My wife and I are looking at building a house next year. The total cost will be about 320k. Of this we will be financing ~260k. I am concerned about the cost of a $1700+ mortgage payment vs our current $650. We have reasonably good incomes for 28 yr olds totaling 110k/yr and will increase at a fairly good pace of the next couple of years. We currently save about 28k of that for retirement and 12k for future house. Building will deplete our nonretirement savings to 0.
The logical part of me is screeming wait until you can finance <200k and still have some savings set aside. Our rush to build is based on two things: My wife has a goal of moving by the time she is thirty and I agreed to it before we bought our first house and were married, second my FIL is semi retired now doing high end kitchen remodeling and absolutely loves building houses. He has helped build one for three of my in-laws as well as his own. We would end up doing our own cabinets, roof, driveway and patio, painting, electric, plumbing fixtures (not running the pipe), windows, and any finish carpentry. So for the 320k and a lot of weekend and evening labor we would end up with a house worth around 420k+ based on my inlaws' experiences. As he is 68 now, he might not be up to helping as much by the time we saved up enought to finance only 200k.
So my rambling question is, how badly are we hurting our chances at FIRE by building a house and financing appr 2.5x our current yearly income? Should I finance a larger portion to keep some savings? Did anyone buy a house that felt like a stretch in the beginning and their income grew to make the payment easier to handle? I feel like building now would be a high risk but if everything went according to plan it would work out well in the end. But if anything went wrong we would be screwed. I keep imagining hurting myself in the process of building and not being work for a couple of months, and be faced with a new mortgage expense. I like my current low risk lifestyle where either one of us could be out of work indefinitely and we could make due.
The logical part of me is screeming wait until you can finance <200k and still have some savings set aside. Our rush to build is based on two things: My wife has a goal of moving by the time she is thirty and I agreed to it before we bought our first house and were married, second my FIL is semi retired now doing high end kitchen remodeling and absolutely loves building houses. He has helped build one for three of my in-laws as well as his own. We would end up doing our own cabinets, roof, driveway and patio, painting, electric, plumbing fixtures (not running the pipe), windows, and any finish carpentry. So for the 320k and a lot of weekend and evening labor we would end up with a house worth around 420k+ based on my inlaws' experiences. As he is 68 now, he might not be up to helping as much by the time we saved up enought to finance only 200k.
So my rambling question is, how badly are we hurting our chances at FIRE by building a house and financing appr 2.5x our current yearly income? Should I finance a larger portion to keep some savings? Did anyone buy a house that felt like a stretch in the beginning and their income grew to make the payment easier to handle? I feel like building now would be a high risk but if everything went according to plan it would work out well in the end. But if anything went wrong we would be screwed. I keep imagining hurting myself in the process of building and not being work for a couple of months, and be faced with a new mortgage expense. I like my current low risk lifestyle where either one of us could be out of work indefinitely and we could make due.