What's the better route...keep existing house or buy cheaper house?

[gayle39503]

The way I see it is: We have 30,000 equity in our home. put it down on a house that cost 60,000-80,000. This brings the mortgage down to roughly 30,000(IF IT COST 60,000). The cost on 30,000 HOUSE note for 15 years would be 245.67, accounting to the mortgage calculator.

Currently our house payment is $1321.00 (minus taxes and insurance of 329.00 per month) which would bring me to $992.00 actual house payment amount. This is why Im considering selling this house, buy something alot cheaper to save money and hopefully save enough to just pay cash for a house!!!

Am I on the right track here?
Thank you ,,,,Gayle in Gulfport, MS

[gayle39503]

Jim Ohio

I will do some of the math you suggest. I just want to not pay so much to live in a house thats to big and I keep seeing us saving more by down sizing. Our house payment including taxes and insurance is 1300 a month for the next 14 years. Our home is in one of the best neighboorhoods in this area and is only 6 years old.

[jIM_Ohio]

We both agree the house is to big for us. We shut 1/2 of it off. Hubby wants to stay until the economy gets better but the way I see it. If we sold it, which I think if we price it at 156,000-158,000, a lot lower than most in this neighboorhood, we have a chance on selling it. It would probably take time to sell though. We can makes the bills, but I see a less expensive house, maybe a forecloser of about 50,000 to 60,000 fixed up by us a way better way to save money. I just need someone to help me average it all out so I can show my hubby how we can save more in a cheaper house. Rather than they way we are going about it. Even if we lived there only 5 years and saved real hard, show him the math on how much we would save, he might consider it a better option. I do like like this house, Im just not to crazy about 280 a month for insurance, where if we move further away from the ocean, it would be cheaper. And if it was under 100,000, we could save money. Do you think my reasoning is good?

Thank you, Gayle

the cost of repairing a fixer upper would destroy the lower mortgage rate.

If your current mortgage is $1000/mo and you have a new house with a mortgage of $600/mo, what would you do with the $400/mo you "save"?

[gayle39503]

I don't think this is a right or wrong thing. You are discussing two different things. Why do you want to move? Are you having any trouble handling the costs associated with this home? Is this home not appropriate for your needs? Do you not like the home?

How is the housing market in your area? How confident are you that you will actually be able to sell the house for 160K? Have you looked at cheaper houses and found ones that you both like and would be happy with? Does your husband want to move (financial considerations aside)?

We both agree the house is to big for us. We shut 1/2 of it off. Hubby wants to stay until the economy gets better but the way I see it. If we sold it, which I think if we price it at 156,000-158,000, a lot lower than most in this neighboorhood, we have a chance on selling it. It would probably take time to sell though. We can makes the bills, but I see a less expensive house, maybe a forecloser of about 50,000 to 60,000 fixed up by us a way better way to save money. I just need someone to help me average it all out so I can show my hubby how we can save more in a cheaper house. Rather than they way we are going about it. Even if we lived there only 5 years and saved real hard, show him the math on how much we would save, he might consider it a better option. I do like like this house, Im just not to crazy about 280 a month for insurance, where if we move further away from the ocean, it would be cheaper. And if it was under 100,000, we could save money. Do you think my reasoning is good?

Thank you, Gayle

[maat55]

If I were short on retirement funds and short on time to build them, I would free up as much money as possible to grow retirement funds.

Homes are not the place to save. IMO, those who rely on SS/medicare are going to be very dissapointed in the not so far future. I would lighten my load and prepare.

[jIM_Ohio]

You need a handle on costs of current house and a timeline of when money is available and what it will be used for.

Example
costs of current house
mortgage payment
Insurance
utilities

Cost of $X per month for 14 years (14*12 months). After 14 years, the payment drops to $X-mortgage payment.

The list what the X-mortgage payment money would be used for in year 15.


On an alternate timeline, you have
new house B
costs are mortgage payment, insurance utilities cost of $A
in B years, the payment is $A-mortgage payment
you gain $30k cash when you move in- what would this be used for? Invest at Y% return... or spent on Z items

Then put the timelines next to each other
with current house, in 15 years you have $C
with new house in 15 years you have $D
then check 5 years later

In general, if you save the money, situation B will come out ahead, but it might be 20 years down the line, might be 40 years down the line. You need to see your break even point and decide if the time and money are worth the stress.

[disneysteve]

I don't think this is a right or wrong thing. You are discussing two different things. Why do you want to move? Are you having any trouble handling the costs associated with this home? Is this home not appropriate for your needs? Do you not like the home?

How is the housing market in your area? How confident are you that you will actually be able to sell the house for 160K? Have you looked at cheaper houses and found ones that you both like and would be happy with? Does your husband want to move (financial considerations aside)?

[gayle39503]

We owe 121,000 on our house with 14 years to pay at 5% interest rate. House is valued at 160,000. Each month at this time, $550.00 goes towards principle balance. Insurance each month living on the coast is $280.00 a MONTH!! We are ages 54 & 55. I want to sell the house, make the profit of approx. 30,000 give or take some, buy a cheaper house, make smaller house payments ( a lot smaller) AND SAve the money we are spending on this house. Hubby wants to stay in the house and says this is the way to save. That if we stay in the house and sell it when the ecomony is better, we will make more money than moving to a cheaper house. I just need some good advise from you wise money people on who really is right here