Home Purchase Advice

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UTJazz
Posts: 2
Joined: Sun Oct 29, 2017 4:38 pm

Home Purchase Advice

Post by UTJazz » Sun Oct 29, 2017 5:05 pm

SatuMedia,

Would like your thoughts on potential home purchase decision as our family has benefited greatly from your advise over the years. Here are some background data points:

+ Military Officer with stay at home Mom of 2 kids (1 HS Freshman and 1 Middle Schooler).
+ We are on last assignment and expect to retire in next 1-4 years with gross annual retirement of approximately $80-90K.
+ House we are considering is $525K w/ HOA of $340/month (high for the area but includes pool and lawn maintenance).
+ House is brand new/built spring 2017 w expected property tax of $4K-5K per year.
+ Have $2M in investment assets with approx $1.1M in non-retirement and $900K retirement accts.
+ Own rental house in area (built in 1996 and we are currently living in now as we look for house). Valued at approx $290K with about $130K left on mortgage (15 yr mortgage at 3.125% paid off in 2028).
+ Have 529 Accts & GI Bill for kids college.
+ Will look for job after retire from military however in smaller market so salary expected to take a dip.
+ Currently investing approximately $6K/month (TSP/Total Stk Mkt/Tot Int) which could transition to mortgage paydown vice investing.
+ Current plan is to stay in area for at least 7-8 years so our youngest can graduate HS.

House is very nice and has floor plan which would work for our family but monthly HOA fees are bothersome--although most of the new homes are in this community. Housing market is very warm at this time and newer homes in another part of town are about 75-200K more and over 3K sq ft--too much house for us.

What are your thoughts/recommendations. Thank you.

UTJazz

Ron Scott
Posts: 360
Joined: Tue Apr 05, 2016 5:38 am

Re: Home Purchase Advice

Post by Ron Scott » Sun Oct 29, 2017 9:34 pm

I like the purchase.

To conserve, If you continued working for another 4 years or so and sold the existing house to help buy the new one you'd be back to where you are in investable assets--and own the new house outright. Is that a worthy goal for you?

The HOA fees and taxes don't seem horrible to me at all (and don't discount the value of professional grounds maintenance since it protects everyone from the untidy neighbor and keeps resale value higher).

Good luck!

panchilly
Posts: 105
Joined: Sat May 14, 2016 9:57 am

Re: Home Purchase Advice

Post by panchilly » Sun Oct 29, 2017 9:38 pm

I'm looking forward to what KlangFool says on this one.

student
Posts: 1333
Joined: Fri Apr 03, 2015 6:58 am

Re: Home Purchase Advice

Post by student » Sun Oct 29, 2017 9:51 pm

Seems reasonable. I would probably sell the current house.

Olemiss540
Posts: 188
Joined: Fri Aug 18, 2017 8:46 pm

Re: Home Purchase Advice

Post by Olemiss540 » Mon Oct 30, 2017 6:38 am

Hard to tell without knowing your current and projected expenses (post home purchase). Age? Will you get the 80/90k retirement immediately plus projected salary at new job? What is your goal for full retirement age and projected income at next job once retired?

tampaite
Posts: 389
Joined: Wed Feb 18, 2015 9:29 pm

Re: Home Purchase Advice

Post by tampaite » Mon Oct 30, 2017 7:22 am

UTJazz wrote:
Sun Oct 29, 2017 5:05 pm

+ Military Officer with stay at home Mom of 2 kids (1 HS Freshman and 1 Middle Schooler).
+ We are on last assignment and expect to retire in next 1-4 years.
+ Own rental house in area
+ Will look for job after retire from military however in smaller market so salary expected to take a dip.
+ Current plan is to stay in area for at least 7-8 years so our youngest can graduate HS.
I cherry picked few of your points to share my thoughts.

#1 - you haven't provided a good reason why you are looking to buy another home?

#2 - you are looking to stay in the area for 7-8 yrs - will you be moving out? if so, you do own an existing home - my suggestion would be to ride it out for next few years and then look for a home in a more permanent area whereever you find a jon after retiring from military.

UTJazz
Posts: 2
Joined: Sun Oct 29, 2017 4:38 pm

Re: Home Purchase Advice

Post by UTJazz » Mon Oct 30, 2017 6:39 pm

Thanks for your thoughts and questions.

+ Am 50 years old.
+ $80-$90K pension would start immediately and taxable investments generate about $20K in div/cap gains annually.
+ Believe could live on pension plus investment income w/o job but would like to find one which may pay between $80-$120K annually.
+ Would like to buy larger house for family in nicer neighborhood. Many older homes in area we like but this enclave of newer homes have highest HOA in area.
+ Plan to stay in the area for at least 7 years, if can find solid job may stay 10-15.
UTJazz

Engineer250
Posts: 799
Joined: Wed Jun 22, 2016 1:41 pm

Re: Home Purchase Advice

Post by Engineer250 » Mon Oct 30, 2017 6:45 pm

panchilly wrote:
Sun Oct 29, 2017 9:38 pm
I'm looking forward to what KlangFool says on this one.
Where is he? I thought he'd be all over this one.
Where the tides of fortune take us, no man can know.

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Top99%
Posts: 169
Joined: Sat Apr 22, 2017 9:30 am
Location: Austin, TX

Re: Home Purchase Advice

Post by Top99% » Tue Oct 31, 2017 7:25 am

Regarding the HOA fees, since you mentioned the home is new I suggest checking if the builder is subsidizing the HOA. If so once the builder finishes with the project the HOA fee might take a big jump. I would also make sure the HOA has reserves of at least 6 months of HOA dues for big maintenance items. If they don't when these items come up they will either need to assess home owners or sharply raise dues.
Adapt or perish

student
Posts: 1333
Joined: Fri Apr 03, 2015 6:58 am

Re: Home Purchase Advice

Post by student » Tue Oct 31, 2017 7:37 am

Engineer250 wrote:
Mon Oct 30, 2017 6:45 pm
panchilly wrote:
Sun Oct 29, 2017 9:38 pm
I'm looking forward to what KlangFool says on this one.
Where is he? I thought he'd be all over this one.
Maybe the OP situation satisfies his criteria, or at least one of them. The OP has 2 million dollars and want to buy a half a million dollars house. So they will not be house poor. Also OP is in the military with super secure retirement benefits, the job is as safe as one can hope for, and the plan for retirement is within the next 4 years. They have won the game already.

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Pajamas
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Joined: Sun Jun 03, 2012 6:32 pm

Re: Home Purchase Advice

Post by Pajamas » Tue Oct 31, 2017 7:48 am

HOA fees tend to go up roughly with inflation, and more to cover capital expenses. If they are high now, expect them to be higher later. I would at least investigate that and see exactly why they are high and exactly where the money is going compared to other HOAs.

If you already own the home that you are living in and the market is even slightly frothy, why not wait until it it is more favorable, especially with interest rates finally rising?

Engineer250
Posts: 799
Joined: Wed Jun 22, 2016 1:41 pm

Re: Home Purchase Advice

Post by Engineer250 » Wed Nov 01, 2017 11:07 am

student wrote:
Tue Oct 31, 2017 7:37 am
Engineer250 wrote:
Mon Oct 30, 2017 6:45 pm
panchilly wrote:
Sun Oct 29, 2017 9:38 pm
I'm looking forward to what KlangFool says on this one.
Where is he? I thought he'd be all over this one.
Maybe the OP situation satisfies his criteria, or at least one of them. The OP has 2 million dollars and want to buy a half a million dollars house. So they will not be house poor. Also OP is in the military with super secure retirement benefits, the job is as safe as one can hope for, and the plan for retirement is within the next 4 years. They have won the game already.
OP doesn't give their monthly income so I can't figure out if their housing expenses fall below the ever important 33% after tax. KF probably busy telling someone they will lose their job and have to raid their 401k on some other thread involving how much to hold in bonds. Not all superheroes wear capes.
Where the tides of fortune take us, no man can know.

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