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what would you do?
Old 02-21-2007, 06:11 PM   #1
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what would you do?

house #1 - better neighborhood, big house with everything you could need - extra bedroom, office, pool, 3000sq ft.
house #2- nice neighborhood, not as quiet a street (kids couldn't play in street), better back yard, everything we need. no pool,but big community pool, 2400sq ft. would need to do a little fixing up - new carpet, paint etc.
House #1 $100,000 mortgage
House #2 no mortgage
The schools are excellant and the same for both.
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Re: what would you do?
Old 02-21-2007, 06:17 PM   #2
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Re: what would you do?

Everything you need + no mortgage => House #2 IMHO.

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Re: what would you do?
Old 02-21-2007, 06:22 PM   #3
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Re: what would you do?

  • length of commute to work?
  • quality of next door neighbors?
  • parking?
  • value of neighborhood homes?
  • construction quality?
  • maintanence costs
  • age of homes

what is the impact of the $100k mortgage? Do you have 'plenty' of income? reserves? what place do you see yourself living in 5, 10, 15 yrs? How long do you plan on being there? Would it be worth the time and hassle to fix it up, if you are gone in 5 years? The pool probably costs to maintain, and insurance might be more? I assume both 2400 and 3000sq ft are plenty big, so if your family grows i'm sure both will be adequate.

I think there are more criteria you need to look into.
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Re: what would you do?
Old 02-21-2007, 06:45 PM   #4
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Re: what would you do?

What one does your wife want?
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Re: what would you do?
Old 02-21-2007, 07:17 PM   #5
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Re: what would you do?

Having a 9-year-old, there is absolutely NO REPLACEMENT for a neighborhood where the kids can play in the streets and hang with each other. My daughter has her group of friends in the neighborhood and on the weekends they are off having their own adventures. We can keep touch by walkie-talkie, the parents all know each other and look out for the kids, and it's as safe as you can be in America today. Worth the peace of mind for sure (and a $100k mortgage).
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Re: what would you do?
Old 02-21-2007, 07:29 PM   #6
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Re: what would you do?

Another consideration is can you walk to anything fun or interesting from one of the houses and not the other. Does one house have a park/school/shops/restaurants within walking distance. The flip side of that is how far away are some undesirable things like railroad tracks and their noise, the low rent district and their associated problems etc. Is there a toxic chemical plant or steel mill a block away ?

Will you have to keep up with the Jones in one of the houses and not the other. That can break your budget.
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Re: what would you do?
Old 02-21-2007, 08:01 PM   #7
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Re: what would you do?

House #1 will be easier to sell in the future. It's got my vote.
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Re: what would you do?
Old 02-21-2007, 08:10 PM   #8
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Re: what would you do?

I'd want to know if the $100k mortgage payment is going to be a substantial chunk of your income, and prevent you from saving very much, or if it's doable without sacrifice.

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Re: what would you do?
Old 02-21-2007, 08:19 PM   #9
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Re: what would you do?

Income to deduction of mortgage intrest and length of loan as well as FIRE potential delay But, more money for savings vs. payments may include nicer vacations while children are growing up. We know Disneyland aint cheap!
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Re: what would you do?
Old 02-21-2007, 08:50 PM   #10
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Re: what would you do?

Thank you so much for the replies. It's a difficult decision, so it's nice to get other opinions. We can afford the 100K no problem, but for a 10yr loan plus taxes, we would be paying $2000/mth for 10 yrs. If we didn't have a mortgage $1500 could go to savings, thats a lot of money over ten yrs.
But would we regret the move? If we did it would end up costing us if we wanted to move back. But would we regret our opportunity to be mortgage free now instead of 10 yrs?
The houses are close so no differences really. We live in #1 and are renting out #2, but our time is running out before we will have to pay capital gains on the sale of #2.
I'm so tempted to go with no mortgage, inspired by FIRE and you guys .
Other than fully funding retirement accounts (around 170k) we don't have any non retirement investments other than the equity in the houses. Mid 30's for both of us.
So many pro's and cons on both sides. The perfect solution would be #1 with no mortgage, ha,ha. Oh well, that's life. Let me go sleep on it. Night all!
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Re: what would you do?
Old 02-21-2007, 09:42 PM   #11
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Re: what would you do?

Do you do a lot of entertaining or are you mostly 'home bodies'? The reason I ask is because I'm trying to get a view of your lifestyle. Do you use your pool in #1 now, or mostly just 'maintain it'? Do you like to swim at night or early in the morning (when a public pool may not be avaiable)? Do you use your pool area as a 'meditation space'? I have a pool...can you tell

Do you have rooms that are underutilized? i.e. a 'living room' that is generally devoid of people because everyone is in the basement 'rec room'? How about a 'formal dining room' that is basically only used during the holidays? Do you want the 'stuff' or ER?

Forget the economics...think about your lifestyle
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Re: what would you do?
Old 02-22-2007, 11:09 AM   #12
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Re: what would you do?

How many irreplaceable years of your limited time on this earth are you willing to give in order to live in House #1? I am assuming very few, in the following answer, and I am assuming that you are still working.

House #2 gets my vote. Take the money you would have spent on the mortgage and add it to the ER nestegg. That will allow you to retire earlier and essentially claim these additional years as your own.

Another consideration is that usually a more expensive house results not only in the higher mortgage payment, but also in a more expensive lifestyle. Strange, but after reading this somewhere, and observing for a few years, I do believe it is true. The house may end up costing you more than you think.

And lastly, if you REALLY wanted to live in House #1, deep inside, then I don't think you would have asked us.



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Re: what would you do?
Old 02-22-2007, 12:01 PM   #13
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Re: what would you do?

I would prefer a house with no pool to maintain and fewer rooms to heat, air condition, and clean.
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Re: what would you do?
Old 02-22-2007, 01:34 PM   #14
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Re: what would you do?

Keep looking for house #3.

I'm in the same exact bucket right now. Compared to the house and neighborhood we're living in now:

#1: Nicer house in a much nicer neighborhood with a great yard thats $200k more
#2: a much nicer house with about 300 more square feet and 15-20 years newer than #1 in a nicer neighborhood with a pretty good yard thats $125K more.

#2 is commutable to my wifes current job...#1 is far enough away to make her think about changing jobs eventually. #2 is very close to grandpa, which isnt necessarily a good thing. #1 is more of a mature bedroom community while #2 is in an area of more recent tract homes and lots of high end retail.
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Re: what would you do?
Old 02-22-2007, 02:49 PM   #15
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Re: what would you do?

Quote:
Originally Posted by ironman

The houses are close so no differences really. We live in #1 and are renting out #2, but our time is running out before we will have to pay capital gains on the sale of #2.
If you move to #2 and sell #1 you will get the tax break of selling your personal residence (500K of gain tax free). Then if you live in #2 for 2 years, when you sell it you get the tax break on it as well.
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Re: what would you do?
Old 02-28-2007, 08:41 PM   #16
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Re: what would you do?

House #2. Nothing feels as good as "no mortgage".
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Re: what would you do?
Old 03-01-2007, 04:54 PM   #17
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Re: what would you do?

By selling house #2, could you pay off the mortgage on house #1 and be mortgage-free there?

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Re: what would you do?
Old 03-01-2007, 07:39 PM   #18
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Re: what would you do?

In case anyone cares, house #1 was listed and put on the market last night. We will be moving to house #2 once it sells. We ran the #'s, and it just makes sense - that compound interest is huge. If we feel differently later, we can start keeping an eye out for #3. I don't think we will.
Thanks for the replies. The older I get the more I appreciate other people's experience and knowledge.
Lets hope the house sells quickly . Maybe that's a bit to hopeful, ha,ha.
Glo, I can't wait to have that feeling.
No capital gains to pay - yehh!
Cute Fuzzy Bunny, are you still looking for #3?
SingleMomDreamer, your reply was what we went back and forth on the most. We decided it would all work out b/c both kids have school mates in the same neighborhood. It has the whole community ammentiy thing going - pool, playground, road hockey court etc. The kids will be fine. If we change our minds once we're in, that's when the hunt for #3 would happen. We lived in #2 for 2 yrs, starting 4 and a bit years ago, before we rented it out and moved to #2. So no capital gains if we wanted to sell.
Thanks again Iron
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Re: what would you do?
Old 03-01-2007, 08:16 PM   #19
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Re: what would you do?

Quote:
Originally Posted by ironman

Cute Fuzzy Bunny, are you still looking for #3?
Found it. Bought it!

Got a larger, newer house in the neighborhood I wanted for the price I wanted.
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Re: what would you do?
Old 03-01-2007, 08:28 PM   #20
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Re: what would you do?

Don't you just love it when things work out right. Congratulations!! Enjoy the new house. I love moving. Liberating to go through everything and get rid of any accumulated junk.
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