Keep current home vs. buying newer more expense home

[Hawkeye225]

Situation is this.  Currently owe about 450k on a $1,000,000 house, in year 11 of a 15 yr. mortgage at 3.125%.  House is 20 years old.  Making payments are not a problem.

Elderly mother in law is coming to live with us.  She is in good health now but the future of course, is unknown.  We would benefit from from having two bedrooms on the main floor instead of one (she cannot negotiate stairs).  We are considering purchasing a new build that will cost $1,600,000 (yep, it's expensive here) and financing for 30 years at let's call in 3.75%.  PITI would be about 1k less/month but obviously would add 19 years to making payments.

I would like to stop working in 5-6 years.

Pros and cons all over the place.  Out of payments earlier with new house.  No major maintenance expected on new house though I'm sure we would have at least 100k of windows and driveway replacement on our current home within a few years.  I would need to use about 500k of about current 3.5 million in assets to keep the payment reasonable.

Has anyone faced this issue or have thoughts?  Thanks.

[jfoxcpacfp]

Will your MIL be able to make any financial contribution? There are so many unknowns and variables that will affect your decision. This screams Financial Planning to me, but I'm sure others will chime in with some good suggestions.

[Josh0731]

Hawkeye225 wrote:

I would like to stop working in 5-6 years.

Click to expand...

^Meeting this goal sounds like the biggest fly in the ointment.  You make it sound like you could afford to do it, though you mention you would be shifting more of your overall net worth out of liquid investments and into home equity, so I would assume you would need more time to rebuild that in anticipation of retirement.  Also, I assume this new house is larger, so are you wanting to live in a larger house in retirement? Many people seem to want to downsize in retirement, especially with maintenance needs as they get older, so how long would you imagine living in the larger house? 5-6 years?

And you're obviously giving more of each paycheck to the bank.

Wouldn't this be cheaper all-around?:

https://www.ameriglide.com/AmeriGlide-Stairlifts.htm

[Hawkeye225]

Johanna-Yes, MIL will contribute about 2k/month to the household.  And yes, soooo many variables.  How long will she live, will she require long term care (she does have a policy but it surely wouldn't cover all), etc.?

Josh-Yes, we would be able to afford it.  I grew up with the desire to pay off the house by retirement but I'm not sure that is always a good idea anymore with rates so low.  I would not intend on the often mentioned investing the difference and making profit because there is no guarantee that will be successful.

The house would be a little smaller, not larger.  Simply cannot downsize that much in the area that I live in without going to a patio home home or attached living; they just don't do it that way out here without having to deal with mega traffic and people.  The potential new spot would be a highly (and I do mean highly) desirable location for many years to come in our city.  I do like the new factor with minimal maintenance for 20 years or so and by that time, I'll probably be ready to or have to make a move anyway shortly.

Liquidity would be tied which I don't like but I'm not sure it would matter when comparing paying off my current home vs. purchasing a new one with a less monthly payment for longer than I'll live there?  The equity will going to my kids anyway.  Tough decisions that many of us will face in the years to come even if it's our own selves

More thoughts from anyone?  All are welcome to pitch in and help me think this one through!

[VagabondMD]

This is fascinating on a number of levels. Late in your career, you will buy a more expensive, smaller home, to accommodate the addition of your MIL to the family. Wow!

I would do everything possible to not move. Even an addition to or remodeling of your current home might be a better (financial) option. Having a larger home commitment will more than likely work against your retirement goals.

I have said this in other contexts, but we have a "No MILs living with us" policy that (seriously) dates back to the days in which we committed to marry. This speaks more about the nature of our mothers than any financial issue, though.

Good luck!

[Hawkeye225]

We've looked at remodeling but it's not worth it financially.  Because of the house layout, terrain, etc., it would be better to move (the thought of moving makes me nauseous).

As for a more expensive home, if you move to something decent in our metro area, you are simply going to pay more.  Not a thing I can do about that.  Sure, it would be more expensive on the front end but would be lessened on the back end due to routine maintenance of our current home.  I'm not making a case one way or another, I'm simply stumped and at a crossroad.

As for MIL...what am I supposed to do?  There is no other immediate family and she is one fine woman.  Leave her along 2000 miles away from us, just one fall or car accident away from a remaining life of misery?  We've already had to deal with this once...ischemic bowel with a 50:50 shot of survival but she came through as well or better than expected.  As long as she is willing to, there is no way that am I going to leave her alone when she can enjoy her remaining years with her daughter, grandchildren and great grandchildren.  We just need to find a way to make it happen.

[jfoxcpacfp]

Hawkeye225 wrote:

As for MIL…what am I supposed to do?  There is no other immediate family and she is one fine woman.  Leave her along 2000 miles away from us, just one fall or car accident away from a remaining life of misery?  We’ve already had to deal with this once…ischemic bowel with a 50:50 shot of survival but she came through as well or better than expected.  As long as she is willing to, there is no way that am I going to leave her alone when she can enjoy her remaining years with her daughter, grandchildren and great grandchildren.  We just need to find a way to make it happen.

Click to expand...

Your MIL is one lucky woman to have you for a SIL. But, I'm sure the respect is mutual and she has earned it.

I concur with Vagabond MD to try to stay put. Have you considered Josh0731's stairlift idea? Clients who have them really seem to like them.

Have you discussed your MIL's preferences with her? Maybe she would choose to live in your current home and the thought of "forcing" (not really, but I would feel that way by me if I were in her spot) you to buy a more expensive house would take away from the pleasure of the move.

[Hawkeye225]

Thanks again Johanna.  I think we are going to have her move in with us and monitor over time.  In general, I believe it's best to not make too many major decisions at once in life if I don't have to.  And yes, her preferences have been fully discussed.  Understandably, she doesn't want to inconvenience us but it's just the circle of life that none of us will escape.

I hope this thread will help some others when faced with a similar situation.

[Kamban]

In my new home that I am building, I am installing an elevator for this very reason. Even though we have the in-laws room downstairs ( as is our own and daughter's) the media room is upstairs. And I want them to enjoy it, since their bad knees will otherwise confine them downstairs.

 

Apparently its costs anywhere between $15-25K. My builder is going to work that it in our final cost projection. Trying to get it into an existing home will be more, but have you decided to have a quote on it. And it will make the house easier to sell in the future as all of us are only getting older and our arthritis will worsen with time.