Author Topic: To downsize or not……  (Read 2443 times)

maybecherie

  • 5 O'Clock Shadow
  • *
  • Posts: 6
To downsize or not……
« on: October 28, 2014, 07:53:03 PM »
I have a dilemma. 

I own two homes one that I've rented for the last three years and one I purchased a year ago.

rental
is a 2 bedroom 2 bath 1151 square feet.  I purchased it for 68,000 and currently owe 52,000 with a 30 year 4.5% rate.  Currently valued around 150,000

current home
is a 3 bedroom 2.5 bath 1900 square feet.  I purchased it for 257,000 and owe 230,00 with a 15 year 3.6% rate Currently valued around 280,000

Here is my dilemma I originally wanted to sell my current home and move into my rental and pay off the mortgage, but in the meantime I've gotten engaged and talked about having children.  Our game plan is to have children in two years.  We wanted to sell our home and live in the rental and save a ton of money before we have children.  But our fear is that our current neighborhood is hard to get into and we might be priced out in a couple years on top of that the interest rate might jump up as well.  Is it stupid to sell our dream home just so we can save for couple of years? 




BPA

  • Handlebar Stache
  • *****
  • Posts: 1192
Re: To downsize or not……
« Reply #1 on: October 28, 2014, 08:01:55 PM »
This blog post might help with your decision.  I'm not sure if applies to you, but it's the first thing I thought of when I read your post.  Good luck.

http://www.mrmoneymustache.com/2012/12/26/cure-yourself-of-tiny-details-exaggeration-syndrome/

jnc

  • 5 O'Clock Shadow
  • *
  • Posts: 92
Re: To downsize or not……
« Reply #2 on: October 29, 2014, 05:57:01 AM »
You could run the numbers on your current house and see if it would make sense to rent it out instead of selling it. This way, you could decide to move back in a couple of years if you have kids. Sure, you wouldn't be able to use the sales proceed to pay off the mortgage on the smaller house, but if you are not ready to FIRE and are not even sure the smaller house is suitable for the long term, I am not sure about the rush to pay it off.




SunshineGirl

  • Pencil Stache
  • ****
  • Posts: 751
Re: To downsize or not……
« Reply #3 on: October 29, 2014, 01:46:57 PM »
If it's your dream home, you shouldn't sell it.

!!!!


VirginiaBob

  • Bristles
  • ***
  • Posts: 429
    • LRJ Discounters
Re: To downsize or not……
« Reply #4 on: October 29, 2014, 01:51:06 PM »
I have a dilemma. 

I own two homes one that I've rented for the last three years and one I purchased a year ago.

rental
is a 2 bedroom 2 bath 1151 square feet.  I purchased it for 68,000 and currently owe 52,000 with a 30 year 4.5% rate.  Currently valued around 150,000

current home
is a 3 bedroom 2.5 bath 1900 square feet.  I purchased it for 257,000 and owe 230,00 with a 15 year 3.6% rate Currently valued around 280,000

Here is my dilemma I originally wanted to sell my current home and move into my rental and pay off the mortgage, but in the meantime I've gotten engaged and talked about having children.  Our game plan is to have children in two years.  We wanted to sell our home and live in the rental and save a ton of money before we have children.  But our fear is that our current neighborhood is hard to get into and we might be priced out in a couple years on top of that the interest rate might jump up as well.  Is it stupid to sell our dream home just so we can save for couple of years?

Not sure if this is true in your area, but in my area, when we get priced out of a neighborhood, another one that is newer and better is created.  Good ole sprawl.

GoCubsGo

  • Stubble
  • **
  • Posts: 240
Re: To downsize or not……
« Reply #5 on: October 29, 2014, 02:53:57 PM »
Couple thoughts... you say it's your dream home in a great neighborhood (looks like it's already appreciated 9% in one year based on your numbers).  If you do sell and save the money living in the smaller house, wouldn't you just be dumping that money saved in the same type house 3 years from now (assuming the neighborhood keeps appreciating)?  The low interest rate helps as well. 

I would more tend to lean towards staying in your current home and cutting all unnecessary expenses in your budget.  There's something to be said for saving the time, moving aggravation and realtor fees involved in selling your house now, just to move into a similar one 3 years from now.   If you really think the neighborhood will continue to appreciate and you absolutely want that area then I would just stay.  I second JNC's thought to see if the current house can make you money for the few years you live in the smaller house.