Preparing to relocate: can we afford this home?

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steadyhand
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Preparing to relocate: can we afford this home?

Post by steadyhand »

Due to a new job, my family of 4 is getting ready to move from the midwest to the northeast. Our current home should be worth about 500k with about 300k equity. I have some 150k in a money market fund to pay a down payment in case we buy first and then put the current home on sale afterwards (to make it more appealing to sellers). We are in our 40s and both have stable jobs and make about 300k in total per year. We have built up around 1M in retirement assets and have well funded 529 and HSAs. I also have about 200k in taxable accounts, some of which I am happy to sell to increase downpayment.

We really like a 900k house in the new location. Can we afford it? The numbers may seem to work, but I am a bit concerned that it is a 6000sq ft. home compared to the 4000 sq. ft. home we have currently. Property taxes will be about $17k per year and insurance around $4k. Wondering if utility bills will go up significantly as well. Our kids are in middle school and are highly likely to go to a good local university, and may be around the house for another 9-10 years, and hence the space may be well utilized.

I would generally prefer a smaller home knowing that maintenance, utility, and taxes are more. However, all other homes we saw in 750-800k range just are not as appealing (very old, bad curb appeal, safety, non-walkable area being some reasons). Wondering if anyone can convince me that sometimes larger is ok if it fits all other criteria? There are slim pickings mostly in the area.

I assume selling taxable equities will be good to reduce the total loan amounts in this high interest climate. I anticipate that after my current home sells, outstanding loan balance will only be 400k.
Last edited by steadyhand on Sun Jun 04, 2023 7:36 pm, edited 1 time in total.
pizzy
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Re: Preparing to relocate: can we afford this large home?

Post by pizzy »

Have you ever lived in the new location?

If not, why would you buy immediately?
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Topic Author
steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

I have not lived locally, but I don't see how we can rent for a few years and then buy given it will be a pain to move twice in a year or two. We plan to spend a week in the area getting a feel for things.
EHEngineer
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Re: Preparing to relocate: can we afford this large home?

Post by EHEngineer »

$300k income can afford a $450k mortgage. I calculate that to be a $4570 PITI payment. If you save $52,500 in 401ks and HSAs and pay $2,400 for health insurance, you'll have a net monthly income of $14,800 (assuming no state/local taxes). That makes your housing cost ratio 31% which is fine at your income level. I doubt utility costs or maintenance costs would move the needle much.

If one of you loses a job it could leave you house poor.

good luck.
Last edited by EHEngineer on Wed May 17, 2023 10:05 pm, edited 2 times in total.
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pizzy
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Re: Preparing to relocate: can we afford this large home?

Post by pizzy »

steadyhand wrote: Wed May 17, 2023 10:00 pm I have not lived locally, but I don't see how we can rent for a few years and then buy given it will be a pain to move twice in a year or two. We plan to spend a week in the area getting a feel for things.
With all due respect, a week is 51 weeks too short.

You most definitely should rent for the first year to understand your new location.

Otherwise, you could end up very, very disappointed.
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fitawrari
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Re: Preparing to relocate: can we afford this large home?

Post by fitawrari »

We live in a 4k sqr ft suburban home and I can't imagine living in a place that is 50% more than my current house.

You will need to buy additional *stuff* to fill up the additional space.
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

If we have to do some local living, I may have to go and live there for a year in a rental, away from my family. That has its own downsides obviously. I was hoping between a week staying in the general area, and inputs from a local realtor, this may work. But I respect the short term rental idea.
HyperBoggle
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Re: Preparing to relocate: can we afford this large home?

Post by HyperBoggle »

Perhaps consider storing personal property in temporary storage, and accepting this as a reasonable cost to explore and learn the area? Perhaps there is a short term, furnished house on the market available for rent.
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

fitawrari wrote: Wed May 17, 2023 10:09 pm We live in a 4k sqr ft suburban home and I can't imagine living in a place that is 50% more than my current house.

You will need to buy additional *stuff* to fill up the additional space.
It seems only 4200sq.ft is finished. Perhaps the rest is a basement only partially unfinished at least. But good point about needing stuff to put in if too large.
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HipCoyote
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Re: Preparing to relocate: can we afford this large home?

Post by HipCoyote »

Man plans and God laughs. How you know the kids will go to college locally is a trick I would like to know. They change their minds on a dime.

Ever heat a 6000 square foot house in that region? Ever take care of a 6000 square foot house? Ever re roof one or replace three HVAC systems? You lived in a 4000 foot house which is large. 6000 is massive.

I will tell you my true belief on very large houses and the impact on families. We had a mid sized house. Added on a bunch of footage. The son got his own suite with a walk in shower. Made a mistake of having a door to the outside of the house on his room...a few stories he told me once he was grown...wow.. Hint...Glad I did not know then. That left another child in her own room, own bathroom, a nice little set up...except it wasn't the best for family dynamics...kids went off to their respective corners in the castle, and did their own things, homework, what ever. But the kids were not forced to live together, share a bathroom, know a little adversity, get along or get in trouble, learn some patience, negotiation skills. If I had it to do over again, I'd go smaller rather than bigger. One TV. There is something to be said for people actually having to live together.

Meanwhile, kids change their minds, get jobs across the nation, get married, move, what ever. So now we have two houses...the Winchester Mansion I described above and an 1100 square foot bungalow with a closet about the size of a shoe-box (to come live to see one of our grand kids.) As is stated so many times on this forum, simpler is better for so many reasons. I wish I had two small homes.

I can also say when we purchased our second home we did it sight unseen. Crazy? A little. But, we knew the area very very well with multiple long visits to the area, extensive understanding of the neighborhood in very fine detail. My wife knew more about the area than any realtor we ever met..historical information, home builders, history, crime patterns, pending street improvements, which areas had covenants/restrictions and how they were enforced, and much much more. All that took a lot of time and attention to detail. A week simply will not be sufficient. As others said, you need a lot more than a week. In our case, I knew we would not live here full time, but I spent enough time for what it was we were purchasing.
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ResearchMed
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Re: Preparing to relocate: can we afford this large home?

Post by ResearchMed »

steadyhand wrote: Wed May 17, 2023 10:12 pm If we have to do some local living, I may have to go and live there for a year in a rental, away from my family. That has its own downsides obviously. I was hoping between a week staying in the general area, and inputs from a local realtor, this may work. But I respect the short term rental idea.

Many families handle a long distance move to a new area by renting for the first year or so. That gives them a good, serious chance to get a sense of the neighborhoods, the schools, and "other issues" that may exist locally.
Then in the spring (often), they have figured out neighborhoods, and perhaps started watching the real estate listings, and then they start looking seriously, perhaps after having checked out a couple of schools.

It's done regularly.
One parent might go "early" if the children need to finish a school year, but the employment start cannot wait.

We have family who are just starting this for this summer's move. They've flown to the new area a few times to look at general rentals and schools, including trying to find rentals in the most likely school district (which they have now identified). During the coming year, they'll look for at homes for sale, or perhaps wait another year, depending upon how things are working out in their current place.

And if you are relocating and not sure IF you can afford the price you are thinking of, all the more reason to rent first, to see if you can find something you like for a price you feel you *can* afford.

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Re: Preparing to relocate: can we afford this large home?

Post by snowday2022 »

I have a 5000sf house and am contemplating two small additions. A couple rooms I wish were larger. We use all the rooms. Spend lots of time together as a family. Utilities are cheap about 200/mo for gas and electric in the Midwest. Don’t listen to the haters. You have lots of assets. Enjoy your new home. Good luck.
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TinyHouse
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Re: Preparing to relocate: can we afford this large home?

Post by TinyHouse »

steadyhand wrote: Wed May 17, 2023 9:44 pm Due to a new job, my family of 4 is getting ready to move from the midwest to the northeast. Our current home should be worth about 500k with about 300k equity. I have some 150k in a money market fund to pay a down payment in case we buy first and then put the current home on sale afterwards (to make it more appealing to sellers). We are in our 40s and both have stable jobs and make about 300k in total per year. We have built up around 1M in retirement assets and have well funded 529 and HSAs. I also have about 200k in taxable accounts, some of which I am happy to sell to increase downpayment.

We really like a 900k house in the new location. Can we afford it? The numbers may seem to work, but I am a bit concerned that it is a 6000sq ft. home compared to the 4000 sq. ft. home we have currently. Property taxes will be about $17k per year and insurance around $4k. Wondering if utility bills will go up significantly as well. Our kids are in middle school and are highly likely to go to a good local university, and may be around the house for another 9-10 years, and hence the space may be well utilized.

I would generally prefer a smaller home knowing that maintenance, utility, and taxes are more. However, all other homes we saw in 750-800k range just are not as appealing (very old, bad curb appeal, safety, non-walkable area being some reasons). Wondering if anyone can convince me that sometimes larger is ok if it fits all other criteria? There are slim pickings mostly in the area.

I assume selling taxable equities will be good to reduce the total loan amounts in this high interest climate. I anticipate that after my current home sells, outstanding loan balance will only be 400k.
The new house is a bad idea, and not just bad financially… rent at the new location for 2+ years, you won’t regret it.
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Re: Preparing to relocate: can we afford this large home?

Post by cheese_breath »

Say you don't sell current house first...
New home price = 900K
Available for downpayment = 150K
New mortgage = 750k
Am I right so far?

Can you afford the payments on a 750K mortgage? Bringing the balance down to $400K later doesn't reduce the payments.
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Re: Preparing to relocate: can we afford this large home?

Post by LotsaGray »

cheese_breath wrote: Wed May 17, 2023 10:46 pm Say you don't sell current house first...
New home price = 900K
Available for downpayment = 150K
New mortgage = 750k
Am I right so far?

Can you afford the payments on a 750K mortgage? Bringing the balance down to $400K later doesn't reduce the payments.
Not recommending but there is always the option to stick the $450k in treasuries (laddered as needed) and use that$450k plus interest to supplement payment.

Again not the simplistic way but handles the issue you raised
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Watty
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Re: Preparing to relocate: can we afford this large home?

Post by Watty »

I did a cross country job relocation when I had a kid in middle school where we flew into town to buy a house in a city that we did not know and while that was far from ideal it made sense for use because we did not want our kid to have to change schools twice. We basically picked out a couple of high schools that would be good and then found a house in a location where he would go to one of those high schools.

When you have a kid in school an additional risk of renting is that your lease might not be renewed and you will have to move to a different rental.

It turned out that it was indeed hard for our son to change schools in middle school and if he had to do it twice that could have caused additional academic problems.

In retrospect flying into town and buying a house so that we did not have to move twice was the best choice for us. We flew in for two long weekends of house hunting. The first trip was to mainly learn the areas more then when we had narrowed that down we could pick a house.

You can afford the house but it would be insane to buy a 6,000 square foot house since there is no way that you need that much space and others have said it will impact your family dynamics.

Even a 4,000 square foot house is a lot larger than you need. I would suspect that in your current 4,000 square foot house there is a lot of space that is rarely used.

For a family there is a lot to be said for having a cozy house and having a smaller house will help communications when you have a sulky teenager.

I have read that you only really need about 400 square feet per person and the utility of larger house quickly diminishes. For your family of four 1,600 sq ft would be functionally adequate and would be fine if that is all that you could afford. In places like New York City that would be a huge place. A house that is 50% larger at 2,400 square feet would very comfortable for you. You can Google and find lots of information on what people think the best house size is for a family.

Any larger would likely feel too large for most people.

I would suggest looking for a place that is more like 2,200 to 2,400 square feet especially if it has an unfinished basement so that you have plenty of storage so that you are not using the finished living space for storage.
Last edited by Watty on Thu May 18, 2023 12:26 am, edited 1 time in total.
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Watty
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Re: Preparing to relocate: can we afford this large home?

Post by Watty »

steadyhand wrote: Wed May 17, 2023 9:44 pm Our kids are in middle school and are highly likely to go to a good local university, and may be around the house for another 9-10 years, and hence the space may be well utilized.
Even if they go to that university there is a lot to be said for letting them live in the dorms or an on campus apartment to help them transition to living on their own. You also have high income so that would not be a financial burden on you and you might actually save money by paying for dorms instead of buying some huge monster of a house. Many kids would also try to get into some different college just so that they did not have to live with their parents.

You are sort of in a no win situation with trying to have your kids live with you through college this since you will likely;
1) Have kids that don't want to live with you.
2) Have kids that are timid and could use a push out the door to help them develop their social skills and transition into being adults.

One of my favorite quotes is, "Good judgement come from experience, experience comes from bad judgement." College is a good time to get some experience since it is at least a somewhat controlled environment.
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Re: Preparing to relocate: can we afford this large home?

Post by halfnine »

Watty wrote: Thu May 18, 2023 12:07 am I did a cross country job relocation when I had a kid in middle school where we flew into town to buy a house in a city that we did not know and while that was far from ideal it made sense for use because we did not want our kid to have to change schools twice. We basically picked out a couple of high schools that would be good and then found a house in a location where he would go to one of those high schools.

When you have a kid in school an additional risk of renting is that your lease might not be renewed and you will have to move to a different rental.

It turned out that it was indeed hard for our son to change schools in middle school and if he had to do it twice that could have caused additional academic problems.

In retrospect flying into town and buying a house so that we did not have to move twice was the best choice for us. We flew in for two long weekends of house hunting. The first trip was to mainly learn the areas more then when we had narrowed that down we could pick a house.

You can afford the house but it would be insane to buy a 6,000 square foot house since there is no way that you need that much space and others have said it will impact your family dynamics.

Even a 4,000 square foot house is a lot larger than you need. I would suspect that in your current 4,000 square foot house there is a lot of space that is rarely used.

For a family there is a lot to be said for having a cozy house and having a smaller house will help communications when you have a sulky teenager.

I have read that you only really need about 400 square feet per person and the utility of larger house quickly diminishes. For your family of four 1,600 sq ft would be functionally adequate and would be fine if that is all that you could afford. In places like New York City that would be a huge place. A house that is 50% larger at 2,400 square feet would very comfortable for you. You can Google and find lots of information on what people think the best house size is for a family.

Any larger would likely feel too large for most people.

I would suggest looking for a place that is more like 2,200 to 2,400 square feet especially if it has an unfinished basement so that you have plenty of storage so that you are not using the finished living space for storage.
All of this.
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Re: Preparing to relocate: can we afford this large home?

Post by Shackleton »

steadyhand wrote: Wed May 17, 2023 10:17 pm
fitawrari wrote: Wed May 17, 2023 10:09 pm We live in a 4k sqr ft suburban home and I can't imagine living in a place that is 50% more than my current house.

You will need to buy additional *stuff* to fill up the additional space.
It seems only 4200sq.ft is finished. Perhaps the rest is a basement only partially unfinished at least. But good point about needing stuff to put in if too large.
Wait, you haven’t even seen it in person yet?

I’m another that says to figure out how to spend significant time in the area before purchasing, and by significant I mean at least several months. I’d never trust a real estate agent’s opinion over my own. There is no way they can understand your family enough and what matters to you. Plus, they really just want to sell you a house and bank their commission, they aren’t really there to be your friend and get to know you, despite what they might say.
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Re: Preparing to relocate: can we afford this large home?

Post by Glockenspiel »

I live in a 4000 square foot suburban home and think it's very big and requires a ton of stuff to fill up and make feel like a "home". Our 4,000 square foot home has probably 500 square feet that are not frequently used.

A $900k home with $17k in annual property tax will require a total monthly payment of more than $6,000-$6,500/month in principal, interest, taxes, and insurance, assuming you put down 20% as a down payment. Add to that the increase in utility bills and increase in home furnishing costs.

It seems a bit tight. How are taxes on a $900k house $17k/year? Here in Minnesota, those taxes would be about $10k/yr.
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Re: Preparing to relocate: can we afford this large home?

Post by mnnice »

Watty wrote: Thu May 18, 2023 12:25 am
steadyhand wrote: Wed May 17, 2023 9:44 pm Our kids are in middle school and are highly likely to go to a good local university, and may be around the house for another 9-10 years, and hence the space may be well utilized.
Even if they go to that university there is a lot to be said for letting them live in the dorms or an on campus apartment to help them transition to living on their own. You also have high income so that would not be a financial burden on you and you might actually save money by paying for dorms instead of buying some huge monster of a house. Many kids would also try to get into some different college just so that they did not have to live with their parents.

You are sort of in a no win situation with trying to have your kids live with you through college this since you will likely;
1) Have kids that don't want to live with you.
2) Have kids that are timid and could use a push out the door to help them develop their social skills and transition into being adults.

One of my favorite quotes is, "Good judgement come from experience, experience comes from bad judgement." College is a good time to get some experience since it is at least a somewhat controlled environment.
We have two offspring one in each camp. To be honest it was healthier for all of us when older offspring moved out. He is a fantastic human and very independent. At 21 he has an associate’s in a high paying technical field and financially self-sufficient from us. Maybe he knew what he was talking about when he rebelled and didn’t want to go to a four year college. :wink:

We bought a house in a relocation after having spent very little time there. I would characterize it as neither a massive mistake or the best play either. No way would a house that large ever be the right place for me. I want to own the house not have it own me YMMV.
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Re: Preparing to relocate: can we afford this large home?

Post by Jack FFR1846 »

Can you point out where in the Northeast? $900k for a 6000 sq ft house is wicked cheap. My 2800 sq foot house is worth at most $800k about 30 miles west of Boston. I tried thinking where you can get that big of a house that cheap and can only think maybe Western Mass, in the middle of nowhere, upstate NY, in the middle of nowhere, mid to northern New Hampshire or mid Vermont. That big a house. Here's the same square feet, new house in my town:

https://www.zillow.com/homedetails/6-Wh ... 2042_zpid/

Nearly 3 times the price.

I do get that new houses tend to be McMansions. But 6000 sq feet is absolutely huge.
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pizzy
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Re: Preparing to relocate: can we afford this large home?

Post by pizzy »

Watty wrote: Thu May 18, 2023 12:07 am I did a cross country job relocation when I had a kid in middle school where we flew into town to buy a house in a city that we did not know and while that was far from ideal it made sense for use because we did not want our kid to have to change schools twice. We basically picked out a couple of high schools that would be good and then found a house in a location where he would go to one of those high schools.

When you have a kid in school an additional risk of renting is that your lease might not be renewed and you will have to move to a different rental.

It turned out that it was indeed hard for our son to change schools in middle school and if he had to do it twice that could have caused additional academic problems.

In retrospect flying into town and buying a house so that we did not have to move twice was the best choice for us. We flew in for two long weekends of house hunting. The first trip was to mainly learn the areas more then when we had narrowed that down we could pick a house.

You can afford the house but it would be insane to buy a 6,000 square foot house since there is no way that you need that much space and others have said it will impact your family dynamics.

Even a 4,000 square foot house is a lot larger than you need. I would suspect that in your current 4,000 square foot house there is a lot of space that is rarely used.

For a family there is a lot to be said for having a cozy house and having a smaller house will help communications when you have a sulky teenager.

I have read that you only really need about 400 square feet per person and the utility of larger house quickly diminishes. For your family of four 1,600 sq ft would be functionally adequate and would be fine if that is all that you could afford. In places like New York City that would be a huge place. A house that is 50% larger at 2,400 square feet would very comfortable for you. You can Google and find lots of information on what people think the best house size is for a family.

Any larger would likely feel too large for most people.

I would suggest looking for a place that is more like 2,200 to 2,400 square feet especially if it has an unfinished basement so that you have plenty of storage so that you are not using the finished living space for storage.
Obviously knowing the entire area much better than you did after the two weekends, would you have bought in the same neighborhood? Or have you moved since?
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

Jack FFR1846 wrote: Thu May 18, 2023 9:20 am Can you point out where in the Northeast? $900k for a 6000 sq ft house is wicked cheap. My 2800 sq foot house is worth at most $800k about 30 miles west of Boston. I tried thinking where you can get that big of a house that cheap and can only think maybe Western Mass, in the middle of nowhere, upstate NY, in the middle of nowhere, mid to northern New Hampshire or mid Vermont. That big a house. Here's the same square feet, new house in my town:

https://www.zillow.com/homedetails/6-Wh ... 2042_zpid/

Nearly 3 times the price.

I do get that new houses tend to be McMansions. But 6000 sq feet is absolutely huge.
That house is about $4000 sq. ft. on the main level. The rest is a finished basement. It is away from the big metros near a college town in PA.
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

Glockenspiel wrote: Thu May 18, 2023 9:04 am I live in a 4000 square foot suburban home and think it's very big and requires a ton of stuff to fill up and make feel like a "home". Our 4,000 square foot home has probably 500 square feet that are not frequently used.

A $900k home with $17k in annual property tax will require a total monthly payment of more than $6,000-$6,500/month in principal, interest, taxes, and insurance, assuming you put down 20% as a down payment. Add to that the increase in utility bills and increase in home furnishing costs.

It seems a bit tight. How are taxes on a $900k house $17k/year? Here in Minnesota, those taxes would be about $10k/yr.
Property taxes tend to be higher in other places :-). I am sure counting on my current house selling and lowering my mortgage by about another 300k (beyond 20%) and payments recalculated.
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Watty
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Re: Preparing to relocate: can we afford this large home?

Post by Watty »

pizzy wrote: Thu May 18, 2023 9:27 am Obviously knowing the entire area much better than you did after the two weekends, would you have bought in the same neighborhood? Or have you moved since?
I would have still bought in the same general area because of the schools which are some of the best in the state, but maybe a different house if we were not needing to buy quickly.

The housing market was more or less neutral when we were house shopping, meaning that it was not a buyers or sellers market. Even then houses were often listed for sale on a Tuesday and the better ones would often be under contract before we were in town to look at houses on Thursday or Friday.

This meant that most of the houses that we could look at had been listed for a few weeks or even a few months because they had some issue or were overpriced which cause them to not sell fast. The house we ended up buying still had the original 1970s builder grade kitchen which badly needed to be remodeled even though it was functional. That was priced into the purchase price.

The house has an unusual layout with a loft which has been counted different ways in the square footage calculation but it has less than 2,000 square feet but it has a full unfinished basement so it is is plenty large for us. We have two bedrooms that are rarely used now that my son has moved out. One is setup as an office which gets little use since I am retired.

The original plan was that we would stay here until I retired then move to somewhere else to buy a retirement home. I am in the suburbs of Atlanta where housing has gone up a lot but is still somewhat reasonable. My son got married and has two kids(our grandkids) and was easily able to afford to buy a nice house that is only about ten minutes from us and being that close to us is great since we frequently get to see our grandkids so we will be staying in the general area even though I have been retired for a while now. We will likely move into some sort of nearby over 55 community or a ranch house eventually but there is so little housing inventory on the market right now we will likely wait until the housing market is better.

I had no idea at the time I bought the house but it also turns out that the county that I am in is one of the few counties that has a senior property tax exemption where seniors do not pay school property taxes. This means that this year I will only pay $875 (not a typo) in property taxes on a pretty average non-McMansion house. A lot of people in my subdivision are seniors who are staying in their home after their kids grew up in part because of the property tax. In the county next to ours the property taxes would likely be more like $5,000 for a similar house.

Georgia also has a senior exemption on income taxes of $65K($130K for a couple), that is in addition to not taxing Social Security. We will not need to pay any state income taxes either.

I had no clue about either of those when I moved here so sometimes it is a lot better to be lucky than smart!

It would likely be very expensive to move to a different state to retire in.
humblecoder
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Re: Preparing to relocate: can we afford this large home?

Post by humblecoder »

We went through a similar situation a number of years ago. Honestly, there is no easy answer, and to a certain extent, you need to have some luck on your side.

Here is our story.

In 2017, I had an opportunity to relocate from a HCOL area to a "less high" cost of living area (medium to high depending on your definition). This opportunity came about in May. With two school aged children at the time, we really wanted to get ourselves settled into our new home so that they could start the year in their new schools. That was one of our primary considerations.

Since time wasn't on our side, we contacted a realtor and arranged to have them line up house tours for one particular weekend in June when we were going to be in the area. In the meantime, we scouted out listing on our own (through realtor.com) to get a feel for the different areas, the prices in those areas. We also research school districts and narrowed it down to four particular ones that we would be happy with. We also ranked those four in order of preference. The main consideration among those four was that we wanted a smaller middle/high school for my son for "reasons". Just to be clear, any of the four would have been okay on paper.

Most of the above was done remotely through the power of the Internet. However, we had a slight advantage in that we were already "somewhat" familiar with the area. I say "somewhat" because we had previous lived in an adjacent county many years prior when we were first married. Which is to say that the names of the neighborhoods and schools were at least familiar to us, even though we didn't spend a lot of time in this specific area.

[You may ask why didn't we consider the adjacent county that we were more familiar with. Main reason was cost.]

Anyway, the realtor was really good... had about 8 or so houses lined up in the areas we had specified. We brought our son along so he could be part of the process. We had pressure to pick one of the houses that weekend. Otherwise, we might not be able to close in time to get kids into school for the start of the year.

Luckily, we really liked one house. It was in our first choice school district and had everything we needed. Offered full price (didn't want to mess around) and got it.

Fast forward to today and it has worked out well.

That said, I don't know what would have happened if we didn't like any of the houses. I don't know what would have happened if there was some unknown factor that would only come to light from living in the area. But none of those things happened, which is why I said that you have to have luck.

I get the people who say to rent for a year... learn the area. Yes, that is a very logical approach so you can hone in on what you might like or not like. However, I personally felt the the downside risks (having to move twice, having kids change schools twice, etc) outweighed the risk of making the wrong snap decision. In the end, we trusted our research and our gut that we picked the right house. And we got lucky that we did!

I am sure this doesn't help you at all, but I wanted to just share our experience and thought process in case there is a chance you find it to be useful.
humblecoder
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Re: Preparing to relocate: can we afford this large home?

Post by humblecoder »

Another tip.

I talked to my co-workers in my new area, asking them where they lived, what their recommendations were. I especially valued the input from those who also had school aged kids. That helped a lot to validate our own research.
London
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Re: Preparing to relocate: can we afford this large home?

Post by London »

I moved from a 2,400 sq ft house to an 8,000 sq ft house. The uptick isn’t linear from a cost perspective. Some things aren’t much more (gutters, etc). Some things are a lot more (gas in the winter, electric in the summer). That said, even those things aren’t 3x more. I like having the space. When we viewed the house, I wondered how we’d ever use it. Now it seems completely normal. Someday I’ll likely downsize, but I’m enjoying my time with the extra room.
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

humblecoder wrote: Thu May 18, 2023 12:36 pm Another tip.

I talked to my co-workers in my new area, asking them where they lived, what their recommendations were. I especially valued the input from those who also had school aged kids. That helped a lot to validate our own research.
Thanks, this is exactly what I have started doing. This is how we found our realtor, and also how we told the realtor where to look.
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

humblecoder wrote: Thu May 18, 2023 12:32 pm We went through a similar situation a number of years ago. Honestly, there is no easy answer, and to a certain extent, you need to have some luck on your side.
……
I get the people who say to rent for a year... learn the area. Yes, that is a very logical approach so you can hone in on what you might like or not like. However, I personally felt the the downside risks (having to move twice, having kids change schools twice, etc) outweighed the risk of making the wrong snap decision. In the end, we trusted our research and our gut that we picked the right house. And we got lucky that we did!

I am sure this doesn't help you at all, but I wanted to just share our experience and thought process in case there is a chance you find it to be useful.
Really relate to what you have said. We are however not likely to be as lucky due to the way the market is right now with so few homes on sale. But hoping for some luck as we visit in the next two weeks.
Ztx
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Re: Preparing to relocate: can we afford this large home?

Post by Ztx »

Glockenspiel wrote: Thu May 18, 2023 9:04 am I live in a 4000 square foot suburban home and think it's very big and requires a ton of stuff to fill up and make feel like a "home". Our 4,000 square foot home has probably 500 square feet that are not frequently used.

A $900k home with $17k in annual property tax will require a total monthly payment of more than $6,000-$6,500/month in principal, interest, taxes, and insurance, assuming you put down 20% as a down payment. Add to that the increase in utility bills and increase in home furnishing costs.

It seems a bit tight. How are taxes on a $900k house $17k/year? Here in Minnesota, those taxes would be about $10k/yr.

17K year on $900K is not too terrible (only 1.9%) . Kind of on the lower end for Texas ;) It can easily be 2.2-2.3%.

On the topic: I would agree with other posters that 6,000 sq ft might be too much. We are in roughly 4k sq ft and while I enjoy it a lot I wouldn't want a bigger house for sure
OnTrack2020
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Re: Preparing to relocate: can we afford this large home?

Post by OnTrack2020 »

Way too much square footage for 4 people.

You can probably afford it, but I'd wait and find something more appropriate size-wise and rent for a bit.
DarthSage
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Re: Preparing to relocate: can we afford this large home?

Post by DarthSage »

Our last move was 2015. We had a 5-day house-hunting trip, and landed on a 4400 sf house that we really love. We have 4 kids, and it's been plenty of space (oldest has since moved out, kid #2 is autistic and may never launch, #3 is in college--local, but lives on campus, and the youngest is in HS).

We looked as much as possible online, but it doesn't compare to in-person shopping. In our case, we needed not just good schools, but schools with an orchestra (talented cellist).

A couple of things that broke our way:

The house we purchased was lower in price because it needed updated--it was functional, just not modern. This was okay with us--we figured the kids would put in wear and tear, and we'd update as needed. That's been working okay--we still have 2 bathrooms to do, plus other, less expensive fixes (it's always something...). I love the kitchen we put in a few years back. Beyond that, this house was the builder's house, back in the 1960's when the development was built. Great layout, tons of outlets, many, huge closets, prime spot backing up to a golf course.

In addition, somewhere along the way, people lived here who started a window company. They worked from home, so we have all top-of-the-line windows.

A few months after we moved in, my MIL broke her hip, and decided to move into assisted living. We got passed down a full living room and dining room set. The upholstered pieces were actually made by DH's grandfather, and will be passed to the kids as they move out. We use this furniture daily.

We didn't feel crowded during the pandemic--DH continues to work from home a lot, it's not an issue. And I have my own craft room (mostly because we don't need a formal dining room, we eat in the kitchen).

We have housed extra people--up to 21 at a time (long story). While I wouldn't want to do that permanently, it's nice to know that we could fit friends, relatives, neighbors if needed. Some of our neighbors are frail--we live in hurricane country, and have added a whole-house generator.

All that said, I couldn't imagine maintaining 50% more space. Your basement might just end up being a dump spot. We have a sunroom (540 sf, not included in the 4400 sf "living space") and a dance room (converted 2-car garage) that get a lot of stuff dumped in them.

That said, I LOVE Pennsylvania--never lived there, but it's my "Goldilocks" state. I wish you the best.
bombcar
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Re: Preparing to relocate: can we afford this large home?

Post by bombcar »

6,000 sq ft is a large house. That may be harder to unload without taking a bigger hit than most if the economy goes sideways for awhile.

The easiest time to move is soon after you've just moved, so you may want to consider renting to get a feel for the area.

The cost of buying a home pales in comparison to hiring top-end full service movers, so there's that, too.

But there's space and there's space, it's really hard to tell how a house "lives" before you live in it.
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

I think I have good amounts of viewpoints. Thanks everyone!
A related question I have is should I stop all my “extra” contributions I was making to my retirement accounts, backdoor Roth, IBonds, taxable given that I will need that cash for reducing the amount I will need to borrow at high interest rates? By extra I meant tax advantaged space beyond what the employer typically matches for. A case can be made to keep going with IBonds and Backdoor Roth I suppose. Also, I assume I should sell index funds in taxable accounts on a periodic basis (reverse dollar cost average). Under my current low interest home mortgage, I saw no point in making extra payments to finish the loan early. But in current climate, I see that flipping and wanted to prepare.
pizzy
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Re: Preparing to relocate: can we afford this large home?

Post by pizzy »

steadyhand wrote: Sun May 21, 2023 8:39 am I think I have good amounts of viewpoints. Thanks everyone!
A related question I have is should I stop all my “extra” contributions I was making to my retirement accounts, backdoor Roth, IBonds, taxable given that I will need that cash for reducing the amount I will need to borrow at high interest rates? By extra I meant tax advantaged space beyond what the employer typically matches for. A case can be made to keep going with IBonds and Backdoor Roth I suppose. Also, I assume I should sell index funds in taxable accounts on a periodic basis (reverse dollar cost average). Under my current low interest home mortgage, I saw no point in making extra payments to finish the loan early. But in current climate, I see that flipping and wanted to prepare.
I wouldn't give up tax advantaged space (employer plan + roth IRA) because you can never get it back.
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Wanderingwheelz
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Re: Preparing to relocate: can we afford this large home?

Post by Wanderingwheelz »

steadyhand wrote: Sun May 21, 2023 8:39 am I think I have good amounts of viewpoints. Thanks everyone!
A related question I have is should I stop all my “extra” contributions I was making to my retirement accounts, backdoor Roth, IBonds, taxable given that I will need that cash for reducing the amount I will need to borrow at high interest rates? By extra I meant tax advantaged space beyond what the employer typically matches for. A case can be made to keep going with IBonds and Backdoor Roth I suppose. Also, I assume I should sell index funds in taxable accounts on a periodic basis (reverse dollar cost average). Under my current low interest home mortgage, I saw no point in making extra payments to finish the loan early. But in current climate, I see that flipping and wanted to prepare.
I don’t think it’s a good idea to alter your retirement plan in a big way in order to stretch for more home than you need.

I feel for you and others in a similar situation as you. With the crazy inflation of home prices it’s tough to be relocating from the mid west to the north east these days, since you want geo arbitrage to work for you, not against you. Hopefully you received as a monster increase in compensation.

Good luck with the move!
Being wrong compounds forever.
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

Yes I did get a monster raise (40%) and long term it should compensate for short term pains. The reason I wanted to compromise on tax advantaged space is because we actually have a lot of it (close to 50k each every year). I also don’t see the point of retiring too early and living a very frugal life till then.
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quantAndHold
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Re: Preparing to relocate: can we afford this large home?

Post by quantAndHold »

When we moved to Seattle, we flew in for a weekend house hunting trip and bought a house. It turned out to be a great house, but if we had stayed in Seattle, we would have moved again to a neighborhood we liked better. On paper, the neighborhood was fine, but in practice, we would have been happier elsewhere.

Anyway, 6,000 square feet for four people, two of which are leaving for college in a few years? Besides being unnecessarily large now, good luck selling a monstrosity like that a few years down the road.
mortfree
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Re: Preparing to relocate: can we afford this large home?

Post by mortfree »

I think people are hung up on the square footage.

It’s probably a 3600-4000 sq ft home with a large finished basement.

OP said smaller homes aren’t in great shape.

There’s also somewhat a good chance that a neighborhood with homes that size and pricing could guarantee a good choice for where to live in an unfamiliar area.

You just need to realize that your house will consume you financially.
Last edited by mortfree on Sun May 21, 2023 3:09 pm, edited 2 times in total.
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Re: Preparing to relocate: can we afford this large home?

Post by stan1 »

On the surface yes a household making $300K can afford a $600K mortgage ($900K purchase minus $300K equity).

You are making progress in your retirement and investment accounts.

But yes I'm still hung up on the 6,000 square foot house for 4 people. There have to be other options that you aren't seeing. I'd widen my search and give it some time before buying a house this large. The cost furnishing, maintaining, and heating/cooling a house plus basement that large would just be too much for me. The other issue is all that empty space would encourage growth and retention of a lot of items ranging from "treasures" to "junk". It's too easy to have the Amazon truck pull up every day to offload more stuff and then put it into the basement after it is used once or twice, until it is needed maybe in a few years or never.
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Re: Preparing to relocate: can we afford this large home?

Post by thedaybeforetoday »

steadyhand wrote: Sun May 21, 2023 10:26 am Yes I did get a monster raise (40%) and long term it should compensate for short term pains. The reason I wanted to compromise on tax advantaged space is because we actually have a lot of it (close to 50k each every year). I also don’t see the point of retiring too early and living a very frugal life till then.
Congrats on the raise. I hope the move works out.

Given the presumptive cost of living increase between your current location and the new location, what is the new take home pay percentage increase after the increase in expenses of the proposed new house, coupled with the cost of living increase once you move to the Northeast?

Can you afford the home, probably. Depends on the answer to the question above.

Should you purchase, pay taxes and insurance on, maintain, heat and cool 6,000 square feet for 4 humans, (which by my math will run you close to half your gross pay)?
Probably not (from the guy who lives in and pays for all the above in the Northeast, albeit in 3/4 the size of the proposed house, and wishes his house was smaller).
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

thedaybeforetoday wrote: Sun May 21, 2023 12:04 pm ..
Given the presumptive cost of living increase between your current location and the new location, what is the new take home pay percentage increase after the increase in expenses of the proposed new house, coupled with the cost of living increase once you move to the Northeast?
...
I believe it is not always about the cost of living increase. We see a clear quality of life increase as well in correlation with the cost of living increase. As mentioned in a previous post, my goal is not just to get to FIRE in the shortest possible timeframe. We are happy to reach FIRE later in life as long as we enjoy where we live and work. Cost of living is higher in certain places in the country for a reason. I have lived in the Northeast before for 5 years and still have family in the area.
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Watty
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Re: Preparing to relocate: can we afford this large home?

Post by Watty »

steadyhand wrote: Sun May 21, 2023 10:26 am Yes I did get a monster raise (40%) and long term it should compensate for short term pains. The reason I wanted to compromise on tax advantaged space is because we actually have a lot of it (close to 50k each every year). I also don’t see the point of retiring too early and living a very frugal life till then.
The problem is that even though you got a large raise more than half of that 40% could easily go toward federal income tax, state income tax, property tax and higher utility bills in the winter.

With a large down payment a $450K mortgage would only be around $3K a month($36 a year) so with property tax and insurance that should be less than $60K a year. With $300K in gross income you should also be able to max out $50K a year in retirement savings especially since a lot of that will go into things like 401k plans pretax. $50K is only about 17% of your gross pay which should not be all that difficult to do. If you cannot do that then your other spending could be more of an issue than the house price.

Even if you do not plan to there is a good chance that you will end up retiring in the northeast once you settle down there so you may also need more retirement savings to pay the higher retirement costs there. I did a job relocation when I was in my late 40s and my plan was to move somewhere else when I retired but by then my son and his kids(our grandkids) had settled down here so the plans to move changed.

If you had not mentioned the square footage of the house I think this thread would have been very different.

I don't know your housing market but if you could get a smaller house for $700K that is only $200K less which is not real significant in your situation. In the worst case scenario you would have a lot of ways to recover from a $200K "mistake" if it turns out to be a "mistake".

The non-financial aspects of living in a house that is too big would a more important concern to me than the incremental price difference of the large house.
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

Watty wrote: Sun May 21, 2023 1:34 pm ...
If you had not mentioned the square footage of the house I think this thread would have been very different.

I don't know your housing market but if you could get a smaller house for $700K that is only $200K less which is not real significant in your situation. In the worst case scenario you would have a lot of ways to recover from a $200K "mistake" if it turns out to be a "mistake".

The non-financial aspects of living in a house that is too big would a more important concern to me than the incremental price difference of the large house.
Agree. If the basement were left unfinished, perhaps this thread would be different too. I assume that the finished basement is causing much of the increased heating/cooling, and also property taxes. I feel sometimes homeowners do not consider the unanticipated consequences of remodeling their homes. In some markets, additional finished spaces in basements can be easily rented out for income. I am not sure I want to go that route.
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Re: Preparing to relocate: can we afford this large home?

Post by thedaybeforetoday »

steadyhand wrote: Sun May 21, 2023 1:12 pm
thedaybeforetoday wrote: Sun May 21, 2023 12:04 pm ..
Given the presumptive cost of living increase between your current location and the new location, what is the new take home pay percentage increase after the increase in expenses of the proposed new house, coupled with the cost of living increase once you move to the Northeast?
...
I believe it is not always about the cost of living increase. We see a clear quality of life increase as well in correlation with the cost of living increase. As mentioned in a previous post, my goal is not just to get to FIRE in the shortest possible timeframe. We are happy to reach FIRE later in life as long as we enjoy where we live and work. Cost of living is higher in certain places in the country for a reason. I have lived in the Northeast before for 5 years and still have family in the area.
So given the above increases you state, along with your FIRE goals, what's your all in new monthly nut for all costs for your family when you move, including needed FIRE savings ?

If you aren't certain about the retirement number needed, perhaps a new post asking what you need to save monthly to reach your FIRE goal?

Without that new, all in expenses/retirement savings number, along with your new income number ($300k seems like current income based on what I read, but can't find new HHI number), can't answer your subject line question.
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
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steadyhand
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Re: Preparing to relocate: can we afford this large home?

Post by steadyhand »

I do not have a FIRE goal as such but I know I want a balance of quality of life and building towards retirement. I love my job enough to keep it going if I have to until I am comfortable. So yes, you are correct that answering subject line question is difficult if I state goals like that. I guess what I meant is what should I be wary of with such a purchase and I think I got a lot of viewpoints that help.
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Re: Preparing to relocate: can we afford this large home?

Post by quantAndHold »

steadyhand wrote: Sun May 21, 2023 2:19 pm
Watty wrote: Sun May 21, 2023 1:34 pm ...
If you had not mentioned the square footage of the house I think this thread would have been very different.

I don't know your housing market but if you could get a smaller house for $700K that is only $200K less which is not real significant in your situation. In the worst case scenario you would have a lot of ways to recover from a $200K "mistake" if it turns out to be a "mistake".

The non-financial aspects of living in a house that is too big would a more important concern to me than the incremental price difference of the large house.
Agree. If the basement were left unfinished, perhaps this thread would be different too. I assume that the finished basement is causing much of the increased heating/cooling, and also property taxes. I feel sometimes homeowners do not consider the unanticipated consequences of remodeling their homes. In some markets, additional finished spaces in basements can be easily rented out for income. I am not sure I want to go that route.
Even if it were a single level home with a 3000 sqft unfinished basement, it’s a seriously large home.
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Re: Preparing to relocate: can we afford this large home?

Post by thedaybeforetoday »

steadyhand wrote: Wed May 24, 2023 1:12 pm I do not have a FIRE goal as such but I know I want a balance of quality of life and building towards retirement. I love my job enough to keep it going if I have to until I am comfortable. So yes, you are correct that answering subject line question is difficult if I state goals like that. I guess what I meant is what should I be wary of with such a purchase and I think I got a lot of viewpoints that help.
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