- Mrs. Honeybee
- 6 years ago
- Wedding: May 2011
Darling Husband and I have been house hunting, and we found the most perfect, amazing house ever. We’re both IN LOVE with it. It was built in 1780, it’s in an amazing school system, and at $199,900, it’s actually underpriced. It’s perfect in every way and we want it to be our house forever and ever.
But when we started thinking about putting in an offer, we sat down and took a good, hard look at our budget. And I don’t think we can really afford it. Or maybe any house at all.
When we take our combined monthly income, subtract our expenses (student loans, gas, groceries, cell phones, etc.), we come up with roughly $1,750 in available cash for a mortgage payment and property taxes.
So here are our options:
Be reckless and buy our dream house! Because, really, guys, it was built in 1780. And it’s AMAZING.
We can put 5% down and get a conventional mortgage. We’d be depleting pretty much all of our savings between the down payment and the closing costs.
Then, if we paid asking price, we’d be paying roughly $1,400/month for our mortgage payment and property taxes.
So we’d have… $300 a month left over. For savings, emergencies, etc. We’d have almost no savings anymore (because we spent them on the down payment and closing costs), and we could only afford to put $300/month back into our savings account. Assuming that our cars didn’t break down, or we didn’t have a family emergency that required money, or something else. And God forbid the house need any maintenance, like a new roof, or a new air conditioner, or a new sump pump, or whatever.
The only way to get more cash every month is to change our loan payments from a 10 year payoff to 25 years. I’m not sure how much this would reduce our loan payments, but it’s got to be at least a few hundred dollars. So we’d have maybe $600/month for savings and emergencies and things like that. And instead of having our student loans paid off in our 30s, they’ll be paid off in our late 40s or early 50s. And we’ll have paid more in the long run.
So obviously it’s a terrible plan.
We have a lot of student loan debt. We’re currently paying about $1,000/month, with the goal of paying them off about 8 years from now. I’d like to take the money we would have put toward a down payment and closing costs (approximately $20,000) and just make a HUGE payment toward our student loans.
Then we’d consolidate our loans. I figure that between consolidation and paying out $20,000 now, this would bring our monthly student loan payments down from about $1,000 to $700.
So by doing that we’d be saving $300/month every month, plus reducing the amount of money we’d be paying in interest in the long run.
Our current rent is $795/month, and like I said earlier, we have about $1,750 available each month for either mortgage and property taxes or rent. So if we choose to put off homebuying indefinitely, stay in our current apartment, and use our $20,000 savings toward a big loan payment (reducing our monthly payments by about $300/month), I figure we could start saving at least $1,000/month. The advantage of this plan is obviously having more available cash for savings every month, with the ability to (hopefully) replenish that savings account in about 2 years. Then, 2 years from now, we’d have about $20,000 in savings for a down payment and closing costs and a $700/month loan payment instead of a $1,000/month loan payment. We could revisit the issue of homebuying then. And as an added bonus, we’ll probably be making more money in 2 years as well.
I think it’s obvious what we should do. I’m still secretly hoping someone will answer the poll with “OMG BUY YOUR DREAM HOUSE DID YOU SEE THOSE BEAUTIFUL HARDWOOD FLOORS AND THE AMAZING FIREPLACES???” but we’re clearly not really in a position to do so. Even though we can’t stop thinking about this house and how amazing it is. Even though it would probably lead to FINANCIAL RUIN and DEBTOR’S PRISON.
So, tell me bees, would you buy the amazing 1780 house? Or would you make a big loan payment? OR would you do something entirely different? Help!