Blow that dough on a new house?

[JohnnyPHX]

OP hasn't been back since Thursday to look At all the great responses in this thread. Hopefully he is too busy with negotiations on the new home. Hope comes back to give us an update soon and all is well and they love the new place.

 

[Finance Dave]

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.

We are doing similar...

I'm 64, DW 68. We are building a new house and moving to a new state. Current house value about $525k, new house cost $1.1M. The difference of about $575k is about 25% of our NW (not including our current house). I'm not worried at all...think of it as just moving your asset to a different part of your balance sheet. We are spending an additional $575k on a house asset, and reducing our brokerage account by the same $575k...NW doesn't really change (depending on whether you count the house in your NW). Our thinking is that someday we'll sell that house and move into a 55+ community or nursing home, so we'll get the money back out of it.

Go for it!

 

[Lorenzo]

We are doing similar...

I'm 64, DW 68. We are building a new house and moving to a new state. Current house value about $525k, new house cost $1.1M. The difference of about $575k is about 25% of our NW (not including our current house). I'm not worried at all...think of it as just moving your asset to a different part of your balance sheet. We are spending an additional $575k on a house asset, and reducing our brokerage account by the same $575k...NW doesn't really change (depending on whether you count the house in your NW). Our thinking is that someday we'll sell that house and move into a 55+ community or nursing home, so we'll get the money back out of it.

Go for it!

Can you fund your lifestyle spending from the remaining 1.7M or so of your NW (which does not include your current house)? Or do you have sources of fixed income, such as a pension or SS? DW and I are of roughly similar means as you two, and our present home is of similar value as yours, but we're not on SS yet, and no pensions are in our future. No way could the roughly 70k (4%) per year generated by the 1.7M support our spending level.

 

[Calico]

Cambridge is full of old houses, and on my daily walks I see renovations all the time. Pretty much nobody rips out all the old wood framing or wood boards and keeps one random exterior wall —what you’re describing is the exception, not the rule.

For a 100+ year-old house in desirable location, the typical renovation is systems + enclosure + kitchens/baths, plus selective structural repairs where needed—not a full replacement of the wood frame. Most projects keep the structural shell, then modernize electrical, plumbing, HVAC, insulation/air-sealing, windows/doors, and finishes. Ofcourse such houses cost much more than new construction

Interesting video.

I live in a 55-year-old ranch house. The front is brick, and the rest has siding. In 2024 I had all the siding replaced with Hardi Board siding.

The local company I hired had decades of experience installing this siding, and excellent reviews.

I was curious what they would find under the old siding. When my old siding was removed, the company owner came by to tell me that my house was solid as a rock - he said they NEVER see framing like mine in newer houses they work on. He does work on houses the same vintage as mine (1971) and he said without exception they are built to 5-10x higher standards with much higher quality materials than new builds. His entire work crew confirmed that they see this every day in old-vs-new builds. Interesting side note: the company owner said he lives in a house exactly like mine - a 1970s vintage ranch - and he wouldn't trade it for a new build no matter how many "fancy finishes" were included!

My house may be older, and small-ish (1075 SF) but it will be standing after I'm gone! I have countless friends who bought newly built houses in subdivisions over the last 15 years, and within a few years (3-5) they all had multiple issues.

There's a reason for the expression "they don't make them like they used to."

 

[dobig]

Interesting video.

I live in a 55-year-old ranch house. The front is brick, and the rest has siding. In 2024 I had all the siding replaced with Hardi Board siding.

The local company I hired had decades of experience installing this siding, and excellent reviews.

I was curious what they would find under the old siding. When my old siding was removed, the company owner came by to tell me that my house was solid as a rock - he said they NEVER see framing like mine in newer houses they work on. He does work on houses the same vintage as mine (1971) and he said without exception they are built to 5-10x higher standards with much higher quality materials than new builds. His entire work crew confirmed that they see this every day in old-vs-new builds. Interesting side note: the company owner said he lives in a house exactly like mine - a 1970s vintage ranch - and he wouldn't trade it for a new build no matter how many "fancy finishes" were included!

My house may be older, and small-ish (1075 SF) but it will be standing after I'm gone! I have countless friends who bought newly built houses in subdivisions over the last 15 years, and within a few years (3-5) they all had multiple issues.

There's a reason for the expression "they don't make them like they used to."

I once bought a place that 3 old dentists had built for their group getaway. Secluded in the woods on 100 acres with a 2 acre pond. The place was built with stone and white oak. Very rustic. You could have driven a Mack truck into it and it would have just bounced off. Man I miss that place.

 

[dobig]

Ha! My last post got me thinking of some of the cool cabins we've owned over the years so I did a search to see if scammy photobucket was still in existence. They're still around and still scammy. Charged me $5 (recurring monthly) but was able to access a decade of pictures I thought were lost forever.

Better get a thumb drive and download all the pictures before they pull another scam. I'm also not going to give that place any business if I can help it after the stunt they pulled so I'll close the account once I get all my photos downloaded.

 

[RobLJ]

We're looking at buying a 2nd home in Colorado Springs close to our oldest son and family in Denver for about 13% of total worth. Youngest son would stay in the Reno house and pay bills/maintenance (and either inherit it or if he moves we would sell and pay off the new mortgage and give him half, which would be a large chunk of an early inheritance for him).
We would get a mortgage for 1/4 or 1/3 and pay off in 4-7 years by accelerating withdrawals as we have done the last 3 years.
The expense doesn't bother me much; after starting SS for myself last January and anticipating DW in 3 years, the mortgage will be trivial. We just paid for foundation work and side exterior paver stairs (and have put in a heat pump and solar over the last 7 years), so there isn't much more to do to the Reno house, for at least a while, barring earthquakes or other disasters (knock on wood). It would be a way of helping the youngest and help with the oldest's 3 kids and within a day's drive to help my elderly mother in North Texas.
No decisions have been made yet but it's similar to OP, only more expensive.