Blow that dough on a new house?

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rjsob58

Recycles dryer sheets
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May 29, 2013
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We haven't had a mortgage in 5 years, no more car loans, kids done with college. Everything is on the asset side of the balance sheet.

When we moved here, we sold our home and paid cash for our current home. Certainly wasn't the home of our dreams, but it is functional and serves our needs. Wasn't even looking or considering a new house, but this one popped up on our radar. It's really nice with many pluses over our current house.

We can certainly afford it and after years of being careful (frugal), we're starting to spend on things we really want. I'm 68, DW 63. Both retired. I'm struggling a bit with this large of a purchase. I've run the numbers - loan amount, interest, property taxes, etc and it is well within my comfort level financially. I guess I'm looking for the "gotchas".

With that limited information, can you talk me out of it? Or convince me it's okay to take the plunge.

P.S. - The home price represents 8.5% of my net worth.
 
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Have you put all the numbers into a financial planner like FireCalc or/and Fidelity Retirement Planner? If they come back with great success, I would say do it. You are not getting any younger, just enjoy a home that you really want for the however many more decades you both have left.
 
RetiredHappy said:
Have you put all the numbers into a financial planner like FireCalc or/and Fidelity Retirement Planner? If they come back with great success, I would say do it. You are not getting any younger, just enjoy a home that you really want for the however many more decades you both have left.
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No. I retired 9 years ago. Even pulling from my IRA for 9 years, that account is over 40% larger than when I retired. And the cost of the house is roughly 8.5% of my net worth.
 
It's exactly what we did. Sold a paid-off house once our retirement house was built. Financed the build/buy with a 30-year mortgage. After living here for 5 years we have no regrets. So I'm obviously in favor of your plan.
 
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How does your spouse feel about moving?
Will you miss the neighbors or neighborhood?
 
Won't the sale of your current home nearly cover the cost of the house you are considering?

What kind of "gotchas" are concerning you, if I may ask?
 
If it's only 8.5% of your NW, go ahead and do it. It's ok to spend on what you'll enjoy and you don't want to have regrets for what could have been, down the road. For as much time as you spend in your home, you might as well enjoy every minute. We did the same thing back in 2020 and are really glad we did.
 
JohnnyPHX said:
How does your spouse feel about moving?
Will you miss the neighbors or neighborhood?
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She's on board. When we bought here, there were no suitable homes in the city itself so we're about 9 miles out in a rural area. This is in the city and closer to restaurants, groceries, shopping. And it has sidewalks!!!! We can walk the dog and ourselves. Can't do that now.
 
Do it. Your current home is functional, but is it where you want to spend your time, your life? Doesn't sound like it.

Do add some new furniture and redecorating to the budget, but go for it.
 
Koolau said:
Won't the sale of your current home nearly cover the cost of the house you are considering?

What kind of "gotchas" are concerning you, if I may ask?
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Our current home is roughly 17% of the new one ($237k vs $40k). When we moved here, we were not sure if we would stay so we got a double-wide outside of the city. It really has and does suit our needs. We travel a lot in our RV (5+ months a year), so we're typically not home for more than 1-2 months at a time. As it is rural, we don't worry about being gone for 1-2 months at a time. Nobody "wanders" down our street and our neighbors keep an eye out for us.

The new place is in the city proper and is brick construction. It does have space to park the RV. I guess I'd need to invest in some security cameras for when we're gone. That's probably my biggest concern.
 
All valid points in the article. On the other hand, a cash offer can have more clout with the seller especially if they're interested in closing quickly and mortgage companies can be a PITA to deal with. Then there's the additional costs associated with securing a mortgage.
 
Questions to consider:
How likely is it you’ll stay in this house 10+ years?
Could your wife comfortably cover the payment for decades if you die first, using her income plus portfolio?
Do you care if your heirs inherit the house free and clear, or are you fine with them inheriting equity plus remaining debt?
 
rjsob58 said:
She's on board. When we bought here, there were no suitable homes in the city itself so we're about 9 miles out in a rural area. This is in the city and closer to restaurants, groceries, shopping. And it has sidewalks!!!! We can walk the dog and ourselves. Can't do that now.
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Sounds like a good quality of life move to me. Being able to go for daily walks safely is a really good reason. Being closer to things is important as we get older. Having easy access to doctors and hospitals can help you sleep better too.
Have you spoken to a realtor yet and gone and seen the place and neighborhood in person? A realtor can give you insight to the area and if the home is priced right. I like to use Redfin when shopping for a home. Their website just seems to flow better for me. If you aren't already working with an agent they have an option to contact a Redfin agent on their site to set up a no hassle tour. I am sure others sites like Zillow have improved too. So look at them all. Check the comps in the area.
I just saw a news blurb about AI being used to alter the pictures to make homes appear more desirable. I have been testing the waters and looking at homes and have seen some pictures that are clearly labeled staged and then also show the room empty. That's a good thing and can help you get a feel for the place with furniture in it. Zillow has a feature for some of their premium listings that let you actually stage a room using select design templates. Other than putting a bed in the shower the tool works pretty well. It's when these staged rooms aren't labeled as such it can be deceiving. AI can give a run down home a fresh clean appeal. They also tend to leave out undesirable views like the two story home directly behind yours ruining that privacy in the backyard.
Also check prior sales on the home. Depending on where you are at and when the home last sold you could be in for a big jump in property taxes when it sells. Property taxes are forever and rarely do down!!!!
Good luck with the decision. Remember if this one gets away it wasn't meant to be. There will be others.
 
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I'd consider ~10-12% reduction in your portfolio in year one with your additional maintenance, insurance, property taxes and utilities. Not to mention the things you will want to do when you move in (decorating).

So if you are currently spending 4.4%, plan for a 4% reset...
 
Which place do you think you will be happier in when you reach those slow go and no go years?
Does one home have a better layout for aging in place? No stairs or steep drive way to worry about?
 
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My concerns would be repair and maintenance related, and whether or not it might need to be updated. Neighbors too. Jump from the pan into the fire. Neighbors make or break it.

The money part isn't even a factor given what you've described. It could be something as simple as how the house is oriented to the sun. Does ice melt on your driveway, or is the kitchen blistering hot during dinner in the summer?
 
If it’s a new house you’ll have warranties on just about everything for at least 1-10 years so maintenance isn’t going to be an issue. You may also get an insurance discount because it is new construction. I just went through all this because we close on a new build in 3 weeks.
Here’s a gotcha. You are buying too low. At 8.5% of net worth, you can easily afford more.
Don’t over think it. Tens of thousands of people buy a home every day and love it.
Buy it before someone else does and then you’ll regret hesitating.
 
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