What should I do given all these variables (home mortgage edition)
June 21, 2013 7:46 AM Subscribe
I'm getting married! And buying a house with my fiance! And I'm so, so confused about the best plan (longish question, totally special snowflake focus).
posted by Lizlemondrop to home & garden (10 answers total)
So, my sweet, sweet guy is selling his very nice townhouse that he only bought a year ago so we can stay in my daughter's school district after we move in together. It's a much more expensive area and the inventory on the market seems very strange in that there are some choices on the market for around $350 and lots of choices for $469 and above, but nothing in between the two price points. The area is fairly expensive - a $350 house or townhome would involve compromises and would not be a dream home by a long shot. It would be more likely a place we would plan to live in until my daughter finishes high school in 2 years. However, none of the places we've looked at in the range are _horrible_ really. We could find a place where we'd be happy.
So, here's all the variables that make a decision not so clear cut. He just got an offer on his place and if all things work out the way it looks like they will, he'll net about 80K. He's willing to use all of this for the down payment and other associated costs in closing on the house and moving. I'd like to help out where I can but the truth is I'm more of a drag than a help, I fear.
He's got great credit; I have a bankruptcy (discharged) and a foreclosure in 2009 stemming from my divorce. He owns his house and I rent (since 2009) so technically I would be a first time home buyer, I think? He's got the money from the sale of his house; I've got nothing except possibly some money that I could withdraw from my 401K. We both have 6 figure incomes.
The twist is that if we were to bump up what we were willing/able to buy to one of the >469K houses, I think we could get a house that we would want to live in for many years. Also, since it is in such a good school district, these houses have consistently appreciated in value - even during this downturn. And then there's interest rates - good now, apparently getting worse soon.
So, in order to get the down payment for a $460,000 house (just for an example), it looks like I'd need to contribute around $20,000. I could get that much from my 401k - as a first time buyer, would I incur the 10% penalty?
If I contribute to the down, then does my name need to be on the mortgage? He can qualify on his own for a fairly high amount - I think for the full amount of what we'd need to borrow. We've always assumed I'd hurt rather than help, so we haven't been planning to have me on the mortgage, although I will be on the deed.
So, it all comes down to this: in this market, is it smarter to buy the house you can totally afford even if you think you'll end up moving in less than 5 years. (But, you know, life - maybe we will or maybe we won't) Or is it better to stretch into a house that you think you'll probably never want to leave? Is that even a workable solution? Is there something I'm not even considering?
First world problems are the worst, amirite? Thanks for any input.