I live, write, and garden in the PNW with my husband of 27 years, disabled daughter, college-aged son, and my 84-year-old mother. We have paid off $250,000.00 worth of debt (if you include the interest) in the last fifteen years and as of 6/12/2020 are 100% DEBT FREE!!!!There are 3 very nice farms for sale right now. One is utterly perfect and two are quite doable. We have enough money for a 10% down payment on two of them and will have enough for a 10% down payment on the perfect one by the end of this year. And I'm swayed quite hard in that direction.
We would be able to afford the payments, all of our expenses, and still save a little each month. It would mean being a lot stricter with the budget. We've got a lot of play right now so that could be accomplished and we'd still have some breathing room.
We'd also be in our home for the first time since 2009. There is stress in living so long with my mother, even though I love her dearly and we get along quite well. I yearn to be able to have my own kitchen and do things my way and not have to schedule around her timetable, which is erratic at best and annoying at worst when you are trying to feed a family.
If we do this now, there are no ifs, ands, or buts about doing a 30 year mortgage. We would have to. I don't particularly like that idea, though, because we have only ever had a 15 year mortgage, and a 30 year mortgage would mean we could be 75 and 76 years old when it was paid off. Oh, I'd throw more money at it as we had it, but that would probably have us finishing at 65 to 70 years old.
The thing is, the practical thing anyway, is that if we buckle down and save super hard this coming year and throw everything at our down payment fund, we could have enough for a 20% down payment by December 2016. Which means we would lower our monthly payments significantly and have a 15 year mortgage. And it would be paid off by the time we were 61 and 62 years old, with no extra payments being made. With extra thrown at it, we might pay it off by the time we are 56 and 57.
The numbers make sense to wait out another year and save like the dickens. My head says that is the smartest thing we could possibly do. My soul says it is not quite sure it can cope with another year of living only in 1000 square feet with 2 teenagers and my husband. And only one bathroom.
We simply have no space. None. The house is very large, but this is the only space she allows us to use, plus we can cook in the kitchen (but must keep all our dishes and cooking stuff in our 1000 square feet). That frustrates me, too, because she has a huge kitchen with lots of cupboard space, two large living rooms, 4 bedrooms and 3 bathrooms for just herself. And two of those bedrooms are almost empty.
I am torn. I know what makes better sense. I really do. But it has been seven years. Seven very long years. And we wouldn't be struggling if we did it now. I feel like we are struggling though with the emotional part and being packed in like sardines. I want space. I want room to move. I want freedom.
I guess the thing I need to decide is what do I want most? Financial security is so freaking important to me. It is only one more year. Yet when I think about that year it is like a massive weight pressing down on my shoulders. One of these homes could be our escape hatch.
And 2 of them have open houses tomorrow. I will take my son and go look. Maybe in person they won't be as good as they are on paper.
It's Hard to Wait and I'm Not Sure I Want To
December 13th, 2015 at 12:02 am
December 13th, 2015 at 12:46 am 1449967583
Maybe it's time to have a talk with mom. Tell her you're bursting at the seams and could you have more of that unused space, for the last year you're there. Could it be she's completely unaware of how you feel?
December 13th, 2015 at 01:26 am 1449969999
We plan to pay ahead on our mortgage eventually; at the moment I'm in no hurry, but I definitely want it paid off before I hit retirement age, so at some point we will begin to pay it off faster.
December 13th, 2015 at 02:47 am 1449974874
December 13th, 2015 at 03:33 am 1449977598
December 13th, 2015 at 04:45 am 1449981949
The refinance is an option. Another option would be to do a adjustable rate mortgage for a few years and then pay it down and refinance. There are many ideas to toss around. An adjustable might be a long term play to keep refinancing because the amount saved on interest can be paid towards principal.
Did you know in canada there are no 30 year fixed mortgages? Most are adjustable and change every year. But in canada lending laws are more strict and many people pay off in 10 or 15 years. So they don't over buy. So adjustable rate mortgages aren't the problem. It's people using them incorrectly and buying what they can't afford.
So it's worth investigating and running the numbers. I also might add maybe the properties aren't perfect and you can wait for the perfect place. But only you know once you see it.
December 13th, 2015 at 05:26 am 1449984361
December 13th, 2015 at 05:55 am 1449986116
How much are you saving for retirement? Is the $3300 for all housing costs or is some of it dedicated to other savings? What's your big picture look like? You are 45 and what are your retirement plans? Is $3300 entire budget or how much more are we playing with?
If you got a 5/1 or 7/1 arm at 3.125% on $300k your payment is $1285 (bank of america). We'll keep out property taxes and insurance since it's all the same. It probably caps out at 9.125% or 6% limit with 2% a year so worse case scenario is 9.125 after say 10 years.
Without paying a penny more you will have paid in 60 months it down to $266k according to amortization calendar. Refinancing down to 15 years in 5 years @ 4% puts you at $1900/month. Let's assume you instead pay down and extra $500/month = $1800/month for 60 months $233k balance on Arm in January 2021. Same mortgage refinanced to a conservative 4% 15 year mortgage is $1723.
Now there are things to consider, you have to watch rates for the next 5 years and if it drops contact mortgage broker and use them for a no cost refinance. How likely it is you can pay extra a month, etc.
I've done arms for over 13 years and might not ever do a conventional 30 year again.
December 13th, 2015 at 01:19 pm 1450012777
Anyway the 15 year will be about a $2k payment but the 30 year will be in the $1400 range.
Buying so much house at this stage in your life is a huge financial commitment. Does it really make any difference in the grand scheme of things if you do it now versus one year? If you are going to do it anyway, I don't see that it would make that big of a difference.
December 13th, 2015 at 08:31 pm 1450038702
December 13th, 2015 at 10:14 pm 1450044896
Have you run your numbers with a broker yet?
Do you qualify for any of the down payment grant assistance programs? I received one when I bought last year that I didn't think I would ever qualify for at a salary of 80k: a grant for 3.5% of the price. I have to pay it back if I sell within 5 years. It is worth checking out.
December 14th, 2015 at 03:19 pm 1450106361