increase more than they have now. They are higher than I've ever seen them. Normally I'd just say we should wait to buy, but my apartment is not conducive to having more people in it. Advice?