- I'm probably about 20 years from retirement and I'm thinking about
buying a house. I still have two kids that live at home, I'm a single
father, I have $150,000 in my retirement account, and $180,000 in
cash. Is it worth buying at this point, or should I stay in the
rental market? - Ron
Hi Ron - Boy, you're right on the line between buying and
renting. On the one hand, you have the cash to do it. On the other,
you still have kids to care for and you need to keep building that
retirement fund. Let's go over some of the variables and see where
finances of buying. Everyone faces different variables when
it comes to home buying, and in your case it might come down to
the affordability of the house. I don't think you should be looking
to buy a $400,000 home, but I think you might be able to get something
under $300,000. As long as your mortgage doesn't get too much
higher than your current rent, and you don't use too much of your
cash on the down payment, the equity you build might make up for
the added expenses.
2. The cost of buying. Keep in mind that owning a home
puts more on your plate than just expenses. Moving into and maintaining
a house takes a lot of effort, so make sure you'll still be able
to find a balance between your new project, work, and your family.
If you're 20 years away from retirement, you might not want to
bring a lot of added stress into your life right now, especially
if your job takes a lot out of you. You need to factor quality
of life into this decision. Buying a house might make sense on
your balance sheet, but it could also prove to be a little overwhelming.
3. The bottom line. You need to avoid getting a bad mortgage
(naturally). I recommend you don't take anything more than 15
years, possibly 20 years if you get an incredible rate. After
that, you need to think about your schedule, budget, and plans
for the immediate future. Consider retirement, but don't ignore
the 20 years you have between now and then, and whether buying
a house will impede any of your other aspirations.
| As long as your
earnings are steady and can cover most of your costs, you can look
into buying an affordable house. If you're thinking about spending
all of your savings, tripling your monthly expenses and taking on
a 30-year mortgage, I would definitely advise you keep renting instead.
Hope it all works out, Ron!
© Taylor Kovar
June 22, 2018
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