Thinking of upgrading our house. Am I out of my mind?

[Snodog]

I'm really at a loss as to what to do. I change my mind 10 times every day between 3 options. Hopefully you wise folks can help sort this out.

1. Stay where we are now. We owe around 40k and have 13 years left on the mortgage. This is our only debt and we currently save 40% of our income for retirement.

2. Buy the cheaper condo and get a 30 year loan for around 80K. This would only increase our payment about $150 more than what we are paying now even if you include the increased taxes and utilities. We would still be able to save 38% of our income.

3. Buy the dream condo and get a 30 year loan for around $180k. This would increase our payments, taxes, and utilities around $800 from what we are paying now. Our payments would be $1300 which would be 21% of our income, and we could still save 27% of our income.

We always thought we would upgrade at some point but not for like 10-15 years when we were better off. But with rates so low, and house prices down, and with inflation possibly on the way, we are wondering if now is the time.

But on the other hand the economy scares me, and inflation may never come. I dont see a great depression 2.0 coming down the pike but who really knows?

Our jobs appear to be safe. I work in what is normally a fairly recession resistant job, and my wife just got promoted and is constantly getting job offers including one just the other month.

I just have always been extremely debt adverse, but we have both fell in love with the dream condo. It would be a total luxury purchase and we dont need near the square footage but why have it if you cant spend it?

On the other hand I hate to go into debt for 30 more years which will make me 70 when it is finally paid off. Am I out of my brain on the train?

[zetta]

You need to do a retirement analysis first.

How many years till retirement?
How much do you have saved?
How much do you need to live on?

[MonkeyMama]

Not enough info to say.

If I was planning to upgrade my home in the future (I'm not) now could possibly be an exceptional time to buy. Low interest rates, low prices, which means lower transaction costs and possibly lower property taxes, etc. I'd consider it speeding up an upgrade, but only if it made financial sense.

It just depends how important all this is to you.

I think age can be a huge factor too. I assume you are about 40 then? On the flip side of the equation I think what gets a LOT of people in trouble is buying up as they age. When I am 40 I would like to have 5-10 years left on my mortgage. Certainly not 30. I wouldn't buy anything I couldn't afford with a 15-year mortgage. (I think a 30-year could be wiser, but I'd want to be able to afford the 15-year amortization - and make the payments like a 15-year loan while employed/healthy).

All that being said, #2 doesn't sound like a bad move.

#3 - I think I'd wait to see if I was in a better financial position later. Though I know nothing about your financial position so it's hard to say. But in general I'd avoid the "If I don't stretch today I will never afford it" mentality. It's a recipe for trouble. & because that's how it comes across.

I am curious why you want to move in the first place - you didn't mention anything about where you live now.

Honestly, if you have that much doubt about the whole thing, that's a red flag. At least wait until you have more certainty.

[Snodog]

You need to do a retirement analysis first.

How many years till retirement?

We are 40 and 37, so about 20-25 years.

How much do you have saved?

About 150k.

How much do you need to live on?

We lived on $33,000 last year.

We will get about $32,000 in social security at age 67

[Snodog]

I am curious why you want to move in the first place - you didn't mention anything about where you live now.

We both just would like a nicer place.

[TBH]

It sounds to me like you can afford the dream condo. Whether you want to spend your money on that is a question I can't answer for you. Another thing to think about is that you won't be able to live on $33K any more, so the amount of money you need to retire will go up a bit if you upgrade your home.

We have been in a similar position. We are really ready to upgrade our house, and we have been looking at houses for 3 months. We finally came to the conclusion that we couldn't comfortably afford the kind of house we want, so we had decided that rather than buy something in the middle, we'd stay where we are and save money for a few years until we can afford the dream house.

But then something came on the market in our price range two days ago, and it's not perfect of course but it has all the must-have elements, so we are under contract as of last night! I hope it's the right decision, but I am feeling very good about it so far.

Good luck.

[snafu]

Since there are wildly different economic circumstances in various parts of your huge country suggestions appropriate to Las Vegas would be different for areas not facing such upheaval.

Now they are telling us 80 y/o is the new 55! As a retiree [15 yrs], would you want to remain in your current location? Would you rather be in a more moderate climate? How do you imagine your retirement lifestyle? Would you travel? Domestic? International? Play golf? Learn new skills? How would you fill your days?

How important is 'control' to you and your wife? Do you like living in a house where you can make changes to suit your needs? Would you prefer living condo 'style' where you pay for monthly maintenance whose fee is totally out of your control and whose rules you may or may not find easy to comply with?

Moving is a lot of work and very stressful. What stuff are you willing to sell or dispose of? What is the point of moving to an 'inexpensive' condo? When buying, the rule is location, location, location. Is it closer to work, less of a commute? Closer to family/friends?

What features comprise your 'dream condo?" Is it size, the amenities that are part of the complex, the social status of the residents? Is it the fact that it is new, modern with up-to-date appliances and decorator colors? Safety, parking, walking distance to services you use regularly? Buying a new condo likely means buying new furniture, window coverings etc. because what you have will likely be inappropriate for the new digs.

Do you plan to sell your current residence? Can you undertake DIY tasks? What is your RE market like? What would you need to do, fix, upgrade, update to get best price for your house? It is usually cost efficient to spend $1K- $2K to make your home the most sale-able in your community. Does your wife's name appear on your current home? Would she be eligible for the gov't program for new purchasers?

Have you tried a Pro - Con list for each of your options? Sorry to have asked more questions without being able to offer answers.

[swaymonae]

holy crap at a dream condo for $180k..

I live in the Bay Area.. try a mil..

[Snodog]

Another thing to think about is that you won't be able to live on $33K any more, so the amount of money you need to retire will go up a bit if you upgrade your home.

Yeah for the first few years of retirement our expenses will be around 42k until we get the house paid off. Once the house is paid off at age 70 and 67 our expenses will actually go down to around 31k.

Good luck with your house. I hope all goes well.

[Snodog]

holy crap at a dream condo for $180k..

I live in the Bay Area.. try a mil..

Remember that is not the cost of the condo. That is the amount I would have to borrow.

[swaymonae]

Oooooooh. Well color me happy

[Snodog]

Since there are wildly different economic circumstances in various parts of your huge country suggestions appropriate to Las Vegas would be different for areas not facing such upheaval.

We are in a fairly good area. Our house value has only gone down around 10% the last couple of years although the higher priced stuff has come down around 30%.

Moving is a lot of work and very stressful. What stuff are you willing to sell or dispose of? What is the point of moving to an 'inexpensive' condo? When buying, the rule is location, location, location. Is it closer to work, less of a commute? Closer to family/friends?

What features comprise your 'dream condo?" Is it size, the amenities that are part of the complex, the social status of the residents? Is it the fact that it is new, modern with up-to-date appliances and decorator colors? Safety, parking, walking distance to services you use regularly? Buying a new condo likely means buying new furniture, window coverings etc. because what you have will likely be inappropriate for the new digs.

Both condo's are in the same developement which is about 5 minutes down the road from where we live now. We like the area, but we just would like a 2 car garage and a loft and the low mantainance condo life appeals to us.

And yes I have thought about having to buy new furniture. I guess chalk a point up for staying where we are.

Do you plan to sell your current residence? Can you undertake DIY tasks? What is your RE market like? What would you need to do, fix, upgrade, update to get best price for your house? It is usually cost efficient to spend $1K- $2K to make your home the most sale-able in your community. Does your wife's name appear on your current home? Would she be eligible for the gov't program for new purchasers?

Hopefully we may have a buyer for our house already. My wifes brother may be interested in buying it to rent out. This would greatly simplify things.

[Snodog]

For those who may be interested in these things here is the cheaper condo. And here is the dream condo.

The cheaper condo has everything we need. But the dream condo has a bigger loft, and those nice cascading steps.

[LivingAlmostLarge]

They both are beautiful and quite lovely!

[swaymonae]

Go for the dream condo.. it's so purdy.