New Here. Advice??

[tsawyer]

Hello everyone. I need some advice thought this may be a good place to find some.

My wife has been completing her Masters for the last couple of years. We have survived (barely at times) on my income along with our two little boys. She is working again and our income has doubled!! We are living in a two bedroom one bath home. Our kids share a room and the walls are closing in on us. House is in good shape just too small. We looked at another home and love it however we will double our mortgage to get this house. The new house is not beyond our means at all we are living with a $2000 surplus in our budget as we speak.

My question is this> should we suck it up a few more years in this house (we could pay it off in about 6-7 years) or just do what every other American does and increase our debt load?

[Fizgig]

A lot of factors go into this decision. First off it's absolutely okay for your children to share a room - they are not suffering any hardship because you're in a small home!

Everyone here will need to see numbers before offering an opinion.

1. What's your current (net or gross) combined income?

2. What's your current house payment, including taxes and insurance?

3. What's the current mortgage compared to the home's value? Could you sell it for a profit or are you upside down like half of America?

4. What's your current debt load - credit cards, student loans, car loans, etc. If you're carrying heavy debt it'd be best to keep your housing costs low so you can more rapidly pay off that debt.

5. What price of a home are you looking at?

I don't always agree with Dave Ramsey, but I do agree with his notion that your total mortgage payment will ideally be a quarter or less of your monthly take home pay. If your home is too expensive, it just makes it a lot harder to achieve other financial goals, whether it's getting out of debt, saving agressively, or having more fun.

Also remember that a larger house means more taxes, usually higher utilities, more furniture, more to clean, etc. Bigger is not always better!

Congrats to her for finishing her masters!

[tsawyer]

combined bring home (after taxes) is about $4400 month. This is on the low side as she gets a significant milage check as well. We plan to keep most of that in its own"car" account. We currently pay $560 month taxes and everything. Owe about 54k on this house should be able to get 75k-80k out of it. New house is asking 119k. Our debt load other than the house is about $50k in student loans and 4k on the credit card. No car payment or other bills to speak of.

[Fizgig]

The bigger house seems okay given your situation. There's something to be said for having a house that's affordable on only one income, though, especially in the current climate. I'd try to take this opportunity to live cheap and pay off your debts, but I don't think it'd be a stupid move to get the bigger house.

[tsawyer]

That kind of my mindset as well. We may only be in this position once in our life, I want to do this right. On another note, the realtor I talked to mentioned a "bridge loan" that would give my time to sell my house while buying the new one. Sounds risky, any thoughts??

[jIM_Ohio]

Hello everyone. I need some advice thought this may be a good place to find some.

My wife has been completing her Masters for the last couple of years. We have survived (barely at times) on my income along with our two little boys. She is working again and our income has doubled!! We are living in a two bedroom one bath home. Our kids share a room and the walls are closing in on us. House is in good shape just too small. We looked at another home and love it however we will double our mortgage to get this house. The new house is not beyond our means at all we are living with a $2000 surplus in our budget as we speak.

My question is this> should we suck it up a few more years in this house (we could pay it off in about 6-7 years) or just do what every other American does and increase our debt load?

Give me numbers if you could.

If your mortgage goes from $1000/mo to $2000 mo, you still have surplus

If your mortgage goes from $2500/mo to $5000/mo, you used up all your surplus and need to cut back.

Some points to consider:
1) is school district where you live good?
2) can you improve/remodel current house (add 2-3 more bedrooms, possibly increase size of kitchen and possibly add a morning room or second TV room?)
3) why would mortgage double if you moved?

My thought is this

find a house which is a modest upgrade (whether remodel current house or a new house) and its OK to add $750/mo to current house payment to get what you "need".

The sooner you make the decision, the sooner you are debt free (which appears to be a goal).

Meaning if you wait 2 years to make decision, you will still have a 15 yr or 30 yr mortgage to payoff when you move. If you move sooner (2 years sooner), then you have 13 years or 28 years to become debt free.

[MonkeyMama]

Bridge loan - absolutely not. Very high interest rates, and higher penalties if house does not sell in agreed time frame.

You can sell the first house and rent while you look for a second home. Or, buy new home on contingency of old one selling. May not be ideal, but I wouldn't consider a bridge loan as a viable option.

[jIM_Ohio]

Bridge loan - absolutely not. Very high interest rates, and higher penalties if house does not sell in agreed time frame.

You can sell the first house and rent while you look for a second home. Or, buy new home on contingency of old one selling. May not be ideal, but I wouldn't consider a bridge loan as a viable option.

We did this and the amount of money we saved when renting was astronomical.

Mortgage was $1000 before (maybe $1100) and electric bill was about $200 or so.

Renting was so much cheaper- $500 in rent maybe, electric bill was maybe $50/month and storage was another $30/month maybe.

This is a great way to save for a downpayment.