My husband and I are trying to figure out our next steps. Our current lease in a condo ends in August so we need to figure it out before then. Together we bring in about $245k annually (around 303,075 USD), take home about $12k monthly. The only debt we have is a car loan with about $16k left and student loans with about $11k left. Both loans will be cut in half by the end of this year and completely paid off by the end of next year barring nothing detrimental happens.
We don’t have children but are talking about having one. If we decide this route, it will likely happen in the next 2 years due to my IUD. We have time but not a lot. We started discussing moving from our current 2bd/2ba condo to a 3bd/2ba minimum so we have room to expand. I was looking at town houses but he mentioned it might be better to buy a cheaper house, pay it off, then sell it.
We live in NOVA so the housing market is complete trash. All houses near us are in $700k + range which isn’t feasible. There are plenty of houses in the $525-$650k range which is more reasonable. We just got approved at Navy Federal so we would use the home loan from them to save on interest. We current save $2500 a month into a HYSA with northwestern mutual; account has $47k in it currently. We will be at $72k by the time we need to move. Our current rent is $2450/month not including utilities but we are able to pay up to $3400 comfortably.
Would it be smarter to purchase a cheaper house here ($500k-$620k) and pay on it/rent it out in hopes of getting a better house down the road or continue renting at $3k a month and saving $2500 for the house we actually want?
This came up as we’re spending nearly $30k on rent yearly which could be going towards a mortgage. The biggest question mark is post-election housing market’s condition so I know this advice might change. Can you provide tips or advice on what you would do here? If you did something similar, what did you pick and how did it work out?
Cheers, Future Homeowner
Response from THE MONEY MINDER:
Hello There,
Congratulations on taking proactive steps to plan for your future, especially with regards to growing your family and considering your housing options. It sounds like you have a solid financial foundation with a good income and manageable debt. Given the specifics of your situation, I would advise considering a very realistic and practical approach.
Firstly, given the high cost of real estate in NOVA, it might be wise to explore purchasing a home in the $500k-$620k range as you mentioned. This will allow you to enter the housing market, start building equity, and potentially have the option to rent out the property in the future. By doing this, you can start saving on rent and put the money towards building equity in your own home.
Additionally, with your financial discipline of saving $2500 monthly, you can continue to build up your savings for a down payment on a future dream home while also paying down your existing debts. It’s essential to consider the potential flexibility of this approach and how it aligns with your long-term financial goals, including saving for a growing family.
As you mentioned, the uncertainty of the housing market post-election is a valid concern. However, if you approach this decision with a clear plan and a focus on your financial stability, you can adapt as needed based on the circumstances. Consult with a financial advisor or real estate expert to better understand the market trends and make an informed decision that best suits your needs.
Remember, it’s essential to prioritize your financial stability, savings goals, and long-term plans when deciding on your next steps. By following a practical and informed approach, you can navigate the complexities of the housing market in NOVA while working towards your future goals.
Best of luck with your decision-making process, and I hope this advice serves you well!
Farewell from THE MONEY MINDER.
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