I didn't get any responses after posting this a few days ago, so I thought I'd clean it up and make it easier to read/skim. Ahem...
I'm planning to buy a townhouse with 2 bedrooms + 1.5 bathrooms + full studio apartment in the basement (So in a sense, it's a 3 br/2.5 bath home). My family of three will live in it. We will rent out the basement studio, which has its own separate entrance. These townhouses were designed with this "live on top/rent the bottom" arrangement in mind.
Home price: $135,000
Down payment: $13,500 (10%)
PMI: $0; The first lender I met with said it will waive PMI since my credit is so good.
Here's how I'm figuring the total monthly housing costs:
Mortgage: $580.00 (per the rate given by that same lender)
Taxes: $210.00 (based on the 2014 assessment)
Insurance: $55.00 (based on the first quote I got and a $3K deductible)
HOA: $165.00
Maintenance: $113 (based on spending 1% of the sale price of the house on maintenance each year)
PMI: $0
--
$1123.00
I am confident that I can rent out the basement studio for $600 per month, possibly more. This is a university community with a robust rental market and constant demand for rentals. Assuming I keep it rented for 10 months/year on average:
$1123 - $500 = $623.00 of total monthly housing costs.
By comparison, we currently rent a 2br/1ba apartment for $806.00 per month. Excluding the basement studio, the townhouse has similar square footage but contains an extra 1/2 bathrooom.
On one hand, this seems like an all-around stellar buy, but I have some questions:
1. I would be taking around $10K from one of our ROTH IRAs to make the 10% down payment (first-time homebuyer). The rest would come from cash savings. All of our investments are in tax-advantaged accounts. Is there any reason for me to be wary of taking the money out of the ROTH?
2. I could put down 20%, but I'd be maiming our retirement accounts if I did that. All together, they're worth around $62K. Since I don't have to pay PMI, I think it benefits me more to keep the additional $13.5K in my investments than to put it in the house. Am I right?
3. Is it fair to factor in the opportunity cost of taking $10K from the ROTH? I've got everything in VTSAX at the moment. Thanks in part to lowering my monthly housing costs, I think I'll realistically be able to recoup that $10K in about a year at our current savings rate.
4. Given all of the above, is there anything I'm not considering that I definitely should consider?