Here is the dilemma. DW works downtown. We currently live down the street from her work, so her commute is very short. We are thinking about buying a house in an area 20 miles from downtown. That location would be great for retirement, but it would require a serious commute for DW, which we don't want. If traffic is light, it could be a 30-40 minute commute. But during rush hour, it would take significantly longer. That's probably why the area is still affordable. We have talked ad nauseam about it with DW and I feel like we have lost the perspective on the problem.
Here are the 2 options:
Option 1 - buy later. Keep renting close to DW's job, save a bunch money, and buy when DW retires - cash hopefully. It sounds like the right thing to do, but it seems to be a very conservative plan. On one side, this could allow us to take advantage of a softening of the real estate market if interest rates go up in the next few years. On the other side, prices could continue to increase and outpace the savings we are allocating for the purchase. So, with this option, there is the fear of being unable to afford a home in that area by the time we are ready to purchase.
Option 2 - buy now. As long as DW keeps her current job, continue renting a small apartment close to DW's work and list the house on airbnb for example to offset some of the carrying costs. Positives: with DW still working, we have a very good income and we could lock in a mortgage with an attractive rate. So we would not have to dip much into our savings. We would also lock in a purchase price that is still attractive. Negatives: we will have to pay for rent on the apartment and PITI on the house for a while, which is doable on our income. When DW retires, we can then move into the house and pay it off.
Most people tell us to go for option 2. But I would rather have the perspective of people I know are good with money. And maybe you can come up with a 3rd option.
Here are the 2 options:
Option 1 - buy later. Keep renting close to DW's job, save a bunch money, and buy when DW retires - cash hopefully. It sounds like the right thing to do, but it seems to be a very conservative plan. On one side, this could allow us to take advantage of a softening of the real estate market if interest rates go up in the next few years. On the other side, prices could continue to increase and outpace the savings we are allocating for the purchase. So, with this option, there is the fear of being unable to afford a home in that area by the time we are ready to purchase.
Option 2 - buy now. As long as DW keeps her current job, continue renting a small apartment close to DW's work and list the house on airbnb for example to offset some of the carrying costs. Positives: with DW still working, we have a very good income and we could lock in a mortgage with an attractive rate. So we would not have to dip much into our savings. We would also lock in a purchase price that is still attractive. Negatives: we will have to pay for rent on the apartment and PITI on the house for a while, which is doable on our income. When DW retires, we can then move into the house and pay it off.
Most people tell us to go for option 2. But I would rather have the perspective of people I know are good with money. And maybe you can come up with a 3rd option.