Home Ownership Emotional Side

I have a weird emotional connection to home ownership.

Maybe it’s the immigrant attachment to owning hard valuables you can touch or fulfilling the American dream? The truth it is I keep running the numbers behind whether we buy a home in the new city or keep renting. I know renting provides flexibility to move wherever, whenever. But owning a home in Texas didn’t stop us from picking up and moving last year. We bought a house where the numbers made sense and we are now renting it. We have 3 years to figure out what to do with the home, although we are leaning towards keeping the house forever.

 This is all me and my random thoughts….

 So, now I want to buy another house. My husband looks at me goofily; he is not sure whether he wants to buy another property right now. He thinks the market is too high, but market timing is so iffy. So, I’ve been running the numbers and thinking about why buy a house. NY Times Rent vs Buy calculator is pretty useful. From my perspective, I feel like buying a house would keep me motivated. I need a carrot to keep running on the treadmill. Financial independence should be the carrot that keeps me on the treadmill? Yes and no. Yes, it keeps me motivated long term (in the decades horizon), but not necessarily in the near term (5 – 7 year horizon).

Our apartment is nice, no maintenance, and yet…I want to own 20% of my walls around me (the bank owns the rest until the house is paid off). In order, to run the numbers, I have been trying to get a gauge for the real estate and what we can get.

Criteria 1: Stay within walking distance to work. Save gas, miles on car, and time. Which means city living.

Criteria 2: 2 Bath, 2 Bed Min.

Criteria 4: Single family home.

 Criteria 5: No big updates to do, no carpet, energy efficiency windows, furnace/HVAC fairly new, good location, single lot (no townhome), place to park the cars. Gosh, our tastes sure have gone up.

So looking at $250K price tag for 1500 square feet, 2 bed,2 bath, carport. Whoppers. It’s going to be hard to pull off a 15 year mortgage. Actually it’s going to be more beneficial to get a 30 year mortgage. I never thought I would say that. By the way right now, our monthly rent is $965 for a two bedroom apartment, 890 square foot apartment.

So yeah, the only hesitation is the amount of debt we will have to take on. So glad we don’t live in California or Portland. But if it’s within walking distance, I could take 50% of what I have budgeted for gas and allocate to the home budget. Oh if we stay within walking distance to my work (which we are right now), my car will last longer, potentially delaying my car needing to be replaced until my 30s. Do you see me playing with numbers? Trying to figure out what I could reduce in the budget to make the numbers work.

Let me tell you we have kept our budget pretty consistent ever since we graduated from school. So, I’m trying to NOT increase the budget. This way we can still travel, have money for unexpected items, etc.

 Sometimes I want to be like YOLO…especially when you heart wants something and your brain is skeptical. 

 Open for comments, questions, telling me I should stop being emotional, continue look at numbers.

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  • The red flag to me is that you mention potentially buying a house so you can have a carrot for the next few years. Don’t make that your reason! If other reasons for buying a house make sense, then do it, but it seems like the need for a short term goal would help fill some other needs. Explore what’s behind those other needs first and reevaluate. Good luck!

    • Hi Mollie, I think I have go from wanting to retire early to wanting to live my life right now. We live pretty frugally. Our day to day expenses haven’t increased much since we graduated college, so there are time that yes I want a tiny bit of lifestyle inflation.

  • Wish I could tell you YOLO, but too much debt is bad. The 15 year mortgage is definitely the way to go. There is nothing more empowering than owning your home outright. Just be wary of property taxes… As far as your wants, it makes sense because it will provide value to you now and in the future. So try not to compromise you housing standards too much. I took a gamble on my house with two compromises, two story instead of single story and the price is way higher than I would ever thought I would spend. But the location is very premium, with unbelievable mountain and city views… A side effect of spending so much money on housing is that most of my neighbors are wealthy too…

    • Hi Stacking Cash, I definitely want to have a 15 year mortgage. We took a 15 year mortgage on our first house, which we are now renting out, and it was a good financial decision. I think my husband and I decided that if we buy, it has to be the perfect house, especially since we are looking at a higher price point. In the meantime, if I can get the down payment as big as possible, this would bring the P&I portion of the 15 year mortgage at a more reasonable level.
      We went to look at a house today. Everything was great but the bathrooms. We didn’t like them. So we will keep waiting.
      SavvyFinancialLatina recently posted…Planned 2017 BudgetMy Profile

  • 250k at 30 years might not be a bad thing, particularly if you are in an area where housing prices are growing. I agree that a 15 year is ideal, but there is nothing wrong with doing a 30 year, particularly the job situation you all are facing. And it will only get better. So you can do a 30 year to give yourself a bit of room financially and then just pay it like a 15…..why not also think about a 20 or 25?

  • Hey Jason, Thanks for stopping by.

    Yes, 30 years would give more flexibility. Some say take the 30 year and invest the rest of the money instead of paying it off. I think I would lean more towards the 15 year, not pay it off early, and invest the rest. I’m still running the numbers. Also, thinking about the housing in this area. Honestly, if we move to another location, I would negotiate a relocation package where the company would pay for the transactional fees of selling the house. This will probably happen next time whether it be an internal or external move.
    SavvyFinancialLatina recently posted…Planned 2017 BudgetMy Profile

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