Should I buy a house

[ranDMC]

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?

[waltworks]

NYtimes buy vs rent calculator:
http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?abt=0002&abg=1

Do a search on the forum here as well. Lots to learn.

-W

[adamcollin]

You should first consider making your financial situation a bit stable. House can wait, investing now doesn't sound feasible at all.

[escolegrove]

I know the Mystic Seaport area, my grandparents live out there. We are buy and hold investors. We have gotten into our houses with very little to nothing down in all of our houses. We also have a goal of FIRE at 42 and 44 with a military pension. Our cash flow choice is houses.

Crazy Question: What is your school loan interest rate? If your home loan is lower, you might be better off using your down payment to pay off your student loans. As long as you can afford the payment.

We bought a total fixer uppers when my husband was a LtJG and I was just out of grad school. We were told REPEADILY we were crazy. The price was pushing our budget, we were newly married, etc. Honestly our mortgage was pretty close to rent. it was the unknowns. We lived like mustachians (although I didnt know this site). 't was a fixer upper but only cost us 12k in materials to redo almost the entire inside. We only live there for 15 months before we transferred.

 While it didn't fit any of the rules it has been a great rental and a great place holder. If we go back in 2 year with orders, our house will have at least 60-70k less on it than any other house . My point is figure out what your goals are than go for it :) We don't know the area or your values. Every one has their own path to the end goal of early retirement and comfortable living.

Good Luck!

[mojami04]

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