MY wife and I have been looking at homes for the last month or so and I'm struggling with personal finance and if buying a house makes sense at all. Here are some details on our current financial situation. Maybe a MMM reader can help us make the right decision.
I'll start with this big Awful number. I went to a private university (Kettering University) and took out a lot in loans. I was young and irresponsible, and now I'mm less young and in some debt.
I have roughly $100k at 3.25%.
Wifey is a teacher and I'm an engineer, we make about $134K Gross combined.
We have $50K saved towards a downpayment.
We've found a house that we love, but it is $300K.
I think that after typing all this up I'm realizing that that house just isn't practical, but home prices seem to be way out of line with "reasonable" expectations in my area (Mystic, CT).
Why is this all so complicated?
To OP:
I`m not sure I see your problem really?
Positives:
- You have strong cashflow (salary is upper median) at 134k and possibly higher earning potential in the future
- A great downpayment for your home at least 10% if you wish and the home is priced based on the local RE area and you should not compare it to other locations in the US but rather its own market
- Can you rent for much cheaper in that area? If so, keep renting and accumulate a larger downpayment but realize that you may be better off paying off the debt at 3% interest.
Negatives:
- What are your expenditures like?
- Do you drive two new cars? Sell them and buy one used economical car. savings : 500$ a month
- Pay down your student loan as quickly as possible and try to save a minimum of 50% of your salary per month
It's a matter of perception but I think you could also consider purchasing a home with a rental suite to help you with the mortgage instead of taking it on all by yourself.
Food for thought.
Jamie