WWYD - Mortgage/Housing question

crene84 · March 2014

DH and I are lucky to be close to paying off our mortgage. We have a good sized, beautiful home but when we bought it, almost 6 years ago, we knew it was further out from the area we wanted to eventually be in. Now with 2 kids, some of the little things that bugged me about this house before, now bug me a lot more. For example, we can hear our neighbors playing basketball all year round, all hours of the night as if they are bouncing the ball in our living room. Also, the upstairs bedrooms don't maintain a good temperature very well. Our master is so huge compared to the nursery so when we have the heat running upstairs, DD's room gets super hot really fast. We haven't run the heat all winter because of this; instead we have space heaters.

Moving with 2 kids will be a huge pain and knowing that we could have it paid off in a year or two makes me want to stay. But being closer to DH's office and being able to get a house without some of the issues we're dealing with does sound appealing. If we do move to the area we want, though, it'll likely be $100-200K more than our current house so we won't be mortgage-free.

Ugh, I don't know what to do!

AKB090609 · March 2014

I think it depends on how badly you want to move. At this point, DH and I have decided that we want to have our home paid off before our kids are in college, so we plan to move before DD is in kindergarten and do a 15 year morgatage and pay off early (all of this is assuming rates stay low). Our house is missing some key features that we would love to have, but we also love our neighborhood so we may just deal with what we have and stay put. Who knows!

MomtobeNJ · March 2014

First let me say that I am envious of your position! It's a personal decision, obviously. But with 2 kids, I think I would want to be settled in a "forever" home as long as you can deal with the additional/extended mortgage.

hmp1 · March 2014

I would rather move, take on a higher but still affordable mortgage while interests rates are still low, and do a 15 year mortgage but pay extra payments so it is still paid off in the next 10-12 years. Our goal is to be mortgage free by the time the kids go to college and that includes the ability to move up to a nicer home when they are in middle school. I love our house but know that as we can afford more, I will probably want more.

MommaP12 · March 2014

you are in such a great position and I'm sure the better house/closer to work will work in the long run if you can get a 15 year mortgage and pay extra on it even.

Hyaline · March 2014

I know it's not quite what you asked, but those little things would not be enough to make me want to move if I otherwise liked where I lived. You will have slight annoyances absolutely anywhere you live. And to be that close to living mortgage-free--holy crap, no, I would not move unless there were major issues with the location or if I was truly unhappy with the house.

I would call an HVAC guy in to see what could be done about your heating issue, though.

And I might politely ask your neighbors (if you're on good terms) if a neighborhood "quiet hours" concept might be a good idea. Or hope they move soon.

watercolor5 · March 2014

I would try to fix the annoyances while you take the time to decide if you want to move. Sounds like putting some money into better insulation could help with soundproofing and some of the temperature issues and the nursery temperature issue could either be helped by the HVAC guy that hyaline mentioned, or by something simpler by closing off her air vent.

If the location/layout and things that aren't fixable are enough to make you move now, definitely go for it.

That said, I think it's still a really good time to buy a home- we got an amazing mortgage rate when we bought in Dec.

MommaP12 · March 2014

Since we are about to start the Mortgage process, what are you guys thinking is an "amazing" rate. We have really high credit scores and I have been looking on bankrate but want to make sure what I'm seeing is "amazing"

We're going to do a 30 year but pay more on it starting the fall when DS is not in Daycare anymore.

crene84 · March 2014

MommaP12 said:

Since we are about to start the Mortgage process, what are you guys thinking is an "amazing" rate. We have really high credit scores and I have been looking on bankrate but want to make sure what I'm seeing is "amazing"

We're going to do a 30 year but pay more on it starting the fall when DS is not in Daycare anymore.

I am curious what current rate I could get, but we did a mortgage adjustment a couple years ago and got our rate down to 3.25%..another reason I'm not sure if I want to move but regardless if we pay our mortgage off here, the rate doesn't matter..

MommaP12 · March 2014

crene84 said:

MommaP12 said:

Since we are about to start the Mortgage process, what are you guys thinking is an "amazing" rate. We have really high credit scores and I have been looking on bankrate but want to make sure what I'm seeing is "amazing"

We're going to do a 30 year but pay more on it starting the fall when DS is not in Daycare anymore.

I am curious what current rate I could get, but we did a mortgage adjustment a couple years ago and got our rate down to 3.25%..another reason I'm not sure if I want to move but regardless if we pay our mortgage off here, the rate doesn't matter..

yeah @crene84 my BFF refinanced a couple of years ago and got 3.25 also and she has a 15 year she's likely paying off in about 12. Those days are gone it seems and low 4s is what I'm seeing if you have A+ credit. So we're going with a 30 and plan to do a bi-monthly payment, adding a little on to it once DS is out of Daycare, and one extra payment per year every time I get a bonus and hoping to get it closer to 20 years tops.

I don't know, I'm kind of in Hyaline's camp where you'll have problems anywhere you go and having that low of a rate and being almost paid off is now sounding much better to me. Good luck with your decision.

hmp1 · March 2014

MommaP12 said:

Since we are about to start the Mortgage process, what are you guys thinking is an "amazing" rate. We have really high credit scores and I have been looking on bankrate but want to make sure what I'm seeing is "amazing"

We're going to do a 30 year but pay more on it starting the fall when DS is not in Daycare anymore.

Amazing rate right now is under 4%. We bought a year ago with a 15 year mortgage and are at 3%. Interests rates are only going to go up as the market improves.

tinyhumantoe · March 2014

TheAnne said:
There are some (many) financial advisers that would say that it would be wise to never pay off your mortgage early since the return on investment is much higher with what you can do with the extra money outside of a mortgage vs the interest rate you pay to have the mortgage combined with/zeroed out by the increasing value of the home.

I'm sure this is different case by case but it's something to keep in mind.

This. If I am a bazillionaire someday, which I won't be, I would still have a mortgage.

tinyhumantoe · March 2014

I would say the exception would be for people who do not invest or those in a situation where one spouse (or both) has/have spending issues.

OP, that's a tough one. Can you loosely look around with the idea that it might take a few years? Then when you find THE house, it will be well worth the wait and you will have enjoyed the benefit of saving some money during your scouting time.

MommaP12 · March 2014

tinyhumantoe said:

There are some (many) financial advisers that would say that it would be wise to never pay off your mortgage early since the return on investment is much higher with what you can do with the extra money outside of a mortgage vs the interest rate you pay to have the mortgage combined with/zeroed out by the increasing value of the home.

I'm sure this is different case by case but it's something to keep in mind.
This. If I am a bazillionaire someday, which I won't be, I would still have a mortgage.

Hmm, I actually remember reading this now as well now that you mention it....food for thought!

crene84 · March 2014

MommaP12 said:

tinyhumantoe said:

There are some (many) financial advisers that would say that it would be wise to never pay off your mortgage early since the return on investment is much higher with what you can do with the extra money outside of a mortgage vs the interest rate you pay to have the mortgage combined with/zeroed out by the increasing value of the home.

I'm sure this is different case by case but it's something to keep in mind.
This. If I am a bazillionaire someday, which I won't be, I would still have a mortgage.

Hmm, I actually remember reading this now as well now that you mention it....food for thought!

Yea we have a financial advisor we love and we were shocked when he told us to pay our mortgage (since he knew it'd take some time and he wouldn't benefit from us investing our money instead). That is definitely something we thought a lot about but decided in the end, the financial freedom of not having a mortgage won out.

Hyaline · March 2014

crene84 said:

MommaP12 said:

tinyhumantoe said:

There are some (many) financial advisers that would say that it would be wise to never pay off your mortgage early since the return on investment is much higher with what you can do with the extra money outside of a mortgage vs the interest rate you pay to have the mortgage combined with/zeroed out by the increasing value of the home.

I'm sure this is different case by case but it's something to keep in mind.
This. If I am a bazillionaire someday, which I won't be, I would still have a mortgage.

Hmm, I actually remember reading this now as well now that you mention it....food for thought!

Yea we have a financial advisor we love and we were shocked when he told us to pay our mortgage (since he knew it'd take some time and he wouldn't benefit from us investing our money instead). That is definitely something we thought a lot about but decided in the end, the financial freedom of not having a mortgage won out.

I think like most financial advice, it's not one size fits all--there's probably some variance in terms of what you'd earn on that money vs how much more interest you'd pay continuing the mortgage in each situation (what rate investments are earning, what your mortgage rate is, etc).

And I don't discount the emotional value of being out of debt, either.

BeachBabe22 · March 2014

I packed our entire four bedroom house by myself when my daughter was sleeping. It was not the easiest thing to do but it was definitely doable. Our house that we lived in worked for us when we were young and didn't have kids (could walk to bars and little yard work) but we knew we needed a forever home. We just moved last month and our mortgage payments are a little bit higher and it will take us longer to pay off our mortgage but it is worth it to us. We absolutely love our new house and location and are really looking forward to raising our family here.

Our new house is dual zone heating and I LOVE it. Our last house was always freezing downstairs and hot upstairs so it's so nice to be able to adjust the thermostat and keep the temperature regulated.

crene84 · March 2014

BeachBabe22 said:

I packed our entire four bedroom house by myself when my daughter was sleeping. It was not the easiest thing to do but it was definitely doable. Our house that we lived in worked for us when we were young and didn't have kids (could walk to bars and little yard work) but we knew we needed a forever home. We just moved last month and our mortgage payments are a little bit higher and it will take us longer to pay off our mortgage but it is worth it to us. We absolutely love our new house and location and are really looking forward to raising our family here.

Our new house is dual zone heating and I LOVE it. Our last house was always freezing downstairs and hot upstairs so it's so nice to be able to adjust the thermostat and keep the temperature regulated.

I have dual zone too which is great, but all the bedrooms are upstairs and it seems the size and location of the bedrooms makes it difficult to regulate properly.

kelbel527 · March 2014

crene84 said:

MommaP12 said:

Since we are about to start the Mortgage process, what are you guys thinking is an "amazing" rate. We have really high credit scores and I have been looking on bankrate but want to make sure what I'm seeing is "amazing"

We're going to do a 30 year but pay more on it starting the fall when DS is not in Daycare anymore.

I am curious what current rate I could get, but we did a mortgage adjustment a couple years ago and got our rate down to 3.25%..another reason I'm not sure if I want to move but regardless if we pay our mortgage off here, the rate doesn't matter..

Interest rates aren't there anymore. We currently have a low 3% rate on our house and are giving it up to move to our forever home. However, we weren't close to paid off and when we moved into our current house 5 years ago we knew it wouldn't be forever. I do think rates will continue to climb though, so if you think you'll move sometime in the next few years, I'd do it sooner than later.

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