Laura and I have been struggling for the last few months over whether to buy a new house. And not just any house, but one very specific house that I’ll talk about below.
This is really out of character for us and I can’t believe I’m saying this, as I swore our current house would be the last one we ever owned. I honestly hate home ownership and in my perfect-world scenario we would NEVER own a home (which just isn’t realistic in our neighborhood/school district, but it is my “perfect world” fantasy).
Yet here we are, struggling nonetheless. We’ve changed our mind so many times the past few months, it’s crazy! At one point we started the mortgage application process and were literally seconds away from telling our real estate agent to put in an offer and then we somehow backed off and stopped the process entirely.
I write this article mostly to solicit some input from our readers, and to show you that even though our family is usually very focused on our pursuit of financial independence and living well below our means, that sometimes factors above just the dollars and cents of a situation plays into a major life decision.
Our Current Home:
Our Current Home
We bought our home in 2005 and it has served us quite well for the last 11+ years.
It’s a four-bedroom house on a quiet cul-de-sac in a great part of our upscale Richmond, VA suburb.
We got really lucky picking this location originally and we absolutely love it. Since we would struggle to leave this one tiny little elementary school district, that means at most we’d move about 2 miles to the other side of the district.
And wow is our house cheap!
The expense portion (interest plus taxes & insurance) of our mortgage is less than $800 each month. That’s not a misprint and it doesn’t even factor in the tax benefit we receive for the mortgage interest deduction, which drives the cost down further!
For less than what it would cost to rent a tiny one-bedroom apartment we live in the best part of town and have a beautiful 4-bedroom home with a wide expanse of lawn for playing games outside with the kids.
So what’s the problem?
We would love to have neighbors with young kids that we could hang out with regularly.
Our “neighborhood” is essentially non-existent, as we live on an isolated street with 10 total houses, and we are much younger than the vast majority of our neighbors and have little opportunity to interact with them as they don’t have young children.
Our house is also just a bit too small; our girls are growing up and will need their own space in the not too distant future, and we also have plenty of out of town visitors.
While we’ve made it work thus far, we’ve always had it in the back of our minds that this house might not work for the long-term.
But then our rational side always kicked in and said that it was just prohibitively expensive to move with the absurd 6% real estate commission, closing costs, moving costs, etc. We would essentially be burning $20,000+ of our net worth just to move two miles down the road, which was not an appealing thought at all.
The Pine Run Temptress
So what could possibly change our minds?
The perfect house for us.
The community we have always targeted for a future move is called Pine Run. It’s in the same elementary school district as we currently live in (essential) and this house is a 2 minute walk to the actual school so we would walk our girls to school every morning and would have the playground and fields within easy reach when we wanted to play outside.
The house is also literally right across the street and around the corner from some of our closest friends, so our quality of life would likely increase significantly. Laura and I both grew up with incredibly close neighborhood friends who our parents kept as lifelong friends, and this would be our opportunity to have that.
We literally could not pick a better location if we were allowed to drop a house anywhere we pleased!
And the house itself is perfect for us: It has 4 more rooms than our current house and would allow us to setup a 2nd living area for the girls to have friends over, a separate area for our many overnight guests plus there’s a huge 1,000+ sf two-story garage that can be finished to add even more living space. Oh and I can’t forget the hot tub that’s included with the house as well!
And the price is right for the size and location of this house. It has some quirks that are appealing to us, but that might not be for other potential buyers, so it has actually languished on the market for a number of months and the sellers are getting antsy.
So why are we not buying this house today??
The construction in our back yard
Laura and I are low-key people and the horror-show of stress that would be in front of us the next 4-6 months is proving an impossible hurdle to get over.
If we could just magically sell our house, buy this new one and move in seamlessly, we’d be fine taking on the extra debt and monthly mortgage payment.
Though it isn’t a tiny amount, we’re fine paying ~$500 extra per month to live in this new house.
But oh man, is it just awful timing:
- There’s a huge construction project going on literally in our current backyard. A 40-home community is being built right behind us and they are in the heavy construction phase right now. I can’t imagine how much this will depress our home price and slow down finding a buyer.
- Laura and I are both self-employed and because of this actually getting the mortgage will be more of a hassle than we would have otherwise thought. That’s especially true if we don’t sell our home before buying this new one.
- Our current house needs a lot of work before we sell and while we always planned to slowly do it, the thought of having to make a lot of repairs in a short period of time is daunting.
- Paying a 6% real estate commission is an awful prospect. If the time ever came, we always hoped to sell on our own schedule, not be in a rush and be able to do it FSBO to allow for a big savings on this commission. But the need to sell in a hurry would nearly eliminate that possibility.
- Selling a house in the winter is not ideal timing at all.
So we’re in this frustrating position where we would move into this new house tomorrow if we had the opportunity and we believe our quality of life would likely improve significantly overnight, but the thought of going through everything required to make it happen is keeping us awake at night in a cold sweat.
We are not people who really “want” for anything, so this odd limbo position we’ve kept ourselves in for the last few months is really frustrating.
Every time we finally think we’ve put it to bed and decided not to buy the house, it somehow pops up again after a discussion with our friends or a notice of price reduction and we have to re-think the whole thing again and wonder if our inaction is a huge mistake.
While I generally put zero thought into my house and would have previously laughed at my own self for saying this: This is the perfect house for us and there’s a good chance we’ll regret not buying it.
But the short-term pain and uncertainty is proving too much for us to handle and we almost certainly will NOT buy it.
We’d love to get some feedback from you: What are your thoughts? Are we being stupid even considering this? Stupid for not pulling the trigger?
Is this just a vapid discussion from an upper middle-class family looking to manufacture a ‘crisis’??
What would you do in our situation?
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Buy the house! You’ll have regrets for years if you don’t, and you’ll enjoy your new home for many years to come.
Thanks for the advice Ron!!
Brad – This is my first time reading any of your posts and I have to say that this one struck a chord with me. My family is in a very similar situation. We really just started out on the FI path within the past year but we were already somewhat on our way. Both my wife and I make good money and our savings rate is very high, no debt other than mortgage and already have a lot saved/invested. I’ve taken a lot of ideas found in the FI community and ran with them and we are very happy with our current financial situation. We’ve really made changes in our spending habits and have transitioned out of the “wants” phase of our life. With that said, the one area that we’re struggling with is our home. We live in a very nice home, in a very nice neighborhood and don’t really NEED anything bigger or nicer . . . .but it just eats at me. Maybe I’m in the minority, but to me a home is the most important “thing”, for lack of a better term, that you could spend your money on and i don’t just mean in terms of an investment. I know a lot of people talk about spending money on “experiences” is often money better spent, however I believe it’s completely dependent on your lifestyle. We, for example, are not travelers. We do not have any real expensive hobbies. Our idea of an awesome vacation is just taking time off of work and relaxing at home with our daughter. We are home-bodies and spend a majority of our time there. So are we wrong for “wanting” our dream house? I think that even though we aim for eliminating most of the “wants” in our life, it is still important to prioritize and enjoy some of the fruits of our labor in spending on things that are really important to us. We could definitely afford a lot more house and still keep a high savings rate, so what is stopping us? One of the main goals of FI is to stop trying to keep up with the Joneses . . .but I truly think the struggle we are having (and you might be too) is trying to keep up with our newly found Joneses ….. the FI community.
Really great and insightful comment Mike! I’m glad you found your way to our site and that you enjoyed this article. I’m really going to focus more on these type of articles and how we live our day-to-day lives while pursuing FI (yet living a nice normal life), so maybe you’ll find those articles interesting as well
I think we take the vast majority of the FI lifestyle to heart just naturally, but by no means are we doctrinaire about it. I think there needs to be ways that you splurge, and I also think that each person/family values different things. It sounds like you know what your family values, so I don’t see any reason to hold back if you’ve made that determination.
The key part is keeping up that savings rate. As long as you do that, all the other details are just noise in my opinion. I don’t need to optimize everything.
Like you, and like I said in the article, we were quite okay with the extra ~$500/month expense. While I didn’t really want to take on the extra debt in theory, I would have been fine with it since the all-in cost of that was the $500/month. We’re fortunate enough that it wouldn’t really impact us negatively, nor impact our savings rate all that much. So we were okay with that.
I just crave simplicity in life and I’ve done everything possible to remove stress and pain points where possible. So to introduce these complete unknowns (are we going to get the mortgage without selling our home first? How much will the construction impact our selling price? What will the interest rate be in a few months when we can lock the mortgage rate? etc., etc.) is just such a leap for me that it honestly freaks me out.
But then I sit back and wonder if we’d look back even six months from now (not less 6 years from now) and think it was even that stressful, you know?
The point about keeping up with the FI Joneses is a really interesting one! I did have that fleeting thought that it might be slightly hypocritical, but in the end I really don’t care what anyone else thinks.
I feel like I could write a book in response as more thoughts keep on coming, but I’m going to wrap it up here. Thanks again and welcome to our site!
Definitely buy the house! (especially if it’s the dream house as you made it sound). We still talk about the house that got away three years ago and boy does it eat at us! As for realtor’s fees, if you use the same agent to buy + sell, they will often cut down the rate on your sale from 3% to 1%, for a total of 4% (1% for him + 3% to buyer’s agent). Good luck with whatever you decide!
Hey Lindsey — thanks for the advice!! And great point about the real estate agent’s fee, I was unaware of that. Thanks for the comment
Would it be easier to rent than sell your current house? If the mortgage is really so cheap you could use rent to pay it off and keep it as an investment property.
very good point Brandon! I strongly suspect because of the self-employment income that we’d have to sell our current house to get a significantly larger mortgage. I don’t know that for certain, but I would be surprised if not.
And though Laura did float this idea as well, I’m not sure I’m cut out to be a landlord
Brad
How would you like to discuss offline after Thanksgiving? We live a mile from you in Short Pump and have been meaning to have you and the family over forever to discuss Miles and Points and other stuff. This is a great excuse. Let me know what works for your family
Bruce
Great to hear from you Bruce! I’d love to discuss in person and we’d love to come over — thanks for the invite!
Around this weekend?
Hey Brad, after the first paragraph, my immediate thought was a forceful ‘No!’ After reading the entire post, I think that you must move. These parts resonated:
“We would love to have neighbors with young kids that we could hang out with regularly.”
“The house is also literally right across the street and around the corner from some of our closest friends, so our quality of life would likely increase significantly. Laura and I both grew up with incredibly close neighborhood friends who our parents kept as lifelong friends, and this would be our opportunity to have that.”
A couple thoughts:
1) I too, grew up surrounded by kids my own age. On some summer days, we’d all ride our bikes from dawn to dusk and beyond. The memories are priceless.
2) We moved three years ago for the exact same reason as you; we wanted our children to grow up in a healthy environment; surrounded by other kids and young families. While our move was the opposite pricewise ($400,000 -> $175,000), I would have done it even if it cost more. Without hesitation. The way I look at it is that you can move again once the kids are out of the home.
I wish you lived closer; I’d come over and help you prepare the home for sale.
In any case, best of luck with your decision!
Hey Carl! Thanks for the comment and I wish you and Mindy lived closer for a lot of reasons!! I would love to learn how to fix a house from you — that would be fun for sure.
Yeah, there’s something very special about having that neighborhood where people walk around and kids can just play and have fun. This community definitely has that
Buy it!! We moved for the sake of location two years ago and it was the best decision! Every time I step outside and am able to walk and/or ride my bike to places in our neighborhood, I’m happy.
Thanks for the advice Liz!
I didn’t really go into it in the article, but this community is really great because we could definitely ride our bikes all around (can’t do that on our current street) and we know probably 50 families in the surrounding area.
You can’t put a price on quality of life (assuming you can afford it). Moving to a family friendly neighborhood with a pool and built in friends has completely changed our life.
Great point Heather and thanks for the comment! It’s nice to hear your personal perspective
So I’m a believer that there is a house on every corner when it comes to real estate, I know it’s “the one” but it’s really about making it “your one”.
I would probably hold off on buying this particular home, but you make good points to accelerate fixing up your home this way you are in a good position, if you estimate 6 months this will put you in a great position to sell and buy one in this neighborhood. This avoids some of the concerns about construction, winter sale, etc. I think some of the other concerns are general concerns and should be crossed off the list, tough love haha.
Hope all is well in VA!
Doing well — hope all is well by you!
Yeah, I’m normally in your camp when it comes to there being a house on every corner; I don’t put much stock in particular houses and I suspect another “perfect” one might come up soon, but this one really had us going there for a few months so it was as close to “perfect” as we could hope for.
Brad:
I’m a Christian and the way I would handle it is to pray for peace about the decision and move forward but ask God to slam on the brakes if he thinks it is unwise. So if it isn’t meant to be – something will go wrong and you will get a clear understanding it wasn’t for you. You are seeking the council of many and you obviously aren’t a rash guy so go for it and see what happens.
We were in a similar situation 15 years ago and the “deal” did not go through. We have never looked back and are very content in our house and neighborhood today. In addition now I enjoy the location of our house as it is so walkable to our community.
Also pray your new next door neighbor isn’t some psycho ha ha.
All the best.
Mark
great comment Mark — thank you!! Yeah, we definitely talked about the “psycho” thing as well; you never know when you’re going to get barking dogs next door or some crazy situation. So that isn’t lost on us!
Hi Brad–
My first thought was “he’s worrying over things he doesn’t know the answers to yet.”
You said you think you’ll need to sell your house before you buy the new one. Have you checked? You also said you’ll have to make repairs. Do you have to? Sure, the house would sell for less, for weigh the time/money costs to do those repairs vs. what you could get for the house without doing those repairs. Have you talked to real estate agents about this? There’s also the option to hire someone else to do the repairs. Maybe not the best option FI wise, but again–sanity vs. costs.
Ultimately, I say look into all the things you think are going to be problems and get some definite answers.
Long story short, though: buy it. I grew up in a neighborhood where my mother rang a bell to call all her kids in for dinner. All the neighbors knew the sounds of Mom’s bell, and would gather whatever of us were nearby and send us back home. And now that all us kids have left the house, Mom and Dad are still friends with all those neighbors. Priceless memories for the whole family.
These 2 lines stuck out to me Rebecca:
My first thought was “he’s worrying over things he doesn’t know the answers to yet.”
Ultimately, I say look into all the things you think are going to be problems and get some definite answers.
You are absolutely correct. I think I know that I really didn’t want to move forward with this (deep down) since I didn’t take all the necessary steps to investigate, which is not how I normally handle a situation.
Thank you for such an intelligent comment
I think that is a common struggle. I struggle with this as well. Always trying to find that perfect fit. We live in a large neighborhood but our street happens to not have a lot of kids, nor do my kid’s friends live near by, nor my friends. But, I always try to remind myself that if we can get our house paid off and be content where I am, that is the best scenario. But my kids are getting bigger as well and I know I will be faced with this struggle to move “up” many times. They built up behind our house as well, and I do admit that I really don’t like it. I feel closed in. It is really one of the things I don’t like about our house. We are surrounded! Again, I try to be content. You have a very cheap house payment. If not, I would stay. It makes the most sense financially. Easier said on this side of the computer!
This really stuck out to me Pam, “But, I always try to remind myself that if we can get our house paid off and be content where I am, that is the best scenario.”
Yeah, it’s really hard when you’re trying to be smart financially and pursue FI in our case, to make a move away from such an inexpensive house. We’ve definitely gone back and forth on that too!
Hi Brad. We recently went through a similar decision: wanting to buy in our perfect neighborhood, close to friends, with the idea of our kids growing up together, walking over to each other’s houses for boardgames: the idyllic vision of our future.
We ultimately decided to stay. We have cars and see these friends twice a week sometimes already. And as you noted, there are a ton of costs & headaches.
Plus, who knows, maybe your children will make good friends with a family who moves into the new development?
I, personally, would sit pat. Moving probably doesn’t really solve any problems, because it’s always still just a house. Today’s perfect home is tomorrow’s old pile of bricks, complete with its own set of peccadilloes and annoyances.
Thanks for the comment DB40!
“It’s always still just a house” indeed. I agree with you. I think it’s easy to get carried away in our own heads about how ideal something could/would be, but like Mark said above, you just don’t know what’s going to pop up!
My son and Daughter in law had a similar decision last summer time. They actually offered their home for sale by owner through their church, and found a buyer!
Their move was to a newly built home in the center of town, which has been wonderful, the children have playmates, the school, rec center, grocery store, and church are a walking distance away. My son is away frequently with the air national guard, and my beautiful DIL is legally blind. She is so happy to be able to be independent.
So, do your housework, make a plan, and a contingency plan.
Good luck!
Thanks for the personal story Jayne — I really appreciate it! Sounds like a wonderful fit for your son’s family, that’s awesome it worked out so well for them
The going through church/friends route is an interesting one to me; we know friends who had great success with this route too…
Hi Brad, if you haven’t done so already, I recommend getting a prequal letter from a bank that you know has competitive lending rates. Use cashcall.com, bankrate.com, or some other online lender to set your expectations / baseline. The prequal letter might require a hard credit pull, but it will give you a very realistic idea of what size of mortgage you could qualify for, both with or without selling your current place. The lender may be able to provide you good info even without going all the way to completing the prequal letter/hard pull.
All real estate is, of course, local. In my situation in Northern California, I would do everything I could to afford both places and rent one, since I’m pretty sure the property would continue to appreciate in the next 5 years and would be easily rentable for way more than my mortgage + taxes. If the same is true in Richmond, strongly consider this option as others have recommended. There’s a lot of info in the blogosphere about this — I found you and Alexi through one of them, whitecoatinvestor.com.
Thanks so much Andy and great to hear from you!
I think this particular house may have passed us by unfortunately, but we’re going to get all our ducks in a row well in advance of the next “perfect” house popping up. And your advice for a prequal letter is what we’re going to do. I want to do my research now and get everything set so there aren’t the uncertainties. Then we can just make the decision or not and go about our lives
Hi Brad…
Houses are an expensive indulgence and there is nothing wrong with that as long as you can (hopefully easily) afford it.
Assuming you can, and that this is where you most want to put that extra ~$500 a month, go for it.
But here’s how I’d approach it:
First, put your current house on the market, maybe fixing just a few easy items that enhance how it shows but otherwise “as is”
Keep an eye on your dream house and, if it sells, pull your current house from the market.
If you get strong interest in your current house, start negotiating for the dream house.
If it comes together, great. If not, oh well.
But, importantly, you’ll not be stuck with the new house bought and scrambling to unload the other.
BTW, happy to discuss over Skype in depth.
Good luck!
Thanks for your wise counsel Jim — always appreciate it!
I liked this especially, “If it comes together, great. If not, oh well.”
I think we’e since missed out on this house as it just went under contract, so the “oh well” camp won out. We just went about this in a backwards way, which to me means we didn’t REALLY want to do it. If we were 100% in, we wouldn’t have had all the excuses, you know?
Hope Ecuador was great and would love to catch up on the phone soon
Jackie,
You’re right, it is hard to convince yourself that a “want” is okay, but we are getting slightly better at that.
I wish I had thought through the process as clearly as you did in this one comment! I think that honestly we were trying to avoid the decision and that’s why we didn’t actually submit the paperwork just to see what the deal would have been.
I like that your dream home is 2 minutes away from your child’s school. People don’t always consider transit times when buying a house. Even an extra 10 minutes of your commute can take hours out of your week.