Pregnant! Should we step back from buying this house we've dreamed of?
November 15, 2015 10:28 PM   Subscribe

We were getting close to making an offer on a home — but the house was a lifestyle upgrade, not a necessity. This month we found out a kid is on the way (whoo!), and we're trying to decide if the house is still doable, or if we should save our pennies for the little person-to-be?

I feel like this situation is pretty unique, which is why we're asking for your advice!

We are NYC dwellers. For about a year now, we've been looking for a nice little cheap country escape — a place where we could breathe fresh air, let the dog run around, and make a second little home. We are super lucky to have a great deal on a 2-bedroom apartment (we're one of the lucky ones and totally grateful, we stuck it out for 10+ years in a shitty neighborhood that's now turning nicer) and while we'd NEVER be able to afford a place in the city, we have been dreaming of some upstate places we absolutely could afford.

We have flexible enough jobs where we could spend much more than *just* weekends at the second house, and possibly even move there full time if we really had to.

— We live in New York City with very cheap, stable rent.
— Current housing costs are 10% of Gross Income.
— With the second house, our total housing costs would be closer to 22% of Gross Income.
— We have about 40K in savings, most of which would go to the downpayment.
— We have about 180K in retirement savings, which we're not planning on touching.
— We're both in our mid 30s.

— Mama-to-be is the primary breadwinner by a factor of about 5x, she will need to keep working after maternity leave to support the family (and she works her ass off). Mama is nervous that the baby might really slow her down, and of course would love to have a big financial buffer in the bank (but is also sick of the city and really emotionally craving more space and fresh air).

— Papa-to-be is a freelancer, with a growing career, but who is on the fence about how much childcare he feels like he would want to take on vs. careerbuilding. The question of nanny/daycare costs depends on him somewhat.

— Baby was a happy surprise, arriving midsummer!

— As a backup, we could easily AirBNB this second home out. The one we have our eye on has tremendous curb appeal and we figure we'd break even on the second home costs with about 6 days/month of rentals. Of course, AirBNB takes work — and will we just be too overwhelmed with the baby to handle this?

—If we didn't buy the second house, we'd likely have to do some big renovations to our apartment to reconfigure some of our work-from-home equipment + child. With a second place, we can move a lot of our stuff upstate and worry less about clever remodeling "smart solutions for apartments."

— We have our eye on interest rates, and know the Fed is likely going to raise them very soon. Should we hustle to move NOW on the house to try to avert a big interest rate hit (potentially up to a $40K cost in our best estimates)

As first time homebuyers and first time parents-to-be, we're nervous!

— Are we crazy to think of this extra expense right now, since we don't need a second house, but just want one? Should put those dreams on hold and sock away the extra money for baby? Medical costs, childcare, diapers, college?

— If we do the house, should we move extra fast, to get a good interest rate and get our life situation all squared away before baby's summer arrival? Is there a chance if we don't do it now, we'll be so consumed by baby that we'll never get to it, and lose that dream?

— Would it be nice to have a relaxing, outdoor space and more room for the three of us somewhere outside of our cramped, loud, NYC apartment? Is that worth some extra short term stress?

Thank you for all your advice!
posted by anonymous to Work & Money (21 answers total) 4 users marked this as a favorite
I regret not doing this when we were pregnant and had a similar choice. YMMV.
posted by jbenben at 10:43 PM on November 15, 2015 [2 favorites]

If mama-to-be spends the last two months of pregnancy on bed rest in hospital and then another three months at home looking after her torn vagina when the birth doesn't go well, how will the finances look then? Do you have income replacement through short-term disability? How long is the maternity leave available, and is it paid?

What are the deductibles on your health insurance like? If Papa decided he doesn't want to look after the baby then what will nannying cost?

Are the two of you good DIY types who can maintain the house yourself and recognise any major issues, or will you need to get an electrician in if the fuses blow? How much money will you have left to cover any unexpected expenses like the heater dying at Christmas while you're in NYC and the pipes freezing over and bursting before you visit again? Are your ownership cost plans including home insurance? What is the deductible on that?

How would you handle AirBNB - one of you goes out to let the guests in and then again to clean up after them? Or hire a local agent to manage it for you? What would your costs be? Will you need to spend money to furnish the house before renting it out, including dishes, cutlery, etc?

What will your budget look like each month with/without the house - paycheck to paycheck, or easily saving a significant amount still?
posted by the agents of KAOS at 11:27 PM on November 15, 2015 [5 favorites]

One aspect to consider is that of your time. With a baby in the picture, you may not have the same amount of time on your hands to enjoy this space on a regular basis. For example, I had a baby in June. Although I may have gone out for necessities here and there, I basically didn't see the summer. The first time we really ventured out was for Labor Day weekend. Fast forward a couple of years and you are spending the majority of your weekends at playdates and birthday parties. And a couple of years later, Saturday mornings are devoted to soccer practice or t-ball practice, and you still have to add in the bday parties, etc, and, well, you just get busy. So, how would you use this space under such circumstances? Once a month? Once a quarter? If 5 hats okay with you, and being long-distance landlords via AirBnB or what-have-you is okay with you then by all means. Just be aware that it's a big time commitment, and your available free time is going to shrink considerably.
posted by vignettist at 11:32 PM on November 15, 2015 [7 favorites]

There are easier ways to rent your second home than through Airbnb. It might be worth checking with a local vacation rental place near the second place, and see if they take on management. This is a more traditional and much easier approach. You can still stay in your place when you want to, but the management company deals with the reservations, cleaning, etc. Of course they take a percentage, but they do a lot of the work as well.

I suppose the practical thing is not to buy the house, but I think you should strongly consider it. A second home is great when you have kids!
posted by bluedaisy at 12:05 AM on November 16, 2015 [2 favorites]

I don't think it's buying a house or not buying a house. I think this is buying a house NOW or buying a house later. I vote buying a house later.

At this point, you have no clue how your jobs, lives, health, time, etc. will be affected. I don't think that between now and say 9 to 12 months there will be a huge change in the interest rates. Plus you'll have a true idea of your finances including (if applicable) child care, food, baby essentials, diapers, and whatnot.

Here are some reasons to wait or workarounds:
- You will have a steady savings and income in case you need it for health, jobs, time needed, baby gear.
- You can still buy a house down the line if everything goes smoothly.
- You may find that you don't want, need, or can care for a second house and therefore won't have a second job of being a landlord or trying to offload a house you just bought.
- You can't necessarily rely on steady rental income and you may need to pay out money to get a property ready for rental.
- You can refinance a mortgage if for some reason interest rates go up a lot. (Overall mortgage rates are low interest loans.)
- You can sell unneeded items for more space. You can store unneeded items for a future house in a storage unit or at a friends' or families' house.
- You will have more funds to accommodate your current apartment to fit the needs of your child.
- You can look into vacation or AirBnB rentals if you want a second location but not as much fuss or expense before buying a house.

I vote to make your own budgets and Pros and Cons lists. I'm not you and my vote would be not to buy the house. But, your priorities are different than mine. List it all out and see if the benefits of buying a house NOW outweigh the benefits of buying a house LATER.

(And trust me, I get house-fever. We've been in our apartment for 3 years and I can't wait to not share walls. However it's not the smartest choice for us right now. So we're waiting.)
posted by Crystalinne at 12:30 AM on November 16, 2015 [4 favorites]

We have our eye on interest rates, and know the Fed is likely going to raise them very soon. Should we hustle to move NOW on the house to try to avert a big interest rate hit (potentially up to a $40K cost in our best estimates) [...] As first time homebuyers...
As first time homebuyers, you shouldn't be staring at interest rates except in the broader sense. This goes double if you're buying a "vacation" home*. A quarter point (250bp, 0.25%) is the most the Federal Reserve is expected to raise rates, if they do at all, in December or January. If a 0.25% hike in interest rates makes this unaffordable or even less attractive, you've already answered your question. Timing the market is difficult and "buy now interest rates are worrisome" sounds more like a broker than sound advice. Besides, remember that as rates go up, values tend to go down in response (except in hyper-competitive markets).

* Obligatory Point: If this is not your primary residence, you'll want to be careful about how you approach the mortgage (and property insurance). Non-primary mortgage loans usually require 20% down and can't be an FHA mortgage. Yes, there has been some nodding-and-winking at the "we promise and intend that we will occupy this house as our primary residence for the first x year(s)" form but the mortgage market is tighter and lenders are more skittish. This goes double if your plans include significant AirBNB time.
posted by fireoyster at 12:43 AM on November 16, 2015 [8 favorites]

To be less vague, I meant that "the broader sense" is "can we afford this loan" not "can we afford this loan if we act in the next 30 days versus not at all for three years."
posted by fireoyster at 12:44 AM on November 16, 2015

If this house were to be your primary residence, I'd say go for it; I regret not thinking about whether my home would accommodate a baby until after the baby was born. But since it's a second home, I strongly recommend against it, since it's a lot of worry and time and money for something that's going to complicate rather than simplify your life, right when you least need any further complications.

Even if the house is perfect and needs no work, it's probably not going to be a relaxing escape for you for a year or two; if you're not too sleep-deprived to make the journey, spending the weekend there will mean you have to plan ahead for a weekend of baby/toddler/preschooler care: where will he sleep, when and what will he eat, did we pack enough toys/books/diapers/the white noise machine/the baby carrier/things that you don't yet know your baby needs because all babies are different. Short trips with a baby are not that hard, but unless you have a grandparent or other willing caretaker at the other end you're basically still taking full-time care of your kid in a less convenient location.
posted by Metroid Baby at 3:47 AM on November 16, 2015 [3 favorites]

You really need to figure out how much childcare you may need or want. It's not cheap, and it'd be a shame to find out after you buy the house that you'd like more paid childcare than you can afford. It's not a forever expense but it is a big one for those first few years.
posted by ThePinkSuperhero at 4:08 AM on November 16, 2015 [6 favorites]

It sounds like you can't really afford this now, and the uncertainty is going to weigh you down. You can always do a move like this in a couple years when you're used to having the kid and have a better feel for your new lives and finances.
posted by J. Wilson at 4:54 AM on November 16, 2015

I'd wait. You are in a great financial position now and I'm hoping you have a pretty good income if one of you makes 5x the other. If you save for a few more years, you could be in a position to take lower-paying jobs outside the city in a few years and get that fresh air permanently (if that's something you want).

In general, you need to make sure you know what you do want. Do you want to eventually move out of New York? and Who is going to take care of the baby? are question that need to be answered before you make any giant purchases.
posted by chaiminda at 5:10 AM on November 16, 2015

I'd wait because with only 40k in liquid assets, most of which will go toward the down payment, you could get hit with an unexpected expense that could quickly lead you to uncomfortable financial territory such as big medical expenses or daycare. And as others have pointed out, your priorities might well change after you have a baby - it will be good to have a little nest egg to help you fulfill those priorities.
posted by peacheater at 5:35 AM on November 16, 2015

I would wait too. Sorting out first-time home ownership with two places to maintain/baby proof/etc. while also sorting out childcare, child transport, and the impact on both of your careers (try impressing that new client after a week of colic!) is a lot of stress. If you had a really great cushion of money you could throw at hiring help/maintenance/etc. it would be different.

Childcare is a big one, financially. If I read you right you are thinking you could retreat to the weekend house more often but...childcare rarely allows for gaps in it so you have to pay anyway, so that's something to look at. My childcare bill was twice my mortgage and then some.

I think it's something to work towards saving for a few years it's much easier to travel anyway and you'll know your costs and whether you are the "show up to every birthday; enroll in weekend Suzuki lessons" type parents or not (don't assume! I would laugh at my prior self.)
posted by warriorqueen at 6:22 AM on November 16, 2015

If there's any sort of chance (as your post suggests) that your secondary residence might become your primary residence, you should take a look at the school situation in your secondary residence's area if you didn't before. That also affects resale value, so it's not a chance-in-a-million waste of time. (Yes, there are people who live "in the country" full time, and care about things like that.)
posted by gnomeloaf at 6:22 AM on November 16, 2015 [1 favorite]

This is what stands out to me (below).
If we didn't buy the second house, we'd likely have to do some big renovations to our apartment to reconfigure some of our work-from-home equipment + child.

Figuring out how you're going to handle childcare/working between the two of you (and if one/both of you works at home this includes your house) seems like the big decision.
posted by typecloud at 6:54 AM on November 16, 2015 [2 favorites]

I would wait but I would also consider checking into rentals in the area so you can still escape to the country if you want to. If you go ahead and pick a few places and try them out before the baby arrives then your wife will feel reassured that it's a possibility if she does want to go away for a week or two when the baby is little.

For example, for the third year in a row, we have gone to the same beach house with some friends of ours. Now we know exactly where the good stores are and what we need to pack and what we can leave at home. If I wanted to go to the beach over Christmas, I would just pick that place because I know it and there wouldn't be any surprises.

Even if you find that traveling with the baby isn't something that sounds appealing (for some people it's no big deal, for others it is and you just won't know until the little peanut gets here), just knowing that it's an option that you have prepared for night make your wife feel better about the whole thing.
posted by dawkins_7 at 7:09 AM on November 16, 2015 [1 favorite]

I know the house affordability calculators always ask for gross income, but I am always suspicious when self-employed individuals point to the gross percentages. It always makes the financial picture look rosier than it is. If I were you, I would be looking at net costs, and are you really comfortable with those numbers? Things that are missing from your analysis: realistic childcare costs (assume full-time care, either in direct costs or lost income), health insurance for baby, utilities/maintenance on country house. You acknowledge that having a baby may change your financial goals - pick that apart some more and be sure that your decisions align with your values.

Also, for presumably high income folks, your savings is relatively low.
posted by stowaway at 7:33 AM on November 16, 2015

There will be more great houses that can be a perfect country get-away. With a new child the time together will be worth more than some extra space. In another year you will know how your financial picture and lifestyle has changed with the baby and still have plenty of time to consider the country get away by the time the kiddo is walking on their own. So, I'd say keep putting the money away while you can. (Aside, if you are only spending 10% of income on rent then even if interest rates do rise you should be easily able to build up even more of a balancing nest egg/down-payment in the intervening time). Give yourself time to be a new family and then look again in a year or so. And, congratulations!
posted by meinvt at 7:39 AM on November 16, 2015

This sounds really fun, but I agree with everyone else that you absolutely need to get your childcare budget figured out. Budget for full time care, since it sounds like even if Dad cuts back that will be easily as much foregone income.

The other thing I'd do is make sure you're happy with the schools in your vacation town. Almost every single person I know who had kids in NYC and a weekend place ended up moving there permanently when the kids got kindergarten -aged and they started seriously looking at their public school options, and you may want that option as well.

If it's all still doable, go for it. If you're not sure, wait.
posted by The Elusive Architeuthis at 7:45 AM on November 16, 2015

Unless you have a large emergency fund in addition to your savings, I don't think you can afford a house right now. You can't spend all of your savings on the down payment, especially with a baby on the way.
posted by gatorae at 10:17 AM on November 16, 2015

Without the baby, I'd say go for it, but with the baby, I advise you to wait at least a year.

The financial reasons:
- you don't currently have sufficient insight into what your post-birth expenses will be, particularly re daycare, but also with all the other costs of having a baby.
- most, if not all, of your savings/liquidity would be taken up by the down payment. Considering you're about to have a major life event, this is not the time to leave yourself without a good emergency fund. Hopefully the pregnancy and birth will be completely uneventful - but you would have considerably more peace of mind knowing that if something did happen, you would have a cushion. Same if mama wanted to take extra time off to be with baby post birth.

But equally:
- travelling with a small baby can be OK or very stressful, depending on you and your baby, and you don't yet know the baby's personality or how you'll be coping with newborn baby stress. Unless you invested $$ in having a second set of baby gear at the vacation house (high chair, crib, toys, bottles/pump, bouncer/swing/pen/whatever etc.), you would be spending a lot of time and energy hauling stuff back and forth... at a time when you frankly do not have an ounce of extra time and energy.

It sounds like you two are doing everything right with your planning. If you're willing to wait until some of the uncertainties above are resolved/known, I am positive another dream house will come along when you're ready. Best of luck and congratulations!
posted by widdershins at 1:25 PM on November 18, 2015

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