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Hi all,
Here's the nuts and bolts. Wife and I have decided we wish to move in the next 2 years. Our 2 kids are young, but we want to get established in the "forever-home-until-kids-are-gone" sooner than later. The main emphasis for the move is to change public school districts before kids hit that age. It's a must.
Current mortgage balance is 1.75x our income.
After the sale and transaction fees we hope to leave with about $90k equity.
Given the steady rise of home prices in our area, we are worried that waiting another few years is just going to cause further inflation of prices to the point that we may get "priced out" of the homes we want. (Mind you we are looking at homes currently in the mid 400's to low 500's.)
In weighing our options: If we move now with our equity + available savings and put down at least 20%, that's going to leave us with a new mortgage ~ 2.5x our income on these homes. Higher than we want.
BUT, we receive a family windfall gift of $50k yearly (long story I have posted about previously), of which we receive in 1/4's throughout the year.
Initially we had planned to wait on the home purchase for another 2-3 years, which would give us time to stockpile a substantial cash balance to put down.
A different option I have thought of, however, is that we could buy now with a 2.5x mortgage, and dedicate the next 2 years of our windfall to paying down the mortgage. With a future mortgage recast, this would then bring us to <2x income and monthly payments we are more comfortable with.
I am having a hard time deciding what the best decision is.
Assuming the windfall is a guarantee (it is), and that we have all other areas covered (>20% retirement savings rate, 529's funded, disability/life insurance, 6 month emergency fund).... should we go for this now to ensure the market appreciation doesn't outpace our ability to save the downpayment? With low mortgage rates, knowing that we have to get in a new area prior to the kids starting school, knowing that we will be in this new home for at least 15-20 years, and watching the ever increasing housing prices in my area, I am starting to think the more risky option is staying put where we are, instead of moving and just paying down the mortgage in big chunks over the next few years. Or, is it best to have all the cash in-hand ahead of time and take our chances on the inflation of housing prices in the coming years?
Help!
Here's the nuts and bolts. Wife and I have decided we wish to move in the next 2 years. Our 2 kids are young, but we want to get established in the "forever-home-until-kids-are-gone" sooner than later. The main emphasis for the move is to change public school districts before kids hit that age. It's a must.
Current mortgage balance is 1.75x our income.
After the sale and transaction fees we hope to leave with about $90k equity.
Given the steady rise of home prices in our area, we are worried that waiting another few years is just going to cause further inflation of prices to the point that we may get "priced out" of the homes we want. (Mind you we are looking at homes currently in the mid 400's to low 500's.)
In weighing our options: If we move now with our equity + available savings and put down at least 20%, that's going to leave us with a new mortgage ~ 2.5x our income on these homes. Higher than we want.
BUT, we receive a family windfall gift of $50k yearly (long story I have posted about previously), of which we receive in 1/4's throughout the year.
Initially we had planned to wait on the home purchase for another 2-3 years, which would give us time to stockpile a substantial cash balance to put down.
A different option I have thought of, however, is that we could buy now with a 2.5x mortgage, and dedicate the next 2 years of our windfall to paying down the mortgage. With a future mortgage recast, this would then bring us to <2x income and monthly payments we are more comfortable with.
I am having a hard time deciding what the best decision is.
Assuming the windfall is a guarantee (it is), and that we have all other areas covered (>20% retirement savings rate, 529's funded, disability/life insurance, 6 month emergency fund).... should we go for this now to ensure the market appreciation doesn't outpace our ability to save the downpayment? With low mortgage rates, knowing that we have to get in a new area prior to the kids starting school, knowing that we will be in this new home for at least 15-20 years, and watching the ever increasing housing prices in my area, I am starting to think the more risky option is staying put where we are, instead of moving and just paying down the mortgage in big chunks over the next few years. Or, is it best to have all the cash in-hand ahead of time and take our chances on the inflation of housing prices in the coming years?
Help!
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