Author Topic: Downsizing!  (Read 8826 times)

AerynLee

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Downsizing!
« on: April 20, 2015, 02:40:50 PM »
I don't know yet if this will belong in the "Share Your Badassity" or "Anti-Mustachian Wall of Shame" but we're set to close at the end of May on a new house.

The good:
It cuts our commute down from 35 miles each way to 3 miles for me and 5 for DH
The house is a third the size of our current one. Going from 2800sqft (total upstairs and basement) to 960sqft which means lower utilities! Bonus, we'll have to get rid of a lot of stuff and be more careful of what we bring into the home.
It will cut our mortgage payment almost in half. We paid $142k for our current house and we're buying the new one for $80k. We'll be going from a 15 year to a 30 year but will pay it off long before our current house would be paid off if we stayed here

The bad:
We don't have our current house on the market yet so we'll be carrying two mortgages for an unknown amount of time. I'm scared it will take a long time to sell and our holding costs (not including principal payments) are about $1k/month
We've wracked up some credit card debt (~$4k) while simultaneously saving up the down payment and getting our house ready to sell

Hopefully this all works out for the best and takes years off my FI date. *fingers crossed*

TexasStash

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Re: Downsizing!
« Reply #1 on: April 20, 2015, 03:39:45 PM »
Lots of good things going on there, but I'm curious: Why are you going from 15 year to 30 year mortgage if you seem intent on paying it off quickly anyways? Flexibility?

Pretty awesome though to cut the commute by 90% and downsize the house by 67%.

AerynLee

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Re: Downsizing!
« Reply #2 on: April 20, 2015, 03:45:19 PM »
We're doing the 30 year because we don't know how long we'll have both mortgages and we want/need as much leeway in the budget as we can get. The town we live in now has a slower market because it's further out and even with a 30 year mortgage things will be a bit tight until we can sell. I hate to do it but at an $80k purchase price it doesn't cost us as much as it would on a more expensive house

soccerluvof4

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Re: Downsizing!
« Reply #3 on: April 21, 2015, 09:57:04 AM »
Congrats on the downsize! we have made one few years back and in next two years will make another. My only question is why is the other house not on the market yet?

AerynLee

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Re: Downsizing!
« Reply #4 on: April 21, 2015, 10:15:59 AM »
We weren't actually planning on moving. We kept talking about it but the numbers never came out in favor of it...until this deal fell in our laps. So we've been doing repairs to get the house ready to sell; replacing a cracked kitchen sink, patching holes and painting walls, and we just got new carpet in last week.

And to be perfectly honest I was dragging my feet a little bit because I didn't want to try to sell a house while living there with a Malamute and 2.5 cats (we have a stray that comes and goes as he pleases). But the guy we're buying from found his new house and things are now moving much faster than I expected so we're rushing now.

If you find my journal it has my ramblings as I went through the thought process of deciding to sell
« Last Edit: April 21, 2015, 01:01:30 PM by AerynLee »

MLKnits

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Re: Downsizing!
« Reply #5 on: April 21, 2015, 10:40:36 AM »
Congratulations! That commute decrease alone is gonna be amazing, especially with a dog at home (IME).

misschedda

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Re: Downsizing!
« Reply #6 on: April 22, 2015, 01:49:32 PM »
Congrats on the good parts and hope you can quickly fix the bad parts!!

AerynLee

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Re: Downsizing!
« Reply #7 on: April 25, 2015, 10:15:31 PM »
Well I got on it and the house is listed for sale. Now I have to finish up the minor stuff I've been putting off before someone wants to come look at it

Elderwood17

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Re: Downsizing!
« Reply #8 on: April 28, 2015, 11:39:50 AM »
Sounds like a great plan.  Hopefully the current house sells fast!

Jeff Kent

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Re: Downsizing!
« Reply #9 on: May 14, 2015, 11:27:55 AM »
Congratulations to undertaking such a dramatic shift. I too am having a real estate agent come look at my house this weekend.

As a result, I will be following your log to keep tabs on how the process progresses.

AerynLee

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Re: Downsizing!
« Reply #10 on: July 19, 2015, 03:22:15 PM »
Update: our old house went under contract this weekend so if all goes well we'll only have made two double mortgage payments! The shorter commute has been awesome and the much smaller house is perfect for us :)

Bob W

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Re: Downsizing!
« Reply #11 on: July 20, 2015, 12:11:24 PM »
How cool is that!   So what is your new mortgage payment including insurance and taxes?   I'm guessing under $500?    That is super smart and should accelerate your FI date significantly.

For what it is worth I would not pay extra on your 30 year mortgage.   Instead I would set up a fund and name it "paid off house fund."     I would then put a significant amount (all your non tax deferred savings as possible)  into it each month in S and P type low cost funds.   

In 2 or 3 years when the "paid off house fund" equals the value of you home consider it paid off.  Continue to enjoy your 4ish% home loan while continuing to enjoy your 7ish% S and P returns indefinitely.   

Since you are just 3 miles from work, are you considering downsizing to 1 car?   Your 3 mile commute can be walked in 45 minutes or biked in 15.   

You are truly badass!

AerynLee

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Re: Downsizing!
« Reply #12 on: July 20, 2015, 12:58:34 PM »
Our new mortgage payment is $600/month, we have really high property taxes here. Also we have kind of a stupid interest rate; because of cash flow concerns I agreed to a lenders credit which is basically negative points. But the guy screwed up and we got a higher interest rate for almost no credit at closing. I filed a complaint with the company last week asking for either a refund of what we should have got for the credit plus some of the origination fee or a no-cost refinance. Either way we'll do a refi to get down to a 15 year mortgage without PMI once the dust settles from the sale. Once we refi I probably won't worry about paying down the mortgage because it will be such cheap debt and the net effect of the shorter term, lower interest rate, no PMI should only increase our payment by maybe $75/month.

I like the idea of going down to one car but both of us bought our dream cars so neither of us really want to get rid of them. If either car were to die I'm not sure we'd replace it now but we probably won't sell one. Neither of them are ridiculous cars so holdings costs are pretty minor, $46/month insurance (full coverage for both), maybe $400/year registration for both, they are 2008 and 2010 cars who's MSRP brand new was ~$25k. It's definitely on the radar to go down to one car if we change our minds though

Mrs.LC

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Re: Downsizing!
« Reply #13 on: July 20, 2015, 09:52:36 PM »
Yeah on the contract! Soon you will be minus one big headache and loving life in the small house.

AerynLee

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Re: Downsizing!
« Reply #14 on: July 21, 2015, 07:15:42 AM »
Yeah on the contract! Soon you will be minus one big headache and loving life in the small house.
Thanks! We're already loving the smaller house. Even DH (who's not as mustacian as I) said something along the lines of "Wow that house is stupidly huge" when we went back to the old house after being in the new one for a couple of weeks

zephyr911

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Re: Downsizing!
« Reply #15 on: July 24, 2015, 10:17:22 AM »
Went 1900->1144 last fall, know exactly how you feel. We too had some minor issues and didn't get quite the SR% boost we had hoped for, but sometimes the 80-90% solution is all you need in the here and now. Just keep working on saving cash for strategic moves to improve your situation further.
I'm glad to hear this is working out for you. Good move!

zephyr911

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Re: Downsizing!
« Reply #16 on: July 24, 2015, 10:20:09 AM »
For what it is worth I would not pay extra on your 30 year mortgage.   Instead I would set up a fund and name it "paid off house fund."     I would then put a significant amount (all your non tax deferred savings as possible)  into it each month in S and P type low cost funds.   
Unless there's a refi and interest rate reduction hanging on it, of course. That could easily boost returns far beyond the APR of the loan.

TheSecondLaw

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Re: Downsizing!
« Reply #17 on: July 29, 2015, 10:36:27 AM »
We're in the same boat. Well a similar boat... We just had a baby and decided that I would quit my job (8 mile commute down to 0!) and we're moving out of our 1700 sq ft house into an 1100 sq ft apartment. The cash flow will be similar for either living situation but the new place is ~ 60 miles closer to my husband's work. We're excited for the extra family time we're going to have without the long haul to work!

AerynLee

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Re: Downsizing!
« Reply #18 on: July 29, 2015, 03:30:33 PM »
We're in the same boat. Well a similar boat... We just had a baby and decided that I would quit my job (8 mile commute down to 0!) and we're moving out of our 1700 sq ft house into an 1100 sq ft apartment. The cash flow will be similar for either living situation but the new place is ~ 60 miles closer to my husband's work. We're excited for the extra family time we're going to have without the long haul to work!
Wow, 136 miles a day saved is awesome!

On the house sale front: I was just informed the termite inspection came back clean! The house inspection in Monday and as long as nothing major comes from that we should be in the clear to close at the end of August.

I got paperwork to fill out from the title company yesterday and one question was "What is the last month you will make a payment for and when will you make the payment". I'm half expecting to get a confused phone call because the answer is "August, 7/22/15" :)

Trudie

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Re: Downsizing!
« Reply #19 on: August 20, 2015, 02:59:32 PM »

For what it is worth I would not pay extra on your 30 year mortgage.   Instead I would set up a fund and name it "paid off house fund."     I would then put a significant amount (all your non tax deferred savings as possible)  into it each month in S and P type low cost funds.   

In 2 or 3 years when the "paid off house fund" equals the value of you home consider it paid off.  Continue to enjoy your 4ish% home loan while continuing to enjoy your 7ish% S and P returns indefinitely.   


I like the way you think sir.  We've got about $120K remaining on our mortgage, but we intend to sell and downsize before its paid off (we'll do this when we FIRE and then pay cash for our next abode).  I've not succumbed to throwing extra money at the mortgage just yet, but like the idea of offsetting an investment account with the mortgage.  It's simple, but psychologically quite effective.  I'll just start dumping more into "ye old Vanguard."

Cassie

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Re: Downsizing!
« Reply #20 on: August 23, 2015, 11:00:09 AM »
WE downsized from 2000 to 1400 sq ft when we semi-retired 3 years ago & paid cash for our home. It is so nice to have everything on one level. I keep the house a lot neater now because do not have to go up & down steps to put things away.