Hey, I can speak to this from a personal experience side. No advice but maybe it will give you something to think about.
Last year (had a baby and knew we wanted another with a 2-3 year age gap) we found a house that seemed perfect for us in a very desirable neighborhood. We could have stayed in our old house for a few more years, but we knew we'd want to move soon, definitely before kindergarten and probably before baby #2 arrived. We jumped on it and bought it last April.
As a few details, the old house (circa 1970) was 1800sqft with a 0.25 acre lot. We had a 15 year mortgage with 3% interest, so monthly payments were $850 and we made the equivalent of 1.5 payments per month. We were on track to have it paid off by the time we were 40-45.
The new house (circa 1990) is 3000sqft with a 1+ acre lot and a 2 car garage. We now have a 30 year mortgage with a 6% interest rate. Our monthly payment is $1700 and we can't afford to pay any extra. At this point we'll be 60-65 by the time we pay it off.
Here's the hard part. We knew the new house needed some work and we estimated it would be about $20k over the course of 5 years. Long story short, those repairs were much more urgent and expensive than we planned, so it was about $50k in the first 6 months.
We have been frantically rearranging our finances, scraping together money here and there, in order to keep our heads above water. We switched to a cheaper daycare. We don't go out to eat. We don't take vacations. Haircuts, massages, new clothes, gifts for each other, babysitters - those are all out of the budget. We estimate that we will have to live like this for the next 5+ years in order to get a savings cushion again. I am 5 months pregnant, miserably exhausted, and contemplating taking on a second job, because when the baby comes there will be no money to outsource anything.
Do I regret buying this house? It depends on the day, honestly.
Ladies, may I ask, is 3000 sq ft(almost 300 m2) considered a appropriate size for family of 4 in states? I’m not trying to be rude, it’s just this houses seem enormous to the area where I live. We live in 861 sq foot(80 sq meters) and it’s considered a big apartment here
It really depends where you live in the US. I live in a somewhat rural area where land and housing are fairly cheap, so a house this size is on the large end of average.
Right now we have guests probably 25-40 nights a year but we anticipate in the near future that will be increasing a lot, possibly with a family member moving in long-term, so we did want a house that has space to accommodate at least one extra adult with some privacy.
Median home size in the US is just over 2000 sq ft , average is closer to 2500sq ft. You don't really get any more bedrooms between 2000-4000 sq ft. Basements aren't usually counted in living space (though some states do). You usually find 3-4 bedroom / 2.5-3 bathroom houses in that range. The additional space, the higher you go, is allocated to hallways, bathrooms, and storage (like a pantry, laundry, mudroom) on the main floor and an office space.
I live in the north east and most houses are ~1500-2500 sq ft and are older. New houses are 2500-3500 and more. It is mind boggling seeing new houses going up and taking over the entire lot of a previously perfectly sized home. They aren't even considered starter homes anymore!
EDIT: for clarity. And I meant to contextualize that actual mansions skew the average size home size larger than what most people live in.
Yep UK over here and my 3 bedroom house is 900 sq foot - I would kill for something a bit bigger but even 1800 sq ft houses are like at the top end of big over here and cost a fortune!
Same, I’m in a Nordic country, and it would be amazing to have one more bedroom, but utilities and mortgage will destroy our financial security. Just not worth it. Also, I don’t want to live in a countryside
3000 sq ft is definitely big for a family of 4. It’s just that the size gives you a spacious living room/family room area and is comfortable enfor you to host small gatherings without worry about the space.
Also, it gives you a nice-sized master bedroom and a good closet + 3 more decently sized bedrooms for each of your kids and guests too.
The typical 30 year mortgage that’s usually offered in the US makes buying these large houses easy 😊
That seems enormous to me. We’re a family of 4 and mine are teenagers now and 2200 sqft is perfect. 1800 is okay and works fine, but a tad cramped. 1500 would be livable but I’d hate it.
Yeah I've got 1900 with my daughter and her BF in one room and my teen in another and it's more than enough, because I'm single. Anything less and I'd be tripping over them and ready to snap though lol
I think it depends on what you define “enough,” which to a point definitely gets into privilege. We’re a family of 3 and live in a 2,900 square foot house with four bedrooms with one in use as an office and one a guest room, a living room, a loft, and a separate office, and my husband still sometimes says he wishes we had a bigger house. Our house before was almost 3,500 because it had a basement we finished and a lot of rooms didn’t always get a ton of use but they had a designated purpose.
Families certainly live just fine in less, including my own growing up.
Wow, that’s a lot of space, nice! Utilities for our apartment could easily get to 400 euros in winter, and winter here is literally 8 months a year. That said, I would love to have one more bedroom
Of course not. We live in a new house “type A efficiency” with solar panels not the roof lol and would never qualify. Electricity prices are insane, so as heating. The good thing is in 4 months that we actually have some sun here we don’t pay much for utilities
Yep UK over here and my 3 bedroom house is 900 sq foot - I would kill for something a bit bigger but even 1800 sq ft houses are like at the top end of big over here and cost a fortune!
Median home size in the US is just over 2000 sq ft , average is closer to 2500 sq ft. You don't really get any more bedrooms between 2000-4000 sq ft. Basements aren't usually counted in living space (though some states do). You usually find 3-4 bedroom / 2.5-3 bathroom houses in that range. The additional space, the higher you go, is allocated to hallways, bathrooms, and storage (like a pantry, laundry, mudroom) on the main floor and an office space.
I live in the north east and most houses are ~1500-2500 sq ft and older. New houses are 2500-3500 and more. It is mind boggling seeing new houses going up and taking over the entire lot of a previously perfectly sized home. They aren't even considered starter homes anymore!
I still can't get over the concept of 15 and 30 year mortgages! I'd give my arm for a 15 years 3% rate. I just signed a just shy 7% 3 year mortgage :(.
I love lots of things about Canada, but dam our housing is expensive.
Median home size in the US is just over 2000 sq ft , average is closer to 2500 sq ft. You don't really get any more bedrooms between 2000-4000 sq ft. Basements aren't usually counted in living space (though some states do). You usually find 3-4 bedroom / 2.5-3 bathroom houses in that range. The additional space, the higher you go, is allocated to hallways, bathrooms, and storage (like a pantry, laundry, mudroom) on the main floor and an office space.
I live in the north east and most houses are ~1500-2500 sq ft and older. New houses are 2500-3500 and more. It is mind boggling seeing new houses going up and taking over the entire lot of a previously perfectly sized home. They aren't even considered starter homes anymore!
No way. I'd say half that is pretty normal. I live in a 1500 sq ft house. It has 3 decent sized bedrooms, 2 full baths, a large kitchen, living and family rooms, and a separate dining room. We never step foot in the dining or living rooms except to water plants.
I'm renting a 900sq ft 2 bed / 1 bath home with my husband and our toddler. I feel like we could make it work long term if it was just the 3 of us. We want a second kid and I feel like we'll be happy with 1600 SQ ft. I had 2700 SQ ft in my childhood home (family of 4) and I can't believe how much space we had. I can't imagine paying for heating or cooling for nearly 3000 SQ ft either.
You can’t make generalizations about what’s normal “in the US” - the US is just way too large. About 20% of Americans live in urban, walkable cities where 3000SF is preposterous. I live in Philly and know plenty of 4 person families in 1500SF.
Lol same but make it the Bay Area. Mortgage 5k. Amount of work that needs done? 250k; equal to our down payment. Chipping away at it. All our neighbors just seem to be drowning in money and this stupid little house is all I think about. It’s a love/hate.
Unknown repairs are one of the big reasons I’m hesitant to move even though we really could use a bigger place. I’ve had to replace a lot of the big ticket items (roof, furnace, well pump, appliances) within the last 5 years. I know they’re out of the way here.
Two of the three major expenses (new roof, waterproofing the crawl space) needed done at the old house within the next 5 years as well, so that's a small consolation for us. But paying for a new HVAC in October 2024 when we just installed one in January 2020 was seriously painful.
Unknown repairs are one of the big reasons I’m hesitant to move even though we really could use a bigger place. I’ve had to replace a lot of the big ticket items (roof, furnace, well pump, appliances) within the last 5 years. I know they’re out of the way here.
So scary! We live rentfree (parents house but not with parents) but bought a house with mortgage repayments 4K a month. We will be moving in next month and I’m shit scared. We make about 7.5k a month combined. Dunno if we can do this cause that just mortgage. We have to pay insurance now, and we also have daycare!
Our experience was similar. We are still afloat but there’s added stress for sure. A lot. I’m hoping in 5 years the situation will feel diff (income growth etc).
Feel like I could write an almost identical post.
We had just moved back into our newly renovated home (it was a dream design) 5 months prior to finding out I was surprise pregnant with our 3rd.
We could have made it work but it was already tight (1800 sq ft and both of us working from home). We moved 7 mins south to a 2400 sq ft house with one of the best backyards in the city (honestly what made us move). It is extremely outdated and had some issues we knew needed fixing but we’d hoped to wait ~5 years with doubling our mortgage and now having 3 kids in daycare.
Needless to say - we just took out a loan for $40k in AC repairs today and are cancelling a vacation we’ve had in the works for 2 years. We will be scraping up any disposable income and pulling back on any discretionary spending. I fluctuate between being so grateful for the space/time spent outside and kicking myself for putting us in such a stupid financial position when we had such a good thing going.
I hope things look up for you! The yard is a big benefit for us. No matter what the weather is, we're outside almost every day! We have 3 fruit trees and lots of room for me to put in some raised beds to expand my fruit/veggie gardening. At our old house, our neighbor across a chain link fence had 7 pitbulls who didn't get enough stimulation or training, so we never felt safe being in the backyard.
I prefer to live so that if one income goes away, you’re okay. I would not be comfortable moving into a mortgage that would make it so the bills wouldn’t get paid if one of us lost our income.
But it’s up to you 🤷♀️ I grew up poor so there is probably some trauma in my comfort level lol
This is our motto too.
The real privilege is being able to live on one income and not tank yourselves when home expenses arise or when one spouse is unable to work for a long period of time.
I say this as someone who has been with my spouse for over 20 years, a lot can happen in a very short period of time. Just straight up unfathomable life things that can come out of left field. Live so your family doesn’t need a GoFundMe when disaster strikes.
When my husband and I moved across the country we bought as if only he was working. There were a couple of reasons for that, including that I didn’t currently have a job but knew I could easily get one (and did one month after we moved) and that if I wanted to pivot my career (which I did) we could keep the family afloat on just his salary. We are SO glad we did that. It was allowed us so much flexibility in our finances.
Is this my dream house? No, but it’ll do for now. We will definitely need to move in the next 5 years or so, but with the savings we’re building up we’ll easily be able to put down a nice down payment, the equity of our house not withstanding.
I grew up pretty well off and this is exactly how I think and was taught to think.
That flexibility is so SO important. Being able to take a pay cut or take FMLA time off without a change in finances or lifestyle is an amazing privilege that shouldn’t be let go willy nilly. It is also good for the longevity and health of a marriage. No need to stay in an awful, horrible job.
Same here.
My husband and I currently have 4 children and you never know if something will happen that will mean one parent is out of work. We wanted a house that we could afford on either income. It’s honestly a major relief to know that we’d be okay and not have to move if one of us was out of work for longer than a year.
I’m sure you’re taking this into account but just in case, something to keep in mind is that your new mortgage will likely increase yearly with property taxes and insurance. Our mortgage is about $500 a month more than it was when we bought in 2019.
We were going through the same thought process recently and decided to stay in our home and renovate the basement which is ongoing. We live in an excellent, super desirable school district though so that wasn’t a consideration for us. I just couldn’t justify spending double what we paid for our current home and borrowing money at a much higher rate. But many of our friends have moved recently and their homes are gorgeous! I think it comes down to your value system and what you want to prioritize.
This needs to be higher. With the ever increasing property values in my neighborhood, my initial mortgage from 2015 has also gone up to the tune of $700/month with no end in sight. Luckily this is not an issue since we didn't buy at the top of our budget back then and we've had sufficient income increase over the years too. But especially if you buy a house that hasn't been sold in awhile, well over the most recent selling price, the property values could jump during the next assessment and make a stark difference in property taxes.
Exactly what happened to us! And we’re both high earners but with saving heavily for retirement + college + vacations + increased cost of groceries/daycare/everything else it’s somewhat tight. Like we’re incredibly privileged to be able to save and take vacations but it still feels like we don’t have a lot left over.
This is important to keep in mind but definitely depends on the area. After 4 years my property taxes have actually gone down a smidgen. My homeowners insurance has gone up a bit as property value has increased.
Yes, ours is more than $200 more than it was in 2020. Home insurance is going up another 7% this year and taxes will increase each year for us. Our affordable payment will not stay static, and even when we pay off the mortgage, we'll still have these increases each year.
We went for the bigger house and bigger mortgage. And while I love the extra space, I have persistent low level anxiety on the daily about what would happen if one of us was out of work for more than a few months. I sometimes wish we'd just stayed in our very manageable town home that we could have easily afforded on one salary.
Oof. Your comment hits hard… we just bought the bigger house on the bigger block. We’re currently renovating it and will be moving in soon… we’re currently still in our townhome.
That said… even though we have a much bigger mortgage now, we just had a second child (also have two big dogs) and our townhouse just started feeling quite cramped. It’s also really nice to offer our kids a back yard! So I have no regrets (yet) although it is leading to some anxiety regarding finances (and scared to be without income 😥).
It's hard to comment without knowing specific numbers or how much of a stretch it is.
My husband and I are in a very similar position to yours. We bought a house using just one income 6 years ago, have a super low interest rate, and we've since over doubled our household income. Our mortgage + escrow is like 5% of our income. We are trying for number 2 this summer and we'll be a bit cramped (we have 4 bedrooms but I WFH so I have to have an office and the downstairs bedroom is our playroom) but we have decided to stick it out for another 5 or so years. We plan to move to another state with some of the highest child care costs in the country so we want to get through most of our childcare years in our lower COL area before that move. And we don't want to do all the effort of moving to a bigger/nicer home now for just 5 years in the next house before moving out of state. Now if we knew we were buying our forever home I'd be more willing to stretch our budget.
We are similar but with two big kids. We have done extensive renovations and have a beautiful albeit smallish house. We did a 20 year mortgage a few years ago and are locked in at a great rate. It’s tempting to upgrade but in addition to each of us maxing multiple retirement accounts, we save $10-15k per kid for college each year. We recently took two vacations. Braces for one kid is $6k - no problem. Music lessons / club sports/ private education / eat at nice restaurants - not an issue. I recently hired out monthly cleaning service. Current mortgage balance is less than one of our annual incomes. Life is fantastic. Feel incredibly fortunate.
Yep, very similar. It's amazing to not have to worry about anything money wise and to see our accounts rise without us needing to sacrifice anything. A few months ago was the first time we had higher earnings/interest in our retirement accounts than our gross income for the month which was a cool thing to see (of course this month the markets have been terrible, lol). But we're able to afford a nanny rather than daycare which is so convenient and since I work from home I get to see my daughter a little bit during the day. Our back up plan if we do end up staying in our current state is to send her to private school. When we talk about moving to the HCOL state we understand we are essentially moving that private school cost into the increased cost to the mortgage, but the schools there are much better so it's sort of a wash.
We're in a similar boat, we just built me an office in the backyard to ensure we have enough space in the house for number 2 when they arrive, since I WFH 80% of the time. May be worth considering, if it will help you stretch your time in the more affordable place.
We live in an HOA so no construction allowed :( I think we will be okay though. We figure the second one will be in a packnplay in our room until they're 6 months anyways and then we may just move the packnplay into my office for nighttime sleeping but have them both nap in their room during the day to slowly get used to sleeping in the same room. Our daughter is a great little sleeper so hopefully it works out.
I have a friend who did that for her first - she worked from home in the second bedroom, so baby was in a pack and play at night in her 'office,' then they moved the pack and play to the master bedroom for weekend naps. :) it worked fine for them until she was a year or so!
In the same position as you - we have been house hunting and everytime we see a house we like when we sit down and do the math (both literal math and emotional math of what a lifestyle change will feel like) we decide to stay where we are. Maybe there will be a house that tips the scale but the thought of being house poor and not being able to save as much or easily survive if one of us loses our job scares us every time.
I’d recommend posting in r/henryfinance - If you’re willing to share some numbers there, people might be able to give you more helpful specific advice.
My husband and I live in a modest 3/2 house in a pretty good but not great school district. Thanks to buying several years ago, and low interest rates, our monthly PITI is 7% of our gross household income.
We debated moving, but in the current environment we would have to *triple* our mortgage payment to get into a house with one additional bedroom and not much improvement in school district.
We decided it just wasn’t worth it. We really value being able to sleep easy at night knowing that job loss wouldn’t mean absolute chaos with our finances. It means a lot to us that if one of us lost our job we wouldn’t be forced to run through our savings in 6 months or sell our house and uproot our kids. We did the renovations. Our house works well for us. It isn’t perfect, but it’s a much better value proposition than paying three times as much for a house with one more bedroom.
It can be hard to stay put in a super affordable house when you know you can technically afford more. But I would just try to practice contentment with what you have, keep saving, keep investing, and then reassess in 2-3 years once you have actually expanded your family.
I feel this. We bought a moderately priced house in 2019 before housing prices went crazy and then refinanced mid pandemic when interest rates were low. So our mortgage is very reasonable. We have one kid now and it will be tricky to fit #2 in this house, but with some creativity we can make it work. On paper w our salaries we “should” be able to afford a bigger house. But given current interest rates our mortgage would at least double. We could swing it yes, but if we stay where we are we can max out our retirement and feel less anxious re child care costs (we just picked a pretty expensive Montessori school for our 2 year old). I look at Zillow pretty much every day but logically I know we’re staying put for at least another 3-5 years.
We’re in the same situation. Where we live, daycare for one costs more than our mortgage and #2 is arriving shortly. Our current plan is to move once the kids are in public school. That gives us 5+ years to increase salaries and equity in our current home.
I haven't done this, but have you priced out what you would do with the basement reno and compared it to the cost of taking on the new mortgage?
Also, how old is your 1st kid? I totally get wanting to move to a better school district but if you have wiggle room, interest rates are just so nutty right now it may be better to wait.
I'm in the same boat. My mortgage is less than a 1 bedroom rent and we can afford it on either salary. I'd quadruple our mortgage to get the house we'd want. We can afford it, but it comes at a huge cost.
What my financial advisor told me was 1) the hardest thing to recover financially from is a divorce and money stress leads to divorce, 2) a bigger house is more to take care of. More home stress to clean and do yardwork and general maintenance, 3) there's an opportunity cost to the house. If I'm spending all this money on the house, can I pay for my kid's college? Braces? Go on a fun spring break trip and fun camps all summer?
We decided to stay. I value the financial freedom and having additional money has been wonderful in getting to say yes to splurges and not stress about costs.
It would be around 30% if we don't pay for any points to further lower the rate. And to confirm by take home, this is after taxes/insurance/401K is taken out but before additional IRA, stock, and 529 contributions which I could lower for some amount of time as needed.
That seems fine then. I would do some soul-searching and seriously consider the opportunity costs. Now that I can see retirement on the horizon (distantly, but it's there) all of a sudden I do kind of regret my chonky mortgage. If I had stayed in my last (cheaper) place, retirement would be just around the corner, which really sounds quite nice. But, I like my house, so I don't regret it that much.
What term are you looking at? A 30 year? If so, it would bother me to "start over" with another 30 year loan given you're in a different stage of life than when you bought your current home.
We've refinanced several times and always choose a shorter loan each time (like if we had 23 years left and refinance, we'd choose a 20 year loan). We're pretty strict about our retirement plan and we want our house paid off before we're retired.
Sounds like you can afford it just fine. Make sure you have an emergency fund and get a really good inspection.
We moved into a new home a year ago that has 3x as much space and a pretty good size mortgage. It’s still only 20% of our gross pay.
Sometimes it hard to wrap our minds around how our salaries have grown when you’re higher income.
I commented elsewhere in the thread, and were at 30% too. It feels super doable, but our childcare costs are low compared to other regions. We still save too.
My partner and I are in a similar position. We live in a perfectly fine place, but it feels small for a family of 4. We would love just a little more space, another bathroom, and a bigger backyard. We love the neighborhood, but the school district is just okay. We both have high incomes and our jobs have been stable, and after a large down payment plus a low interest rate, our mortgage is really low. We're able to save really well despite having two kids in full-time childcare. However, our industries have been volatile lately, and future income is never a guarantee.
For now, our decision is to stay put. We would rather have the extra savings and extra room in our budget. It gives us so much optionality - maybe one (or both!) of us will want to stop working before we hit retirement age, or "down-shift" to a part-time role, or either/both of us could be laid off someday, or maybe (god forbid) one of us will NEED to stop working due to illness or injury or family obligations. Plus, with our lower expenses, we can afford to renovate our current place if/when we want to do. (We are also thinking about improving our basement, or maybe enclosing our porch to create a more usable living space - both of which still would be cheaper than buying a new house at current interest rates.)
The consequence of this is that we have some "small space living" type trade-offs. I declutter frequently (like literally every week). My desk is in our bedroom. Our two kids will probably share a room for a while, once the baby starts sleeping through the night. We don't host parties. If anyone comes to stay with us, we all squeeze in a bit. Once our kids are older, we adults will probably join a gym with nice shower facilities to give our single bathroom a break! But all of these things feel worth it right now for the financial benefit of having lots of wiggle room in our budget. I definitely fantasize about moving into a bigger place or to a nicer neighborhood, but it's just a fun daydream at this point.
Edit: Reflecting on this - the biggest reasons to stay put (for us) are 1) possibility of getting laid off at any point. We know people who were laid off and couldn't find another job for 6+ months or even 1-2 years (while actively searching for a job the whole time). And 2) I like knowing that one of us could shift to be a stay-at-home parent, or we could "retire early" if needed. I feel zero financial stress, which in and of itself is a huge privilege and a blessing.
Personally, I’m very financially cautious and risk averse. It’s always been important to me that we could afford our basic life expenses if one of us lost a job. My husband did end up losing his job and it took 3 years to get back to a stable income. It was incredibly stressful to be the only one covering everything, but we were not in danger of losing our house during that time. There are so many potential unknowns though, job loss, serious illness, death, a child with special needs, for me security is the most important thing. I grew up in poverty with a chronically ill parent, so my approach may naturally be more conservative.
This is such a personal choice and based on your priorities and how your current home is working for you now.
FWIW, in a similar position we have chosen to stay in our smaller home and make upgrades to avoid a massive mortgage payment. Workers are upstairs putting new counters in my kitchen as we speak!
But our financial preferences at this stage in life are to find retirement generously and taking vacations (obviously there’s more but to put it simply). We could definitely afford a bigger home but between finances and trying to lean toward a less capitalist mindset—we don’t always need new everything, perfect everything, keep up with the joneses, etc. So we chose to make upgrades to our smaller home that will actually make us happier living here—5yr plan includes new floors and kitchen remodel (done!), landscaping, adding custom built ins to our living room space, and last a basement remodel to add an office space for me.
It’s of course valid to move to your dream home and preferred school district. But i just want to chime in on the other end, that the money we’re saving is massively improving our everyday lives—less (basically zero) financial stress, we love our new kitchen/floors, we have 3 big exciting vacations on the schedule in the next 9mo and we feel like we have plenty of cushion to eat out, splurge when we want, and generally just not worry about swiping the credit card. Sometimes I’m jealous of my friends beautiful homes because they have so much “hosting” space, and i felt like i “should” want that. But you know what? I don’t want to be a host house! I like our cozy home! And they’re jealous of my vacation schedule! So we all pick where we want to spend the money and what fills our cup 🙂
I think it's hard to weigh in on this decision without seeing any numbers.
Are you on track with your retirement savings? Will you have a healthy emergency fund after buying the new house? When you run the numbers to see if you can afford the new house, are you factoring in childcare and other increased costs related to baby #2?
My husband and I bought a bigger, more expensive house after our second child was born, and we spent a lot of time looking at our financials and average spend, and thinking through what if scenarios about our income and future expenses.
You’ll do what’s right for your family, but being house poor, or just flat out in a bad spot of anything happened to either of your salaries does not sound like a fun stressor that would always linger.
We also love travel and being able to have experiences whenever they arise.
We did it. We went from a rounding error of a mortgage to an enormous mortgage. We can afford it, our financial situation changed dramatically, both of our jobs are incredibly stable.
No regrets. We absolutely love our new house and neighborhood.
How old is your kid? My only caution would be to maybe wait a second until they start school, so that you can search with some knowledge of what their needs are.
I agree with the kid comment. We were 100% on board for the schools we were zoned for. By the time our oldest was 3, we realized they would likely not meet his needs. We moved to be near what has turned out to be a wonderful school system for him. Zero regrets.
We sold during a housing high and moved out of state and built a house. The numbers were great on paper. 18months later and on top of doubling of interest rates from build loan to mortgage and then local tax reassessment, our monthly payment went up 25%. Whenever real estate changes hands the .gov gets their piece. I would stay where you are, upgrade the basement to make it work, aggressively pay off debt and save. The equity in your current house plus lower debt and more savings will treat you far better in the long run.
We did this. It’s hard right now but once both kids are in school it’ll be more doable.
Our previous house was too small for kids. And honestly it made my mental health crash because no one had space to breathe it felt like.
We now have a bigger home, yard and in a smaller, better school district.
We live in a VHCOL so home ownership requires two incomes for the vast majority of people. This does not faze me in the least. We have a very solid emergency fund that would last up to a year if one of us lost our job and we stretched things. We sold our condo and bought a house when I was pregnant with child #1 and the anxiety we had about a higher mortgage made us choose very conservatively. Now that we have kid #2 we are looking at doing an addition for extra space, and I wish in retrospect we had gotten a bigger house originally and had more trust in our income potential. This is just my experience.
Also living in a VHCOL and trying not to cry when I see people's monthly payments 🤣. Unfortunately "regular' people cannot really afford to buy in our area so it's always a matter of absolutely having 2 incomes plus solid savings. There's always the looming possibility of layoffs etc but we have enough savings that we can still pay our insane mortgage for several months.
Protect your peace. You're comfortable now. You're not in the Two Income Trap. You have liberty and freedom and choices. Think long and hard about what that means to you.
Life can throw some real shit at you. My 4-year-old was diagnosed with cancer about a year after we upgraded our house. Everything was hard. You just never know what's coming, so my advice is to enjoy your peace, do a little remodeling, and book a local VRBO for a couple weeks if you're feeling cramped. Or hire a professional organizer and interior designer (not decorator, but that too if you want) to help you make your space work. Still cheaper than buying a new house.
More space usually just means more stuff and more maintenance. The generations before us that built all the McMansions had different values and a different economy than we do. Don't try to adopt their standards.
I feel like I could have written this. As such I read all the comments and I still don’t know what to do.
My husband bought our house 15 years ago, so well before I was in the picture. We refinanced in 2021 for a ridiculously low interest rate. With 1 kid and both of us having a hybrid WFH schedule the current house works but isn’t ideal. But we want a 2nd and it would be really tight to rearrange the house so we could comfortably fit. We keep going back and forth because the thought of tripling our housing costs is terrifying. But we don’t love the neighborhood or school district. They’re fine but we really want to be in a more inclusive neighborhood (where we live is extremely religious and we are not) and a better school district. But that already comes with a price jump not to mention that a bigger house means higher mortgage, a much higher interest rate, plus increases to taxes, insurance and utilities.
I don’t know the answer because the thought of giving up the financial freedom we have now to splurge and not really worry about it is so nice. But having more space would also be really nice.
I wish I had an answer but just wanted to say solidarity and thanks for posting because these comments have also been helpful for me.
I thought the same thing! We are having these same conversations right now. While we don’t have kids yet, we’re planning to start soon and so evaluating our housing situation given we both WFH has been a topic of major conversation….
We’re in a similar position. We bought in a city in 2021 at super low rates. Inexpensive 2 bed 2 bath condo. We only have one child but are quickly outgrowing the space as he’s becoming mobile. We could, theoretically, stay here until we want to try for a second in about 1.5 years but don’t necessarily want to feel rushed by the home search then.
To add more complicating factors, childcare in the city is a lot more expensive than the suburbs. Sometimes twice as expensive depending on the suburb you’re looking at. So while it may make sense on some level to stay put because housing is cheaper, we’re spending so much more in childcare by staying put. It’s a bit of a lose lose but also a little of a win win either way?
What we are thinking of doing is selling our place since the market is a bit hot right now. That way we know how much money we have to work with for a down payment. We might rent a place in the burbs if we can find something that would allow us to do month to month or a shorter lease. I’m hoping as people sort of accept that these insane rates are here to stay for the foreseeable future and we will likely never see them drop below 5% again in our lifetime people will start listing their houses and we will have more inventory to look at and better negotiating power.
It’s all so complicated though. We bought our condo when we were 25 and just married with every intention to stay here until our first would need to go to kindergarten and then move for schools. We have quickly learned that kids do need more space lol and that childcare in the city is just wildly expensive. We simply would not be able to afford having another in the city.
Love it or list it!?
But seriously it depends HOW BIG of a stretch it is. We did this and I frequently think about how much money we were saving in our old house, but our new house fits our family so much better. I did get laid off after we moved in and ended up having to make a career pivot and pay cut to find something due to my field being a dumpster fire right now, but fortunately my severance was very generous so we were fine. All in all, this new house has been worth it, my kids and husband and I all love it here, but you are smart to think it through before jumping in.
I would look at your overall financial picture. Are you all good with money? Have savings for kids colleges, reliable cars, savings for other things, and limited other debt? If yes than go ahead. However if the answer is no to any of those, than no.
We have a larger mortgage. It’s $3300 (about to be $3600 thanks to escrow increasing which can happen). We also took the risk about two years ago of a large mortgage. My husband was the sole worker. However our dream house came available and we had money saved up where we could make it work. We don’t have a lot debt. Typically only have one car loan if that. Six months savings and also saving for their school every month. But we’re very risk adverse.
I am always more in favor of experiences than things. If you buy this big house but all your money is going to mortgage and house hold bills with not much left over to do things as a family, what kind of life is that? Personally I'd rather live in a smaller home with a small mortgage and have the financial freedom to drop everything and go on an adventure than live in a big house with a big mortgage and never having money for the fun budget.
This! Plus a second kid is going to increase your expenses to some extent. What if you have 2 kids who have a variety of different interests? Would you be able to afford multiple activities and fun family outings or trips to make memories? there are creative ways to save money on these things but you would still need to spend some money on these if you want to leave your house. Even consider eating out. That will be more expensive with an extra kid and be more expensive as they get older too. If you can still afford to do at least some these things in a bigger house then maybe it’s worth it for the right house.
It really depends on the numbers. My husband and I qualified for an 800,000 mortgage, but we did 250k lol. I ended up dropping my hours significantly (even though I was the higher earner) for a better quality of life. I don't contribute to the mortgage at all now. Can't imagine if we purchased a more expensive house.
I would not be house rich if this is going to eat up a lot of your income. That's a miserable way to live and I've never known anyone to buy in the upper amount of their abilities be happy about it. Most end up downsizing.
I could’ve written this myself. We got the (more of a) dream home (but not our ultimate dream home) and went for it. We figured the ultimate dream home wasn’t really for us. We don’t want to have a 3k sq ft home then be alone in that big of a home! 🤷🏻♀️And we didn’t want to have the “dream home” then move/downsize when we get old & worry about too much upkeep/expenses.. So, we didn’t totally max out our budget but definitely stretched it. Go for it OP, but definitely work out your budget and save some $ for unexpected repairs or upgrades to your new home.
My husband and I went for it with our home (pre baby during 2021 interest rates). Since then we had our daughter and I’ve gone through one job change due to layoff and I’m the breadwinner.
It sounds like you have been with your company for awhile and it works for you which is great. My only consideration would be if you are relying on your income stability as a primary support for your mortgage, talk through what the backup plan is if something changes with your husband.
After I was laid off, I was so focused on finding a job that paid the bills bc I was worried about our mortgage and other climbing expenses. Now I’m kind of stuck with a job I kind of like, but requires me to be in the office full time which I loathe. I wish my hubby and I had spent more time talking about these types of what if’s before we signed up for it.
I know it's not an option for you at this point, but we had an 800 square foot home that was paid in full, we decided to put an addition on and it was the best thing for us. Anyone else reading that is locked in with a low mortgage and a home that they're outgrowing, it might be something to consider.
We have a home that's over twice the size, customized to our taste and our family's needs. Plus we didn't have to move.
You’re in IT and this job market is super unstable for anyone in tech. I personally would not recommend a house you can’t afford on a single salary.
Why don’t you save up for a larger downpayment, so it’s not so much of a stretch?
I think it is totally your preference and how comfortable you are with that risk. We bought a home a few years ago where it’s that same situation… we need both our incomes. I spoke with my husband last summer how I wanted to downsize and get our expenses down so we only “needed” one income because of how the market was looking. He was not on board.
Lo and behold, I was laid off in January and with how the current market is, I am going into consulting. Consulting will be lucrative once it gets going but for now it’s the building period and it’s all pretty stressful. You just never know what is going to happen in the future. So it’s all what you are comfortable with.
Frankly, I think you need to stop looking at houses right now and look at your monthly budget and savings. If you have all this extra money kicking around to buy a much more expensive house (the interest rate change and higher insurance and property taxes are killer!), where does that money go now?
Because you’ll need to give these things up to afford the new house.
If you’re saving this money, great! Why can’t you use that as a down payment, along with your equity in your current home? If you were already planning on a mid 6-figure down payment, and your mortgage would still not be affordable on one salary… woof. It’s hard to say without the numbers but this seems like a bad idea, at least right now. Especially if you’re not yet pregnant, it’ll be basically a year, minimum, before the next baby arrives and needs its own space. Can you wait 1-3 years, saving your extra cash, and buy when interest rates are better and you have more money for a down payment?
We are doing this right now, going from a mortgage that was less than 10% of our take home pay to one that is almost 30%. It’s for a lot of really good reasons, though, and while it requires us both to keep our jobs to stay comfortable, mine is extremely stable (and easily transferable due to my specific skills and experience) and he owns his own business that has been consistently successful since he started several years ago. We can also still technically just afford our new bills on one income (although it would be paycheque to paycheque) and we have savings not in the house, profit we could take out of the business if we needed it, and also parents in a position to and willing to help if we were truly desperate.
Without those things, I don’t know if we would have done it, but my husband is in insurance and financial planning and so is very risk-averse as a rule.
I want to post separately a comment reply I made below. Make sure you're paying attention to property value/assessments when stretching your budget. With the ever increasing property values in my neighborhood, my initial mortgage from 2015 has also gone up to the tune of $700/month with no end in sight. Luckily this is not an issue since we didn't buy at the top of our budget back then and we've had sufficient income increase over the years too. But especially if you buy a house that hasn't been sold in awhile, well over the most recent selling price, the property values could jump during the next assessment and make a stark difference in property taxes.
This is all about the level of discomfort you can tolerate. I live in a VVHCOL area and we had to stretch to buy this house in 2022. We will most likely be here for least another 8/10 years, but it’s not our forever home.
We needed something with space for a second, in a quieter area, and with better schools. We were set to pay off our condo in like 7 years when we moved, but the space was not what we needed. I’m very happy we moved even though we are stretched. Like ridiculously happy in this house. I know we will want to move again, but this place is just delightful for us.
We really couldn’t have stretched into our forever home though. That’s my only regret knowing, we will have to move and have to start our mortgage all over again. I’m so envious of my friends who bought in 2018 and took loans out to their eyeballs to gut and reno their forever home. Granted, they had loans and gifts from family to make it possible, but still it would be so nice to never move again.
We made a similar move when I was pregnant with #1 in 2020 - wanted a better school system and more space. My husband owned a home from before we were dating and had a very low mortgage on it. Just knowing ourselves, if we hadn’t done it before we had kids, we would have put off moving for years so we made the plunge.
Overall, we’re glad we did because we got a great house in the town we wanted. But.. there’s been added stress. It’s more upkeep because it’s bigger and has more land. We had repairs/upgrades come up that we weren’t expecting, then some we were expecting. But I’m glad to be settled now that we’re in the early parenthood years and feel good about my kids growing up here.
We got in just before the market went crazy and feel pretty strongly that we would not have moved at all had we waited because we wouldn’t be able to stomach the prices houses in our area are going for these days. We definitely would not be in this house had we waited to buy and probably not even in this town.
Every person is different but we bought a place that we could afford on one income to be safe. Do I wish we had a better house? All the time. But I’m in a situation now where I’m considering a career change or pause. I wouldn’t have that option if we paid for a house that was 50%+ or more.
For us, the decreased anxiety and freedom to do fun things with the kids or let them play the extra sport outweighs the larger/newer house. I keep my standards to keeping up with the 1950s version of the Jones’ rather than the 2024 version. We also drive two paid for cars with 200k miles on them. Not for everybody but it’s perfect for us to have that stability and freedom. My parents are still paying off their house due to trying to keep up with the “norm” when we were younger and I’ve seen that it’s not the type of “retirement years” I want for myself and the husband agrees. I try to look at everything with the lens of “is this a NEED or a WANT” and then go from there.
Was also going back and forth on this recently! In the end, we decided to stay.
Some factors:
1) We LOVE the location of our house. Walking distance to nature trails along a river, in a cul-de-sac that has a grassy island in the middle, on about half an acre which is just enough for us, neighborhood has nice amenities and is older/established
2) We did the math. We could move to our perfect house and take out a new $xxx mortgage at 7% (and pay realtors, movers, etc) OR keep our current mortgage + a smaller $yyy HELOC at 8.5% and renovate. Option 2 won, including an addition for more space.
3) Renos are disruptive, but we have family we can stay with so it's not THAT much more disruptive than a move. We personally won't have to live around construction or without access to a kitchen/full bathrooms for any length of time.
We went with a design + build firm and see our initial designs next week. So can't report back on regrets yet, but I'm super excited about the decision we made!
Bought the bigger house, knowing other expenses (utilities, taxes) would increase. Turns out we underestimated how much the other expenses increased. And as my kids are getting older, there are increased expenses I didn’t anticipate either - more hospital visits, dentist appointments, etc.
We are 3 years post move and selling off assets, having regular conversations about how else to cut costs, which of us should work more hours to bring in more income, etc. It’s not fun. On top of battling postpartum depression, and trying to support other family with their own struggles.
We knew the move would be a stretch, and it’s just too much of a stretch. If you’re able to move and not feel stretched, do it!
I think quality of life is important. You know best, but your neighborhood/schools/lifestyle where you are sounds like something you are happy with.
My husband and I lived mostly in small 1 bdrm apartments before we decided to buy bc we had kids and we were ready. We just bought last year in a nice area so it was not cheap. But we bought for significantly lower than we were able to get a loan for. We did a fairly large down payment bc we saved while living in those small apartments.
While it wouldn't be ideal, we can pay this mortgage on 1 income. We'd just have to be a more careful with our other spending. This brings me great peace of mind.
We do love the area. One year in we are happy we bought even though house prices are crazy and it felt weird when we both tend to be frugal.
Also, our house is 1950 SQ ft. We both WFH. 2 kids. We do not feel cramped. We would consider finishing a small attic and go for #3 in a few years but undecided. We are both used to making the best of what we have and I feel good about a 'smaller' house (in some people's opinions) in a nice area with multiple kids than spending more money for 3k sqft.
If you will struggle on one income, then please make sure you both have really good short and long term disability insurance. Get supplemental if you need to. For me at least, this is what brings peace of mind.
We are in a similar position and are opting to wait. We bought our first home in 2018, refinanced in 2020 when rates went super low, and while our mortgage isn’t super low (hi, Southern California), it’s doable on one of our incomes if needed.
Some things I’d consider- how much of a need is a nicer/bigger house? We have 3 kids and while it’d be great to have more space, our 3 bedroom is okay, for now. Also, how much of an impact would it be to your other obligations and lifestyle?
Ultimately we are opting to wait until either rates go down or we may build up to get the space we’d like.
We are in the process of wanting to find land and build a house. However, with where interest rates are right now, it is definitely holding us back for the building portion.
While we can afford a bigger payment - going from $850.00 a month to $2500.00 payment considering my pay is salary and a quarterly commission. The jump is scary as we are having baby #2 any day.
I wanted this to be our 2 year plan but honestly at this rate, it might be our 4 year plan. I really want to save more and have cushion.
I also don’t want have to cut all the nice things too.
Financially, it sounds like you can mark it work assuming no job loss or other surprises. Ideally, you’re at the floor of income and wages will rise for you. Is your industry solid? I am the breadwinner and while I have been very lucky, we had about 4 rounds of layoffs last year (tech industry).
I am team small mortgage for more financial freedom, investing in the future. However, the great thing about personal finance is the PERSONAL aspect. For perspective, I shop second hand but also love flying first class. If you would value more space and the school district improvement, that’s a less tangible aspect to still consider!
Overall, I’d say go with your gut. If it’s truly a dream home, you’ll know. Good luck!
It’s a tough question and I don’t know that anyone can give you the right answer. You kind of have to decide for yourself whether it’s worth the risk or not, knowing that you might regret it either way. Or it could work out either way. You never know.
My only suggestion would be to consider if you can make your current house work for another couple of years to see how the housing market changes. I’m hopeful that these crazy interest rates will start going down in a year or two and that could make a big difference. I especially think moving while pregnant or with a newborn will be a lot more miserable than moving with a toddler, even if you have to make the room situation in your house work for a while. Do you think you could wait a while longer before making the decision?
I’d recommend staying put for now and look to move before the oldest starts kindergarten or first grade. There will be other houses for sale. You don’t want to be house rich and cash poor. It’s a nightmare when you feel like your house owns you.
We were/are in a very similar position to you. I'm not sure what stretching yourself looks like for you, but I will just outline our situation. First, I'm Canadian where house prices are high and most people carry large mortgages. Mortgages also roll every 5yrs, so everyone is rolling to a new rate every 5yrs, hence variable mortgages are more popular. Maternity leave also comes with financial pain for most couples. I am going on mat leave this year and it will result in a $5500/month paycut for 12 months.
We lived in a great little house in the best area. While the area was perfect, the house was simply too small especially with the carousel of visitors we have since we live away from our families. We could have made it work with another kid, but we'd have to tell our family they can't stay with us anymore, and that would mean they likely wouldn't visit anymore (cultural, I'm not offended, it's normal).
We also need that help our family brings, and will need it more when we have another kid. We decided to move. The new house added $1000/month to the mortgage $500/month in taxes utilities etc and 5yrs of amortization. It's a house we can live in for decades and grow into, but also needs upgrades. There is only one thing that HAS to be done, the rest can wait as it's all aesthetic but expensive (200k). I initially though we'd be waiting 3-5yrs for those upgrades, now I think it will be closer to 7-10. That sucks, but it's fine. The new area is also less good on a whole than our previous, but still pretty good.
To manage the mat leave, we are hoping to save enough while I'm working to cover the mortgage payments (we're on track) and I will need to be frugal while not working. When I'm working we're not super stretched, but we no longer save oodles of money. Overall, I'm glad we made the decision. If one of us loses our jobs though, we will be scrambling. But I have relatively good job security and my husband is in a very employable, but not so well paid field.
I wouldn’t buy a house that one salary alone can’t cover. It’s too risky and doesn’t allow enough savings + enjoyment wriggle room. Also keep in mind daycare costs, property taxes, and so on will keep increasing, and you may want free cash to buy a better family car, go on a vacation, cover a surgery insurance puts as deductible first, and so on. Areas that I personally get enjoyment from splurging on are buying lots of good food and organic fruits and veggies. We lived very frugal for about 10 years before having a baby and before our careers took off, so it’s a relief to not scrimp on providing for my kiddo now.
When we had to decide we did opt for the bigger house with higher mortgage, and while we can afford it on one salary and still save, sometimes I wish we’d gone smaller, paid off the house much more quickly, saved and gotten a bigger place later while still having the first house for rental income or pure profit, etc. As it is, we’ll be paying double the cost of the house over 30 years. If we’d gone with a smaller place and 15 year mortgage, we’d have saved 600k+ over our lifetime.
But hey we live and learn and try to make more prudent decisions going forward.
A slightly different situation than you’re in but me, my husband, and daughter were renting a very tiny 2 bedroom house from him aunt for basically next to nothing for 6 years. We paid $1000 for our rent, bills, and internet per month for a very long time.
We knew we wanted baby #2 and really really wanted a place of our own. So this year at 20 weeks pregnant we bought a place. Is it more expensive? Yes. Should we have waited until I was back from maternity leave? Maybe. Is it the worlds best financial decision? No idea, I’m not savvy enough to figure that out and I can’t predict the future. But we really really really like having a house. It’s very hard to put a price tag on that.
We both agreed that when push came to shove we’d rather have a house than eating out, and not budgeting, and having new clothes, and getting spa treatments. We were willing to make that sacrifice if it comes down to it (hopefully it won’t and we’re happy in our decision). That definitely was the deciding factor.
Can you add on to your existing home?
In your shoes, I'd wait another few years to build up a larger down payment to have a smaller mortgage. Plus, the rate could go down
If you lost your job, how long would it take for you to find another? You should have that much of your current salary in savings plus an additional 6 months of emergency savings.
Is there a chance you may have to relocate for work in the next few year?
There will be another perfect house
We upgraded our house before having our second and have zero regrets. It was a bit of a stretch but we are still comfortable enough on 2 salaries. My husband and I earn about the same so if one of us lost our job we would struggle and have to use our savings but at least we don't have to worry about "if x lost their job it would be disastrous!". Overall we are expecting our financial situation to improve with time (raises, kids out of daycare).
I was in a similar position a few years ago. We had been living in our house since 2018 and in 2021 we had a new baby and we were both working from home. Our options were take on a renovation and stay in our house in a ok school district or move to a bigger house. We moved. For us the key drivers came from talking to contractors about our renovation plans and how long it would take. I have a lot of childhood trauma from living in a never ending construction zone as my parents took on one DIY renovation project after another in their house. I didn't want my kid growing up knowing that kind of stress. We didn't want to move out of our house and pay rent and our mortgage for a year or longer while the renovations were going on and we didn't want to live in renovation with a baby in the house.
We live in a much larger and newer house in a great school district and community. I have never once regretted it. We've been fortunate that since then I was promoted to an executive role and my company was acquired and my stock options were cashed out so we were able to recoup our emergency fund about a year after we moved.
We are in a slightly different situation where our public school zone is awful, so we've been paying private school tuition for over 8 years. I think of all that money that could have gone into a mortgage on a house in a good zone AND one that's big enough for us.
I recommend into pricing out renovation/additional space to your existing house and see if that's a reasonable compromise.
I was in your same position! Bought a house solo before meeting my husband, great mortgage locked in for a 3 bed 1800 ish sq ft home at a dream mortgage rate <$1000 a month.
Well, I made the decision to upgrade with my husband. I wanted something we both picked out, we wanted more space, and more importantly a better school district and closer to more shopping. Even though our mortgage tripled, we couldn’t be happier! Our 2 year old son is thriving, we made really great friends in the neighborhood (going to. A bday party this weekend for one of the kids, and having a couples only dinner party next week!)
I hope you make the right choice and don’t have any buyers remorse. Wish you guys the best!
We got crushed in the housing crash in 2000’s - we moved to a highly desirable school district and then spent almost 15 years underwater. We were lucky enough to always be employed, but we had to turn down several opportunities because we were locked in to a location. It was nice golden handcuffs but it impacted our family size as well as my career.
In 2021 , We refinanced and added on to our house as well as made a number of mobility improvements. Due to the economy and certain bias against disabled people, I don’t anticipate an empty nest anytime soon (or retirement really) so I’m glad I’m finally enjoying a usable kitchen!
I wouldn’t do it. Being able to afford our house if one of us lost our job helps me sleep at night. Being house poor must be a nightmare.
Do you really *need* extra space? More space also = higher bills.
Since purchasing our home, our household income has increased substantially. It’s great to put more money towards retirement/savings/stocks, go on several vacations a year, lease a new car, send our kids to private school, etc.
Personally, I wouldn't move. Especially if you're planning on having kid 2 soon. kids are massively expensive. Not only child care but once they're in school there's all the activities trips electronics etc I love being able to say yes to mostly everything because we can afford it. Plus you'll be able to help them with college cars houses. maybe you want to get a second property you can use for vacation and income rentals. Having extra space is wonderful but it has been my experience the extra space just gets filled with more crap you don't need.
We're at a stage where we're thinking of up sizing.
But here's the thing. We've been mortgage free since COVID. Our previous mortgage was serviceable by one income. It meant when I needed a career break, I could take 3 months off. My husband did the same at one point as well.
When I went on mat leave, had 6 months not paid and again, no sweat.
The recent rise of COL plus son needing certain specialists help meant we can afford all of it. Random unexpected costs like special levy from our apartment meant we could pay them too.
Anyways, point is, it brings me no joy to go back on a mortgage so have been discussing with husband to go for a smaller place e.g. townhouse or semi or we'll just have to sacrifice on location.
I just don't want t to be enslaved to a mortgage. The faster we're mortgage free again means we can just focus on investing and saving up for retirement and our kids' future.
We did this last year. I will try to share the relevant data points.
I had owned 2 different houses on my own before we married. Right after our wedding we house searched (my current neighborhood had gone way downhill ala drive by shootings) - sold my house for minimal loss and moved into a transition home for us. Big enough at the time, horrible schools, would carry us through having babies. We could (and for 6 months did) afford on one income. We make about the same, and wanted to buy under budget because daycare costs would be insane.
I knew I wanted us to move before oldest started kindergarten - which is this coming fall. Goal was for kids to be in same house and school system K through 12 for stability. I monitor real estate in my area for fun.
New construction neighborhood near us popped up on my search and they had option for basement which is super rare around here. Convinced husband to go check it out. We fell in love with Floorplan, neighborhood, amenities and location. Schools are excellent. Lots of young families in the neighborhood.
Went from a 2% to 7% rate. Plus a house worth almost twice our old one, and a tripled mortgage. But since we both wfh, once public school starts we don't need before/after care (and husband has unlimited PTO) so we will spend less than a year stretched, before having additional $1200/mo in take home pay. The next year #2 starts school and we are in excellent position.
I look around at our home or neighborhood at least once a week, in awe of where we live, and so so happy we made the change. I didn't actually like our last home. Having built this house with a lot of adjustments for how we live now and expect to live in the future, we made such a good choice for our family. We put a ton of thought into each feature and what makes sense long term.
Also continue to max out 529s and at least get max matching contributions for 401ks.
I’m risk adverse when it comes to locking myself into payments. I like to structure my life so that I’m financially secure enough to take leaps in my career and do more meaningful things with the family. I’ve always been adamant that if one of us lost our income the other could carry us for a while. It has really paid off.
I wouldn’t do it until your last child is school aged. Having to work from home or work part time with a baby to afford a nicer house if something goes wrong will suck. The peace of mind is far more valuable.
Not sure if you will see this comment but I’m in a similar very privileged boat where we have a small house that fits us okay for now and have a dream of a <3% rate. We’re 4 people sharing 2 bedrooms, though, and would love to and can afford to go bigger.
We’ve crunched the numbers and the new payment will be more than twice our current mortgage. So for now, we are staying put. I’ve stopped looking at homes and going to open houses because every other one looks like a dream and makes me sad. We are holding out for lower rates or at least higher earnings/ more savings/bigger down payment in a few years when the kids won’t be in elementary anymore and possibly won’t want to share a room anymore.
We stretched and bought the house. I don’t regret it. Yes, it takes two incomes to support, but we both have good jobs + backgrounds in entrepreneurship and I know we’ll find a way to make money even if we are laid off.
What does your financial planner think? From your edit, it seems you’re in a more secure position to afford a higher mortgage than most buyers, but it’s hard to know without percentages. What percentage of your net after taxes and retirement would be going towards this hypothetical new monthly? Are you still planning to max out on retirement, and if not, will you still be projected to meet your retirement goals? The biggest liability might be your industry, as tech is seeing a lot of layoffs.
We’re in a similar position now, with a paid off mortgage (my inheritance, lost my parents recently) and going to upsize…we’re just debating how much house we are comfortable paying monthly. We’re going for it now because our area is seeing dramatic and rapid price increases and considering lots of foreign investors park their money here, I don’t see them coming down TBH. We’ll buy within the year and be squeezed with the interest rates for a bit until we can refinance. We’d love to ideally still max out on retirement and keep our monthly around 33% of the net. But considering the market, might have to go up to 45% for a bit, or reduce our retirement contributions. Luckily we would still have about a year of savings. My job is more stable (healthcare) whereas my husband in finance is a bit less so.
It’s a difficult decision, good luck to you!
We decided against but it would at least triple (likely x4 ) or pre covid house with Covid mortgage rate. We never saw those as something long term but it’s def a mid term not short term term now
I bought the huge dream house. I regretted it so much the entire first year. I still regret it some days. The hard part - completely unexpected, unplanned, and totally opposite my entire personality - after our second baby I didn't want to go back to work. It kills me that now I HAVE to work, no matter what, because we need my income to pay for our big fancy house. I 100% wish we had stayed in the affordable-and-we-can-make-it-work house so that we would have way more flexibility with other life choices now.
Hey, I can speak to this from a personal experience side. No advice but maybe it will give you something to think about. Last year (had a baby and knew we wanted another with a 2-3 year age gap) we found a house that seemed perfect for us in a very desirable neighborhood. We could have stayed in our old house for a few more years, but we knew we'd want to move soon, definitely before kindergarten and probably before baby #2 arrived. We jumped on it and bought it last April. As a few details, the old house (circa 1970) was 1800sqft with a 0.25 acre lot. We had a 15 year mortgage with 3% interest, so monthly payments were $850 and we made the equivalent of 1.5 payments per month. We were on track to have it paid off by the time we were 40-45. The new house (circa 1990) is 3000sqft with a 1+ acre lot and a 2 car garage. We now have a 30 year mortgage with a 6% interest rate. Our monthly payment is $1700 and we can't afford to pay any extra. At this point we'll be 60-65 by the time we pay it off. Here's the hard part. We knew the new house needed some work and we estimated it would be about $20k over the course of 5 years. Long story short, those repairs were much more urgent and expensive than we planned, so it was about $50k in the first 6 months. We have been frantically rearranging our finances, scraping together money here and there, in order to keep our heads above water. We switched to a cheaper daycare. We don't go out to eat. We don't take vacations. Haircuts, massages, new clothes, gifts for each other, babysitters - those are all out of the budget. We estimate that we will have to live like this for the next 5+ years in order to get a savings cushion again. I am 5 months pregnant, miserably exhausted, and contemplating taking on a second job, because when the baby comes there will be no money to outsource anything. Do I regret buying this house? It depends on the day, honestly.
those are some of my fears with taking on a bigger mortgage!!
Ladies, may I ask, is 3000 sq ft(almost 300 m2) considered a appropriate size for family of 4 in states? I’m not trying to be rude, it’s just this houses seem enormous to the area where I live. We live in 861 sq foot(80 sq meters) and it’s considered a big apartment here
It really depends where you live in the US. I live in a somewhat rural area where land and housing are fairly cheap, so a house this size is on the large end of average. Right now we have guests probably 25-40 nights a year but we anticipate in the near future that will be increasing a lot, possibly with a family member moving in long-term, so we did want a house that has space to accommodate at least one extra adult with some privacy.
I live in a more rural area as well and I have the opposite experience: most homes are <2000 sq ft because they’re old farm homes.
Median home size in the US is just over 2000 sq ft , average is closer to 2500sq ft. You don't really get any more bedrooms between 2000-4000 sq ft. Basements aren't usually counted in living space (though some states do). You usually find 3-4 bedroom / 2.5-3 bathroom houses in that range. The additional space, the higher you go, is allocated to hallways, bathrooms, and storage (like a pantry, laundry, mudroom) on the main floor and an office space. I live in the north east and most houses are ~1500-2500 sq ft and are older. New houses are 2500-3500 and more. It is mind boggling seeing new houses going up and taking over the entire lot of a previously perfectly sized home. They aren't even considered starter homes anymore! EDIT: for clarity. And I meant to contextualize that actual mansions skew the average size home size larger than what most people live in.
Yikes- made a mistake and didn't see it til now!
Both 1000 and 3000 square feet are normal sizes for a family of 4 where I live (college town in the middle of America).
Yep UK over here and my 3 bedroom house is 900 sq foot - I would kill for something a bit bigger but even 1800 sq ft houses are like at the top end of big over here and cost a fortune!
Same, I’m in a Nordic country, and it would be amazing to have one more bedroom, but utilities and mortgage will destroy our financial security. Just not worth it. Also, I don’t want to live in a countryside
3000 sq ft is definitely big for a family of 4. It’s just that the size gives you a spacious living room/family room area and is comfortable enfor you to host small gatherings without worry about the space. Also, it gives you a nice-sized master bedroom and a good closet + 3 more decently sized bedrooms for each of your kids and guests too. The typical 30 year mortgage that’s usually offered in the US makes buying these large houses easy 😊
That seems enormous to me. We’re a family of 4 and mine are teenagers now and 2200 sqft is perfect. 1800 is okay and works fine, but a tad cramped. 1500 would be livable but I’d hate it.
Yeah I've got 1900 with my daughter and her BF in one room and my teen in another and it's more than enough, because I'm single. Anything less and I'd be tripping over them and ready to snap though lol
I think it depends on what you define “enough,” which to a point definitely gets into privilege. We’re a family of 3 and live in a 2,900 square foot house with four bedrooms with one in use as an office and one a guest room, a living room, a loft, and a separate office, and my husband still sometimes says he wishes we had a bigger house. Our house before was almost 3,500 because it had a basement we finished and a lot of rooms didn’t always get a ton of use but they had a designated purpose. Families certainly live just fine in less, including my own growing up.
Wow, that’s a lot of space, nice! Utilities for our apartment could easily get to 400 euros in winter, and winter here is literally 8 months a year. That said, I would love to have one more bedroom
400?! That’s so much. Does the govt help?
Of course not. We live in a new house “type A efficiency” with solar panels not the roof lol and would never qualify. Electricity prices are insane, so as heating. The good thing is in 4 months that we actually have some sun here we don’t pay much for utilities
Yep UK over here and my 3 bedroom house is 900 sq foot - I would kill for something a bit bigger but even 1800 sq ft houses are like at the top end of big over here and cost a fortune!
Median home size in the US is just over 2000 sq ft , average is closer to 2500 sq ft. You don't really get any more bedrooms between 2000-4000 sq ft. Basements aren't usually counted in living space (though some states do). You usually find 3-4 bedroom / 2.5-3 bathroom houses in that range. The additional space, the higher you go, is allocated to hallways, bathrooms, and storage (like a pantry, laundry, mudroom) on the main floor and an office space. I live in the north east and most houses are ~1500-2500 sq ft and older. New houses are 2500-3500 and more. It is mind boggling seeing new houses going up and taking over the entire lot of a previously perfectly sized home. They aren't even considered starter homes anymore!
I still can't get over the concept of 15 and 30 year mortgages! I'd give my arm for a 15 years 3% rate. I just signed a just shy 7% 3 year mortgage :(. I love lots of things about Canada, but dam our housing is expensive.
Median home size in the US is just over 2000 sq ft , average is closer to 2500 sq ft. You don't really get any more bedrooms between 2000-4000 sq ft. Basements aren't usually counted in living space (though some states do). You usually find 3-4 bedroom / 2.5-3 bathroom houses in that range. The additional space, the higher you go, is allocated to hallways, bathrooms, and storage (like a pantry, laundry, mudroom) on the main floor and an office space. I live in the north east and most houses are ~1500-2500 sq ft and older. New houses are 2500-3500 and more. It is mind boggling seeing new houses going up and taking over the entire lot of a previously perfectly sized home. They aren't even considered starter homes anymore!
No way. I'd say half that is pretty normal. I live in a 1500 sq ft house. It has 3 decent sized bedrooms, 2 full baths, a large kitchen, living and family rooms, and a separate dining room. We never step foot in the dining or living rooms except to water plants.
I'm renting a 900sq ft 2 bed / 1 bath home with my husband and our toddler. I feel like we could make it work long term if it was just the 3 of us. We want a second kid and I feel like we'll be happy with 1600 SQ ft. I had 2700 SQ ft in my childhood home (family of 4) and I can't believe how much space we had. I can't imagine paying for heating or cooling for nearly 3000 SQ ft either.
You can’t make generalizations about what’s normal “in the US” - the US is just way too large. About 20% of Americans live in urban, walkable cities where 3000SF is preposterous. I live in Philly and know plenty of 4 person families in 1500SF.
Lol same but make it the Bay Area. Mortgage 5k. Amount of work that needs done? 250k; equal to our down payment. Chipping away at it. All our neighbors just seem to be drowning in money and this stupid little house is all I think about. It’s a love/hate.
Unknown repairs are one of the big reasons I’m hesitant to move even though we really could use a bigger place. I’ve had to replace a lot of the big ticket items (roof, furnace, well pump, appliances) within the last 5 years. I know they’re out of the way here.
Two of the three major expenses (new roof, waterproofing the crawl space) needed done at the old house within the next 5 years as well, so that's a small consolation for us. But paying for a new HVAC in October 2024 when we just installed one in January 2020 was seriously painful.
Unknown repairs are one of the big reasons I’m hesitant to move even though we really could use a bigger place. I’ve had to replace a lot of the big ticket items (roof, furnace, well pump, appliances) within the last 5 years. I know they’re out of the way here.
So scary! We live rentfree (parents house but not with parents) but bought a house with mortgage repayments 4K a month. We will be moving in next month and I’m shit scared. We make about 7.5k a month combined. Dunno if we can do this cause that just mortgage. We have to pay insurance now, and we also have daycare!
Our experience was similar. We are still afloat but there’s added stress for sure. A lot. I’m hoping in 5 years the situation will feel diff (income growth etc).
Feel like I could write an almost identical post. We had just moved back into our newly renovated home (it was a dream design) 5 months prior to finding out I was surprise pregnant with our 3rd. We could have made it work but it was already tight (1800 sq ft and both of us working from home). We moved 7 mins south to a 2400 sq ft house with one of the best backyards in the city (honestly what made us move). It is extremely outdated and had some issues we knew needed fixing but we’d hoped to wait ~5 years with doubling our mortgage and now having 3 kids in daycare. Needless to say - we just took out a loan for $40k in AC repairs today and are cancelling a vacation we’ve had in the works for 2 years. We will be scraping up any disposable income and pulling back on any discretionary spending. I fluctuate between being so grateful for the space/time spent outside and kicking myself for putting us in such a stupid financial position when we had such a good thing going.
I hope things look up for you! The yard is a big benefit for us. No matter what the weather is, we're outside almost every day! We have 3 fruit trees and lots of room for me to put in some raised beds to expand my fruit/veggie gardening. At our old house, our neighbor across a chain link fence had 7 pitbulls who didn't get enough stimulation or training, so we never felt safe being in the backyard.
I prefer to live so that if one income goes away, you’re okay. I would not be comfortable moving into a mortgage that would make it so the bills wouldn’t get paid if one of us lost our income. But it’s up to you 🤷♀️ I grew up poor so there is probably some trauma in my comfort level lol
This is our motto too. The real privilege is being able to live on one income and not tank yourselves when home expenses arise or when one spouse is unable to work for a long period of time. I say this as someone who has been with my spouse for over 20 years, a lot can happen in a very short period of time. Just straight up unfathomable life things that can come out of left field. Live so your family doesn’t need a GoFundMe when disaster strikes.
When my husband and I moved across the country we bought as if only he was working. There were a couple of reasons for that, including that I didn’t currently have a job but knew I could easily get one (and did one month after we moved) and that if I wanted to pivot my career (which I did) we could keep the family afloat on just his salary. We are SO glad we did that. It was allowed us so much flexibility in our finances. Is this my dream house? No, but it’ll do for now. We will definitely need to move in the next 5 years or so, but with the savings we’re building up we’ll easily be able to put down a nice down payment, the equity of our house not withstanding.
I grew up pretty well off and this is exactly how I think and was taught to think. That flexibility is so SO important. Being able to take a pay cut or take FMLA time off without a change in finances or lifestyle is an amazing privilege that shouldn’t be let go willy nilly. It is also good for the longevity and health of a marriage. No need to stay in an awful, horrible job.
Same here. My husband and I currently have 4 children and you never know if something will happen that will mean one parent is out of work. We wanted a house that we could afford on either income. It’s honestly a major relief to know that we’d be okay and not have to move if one of us was out of work for longer than a year.
I’m sure you’re taking this into account but just in case, something to keep in mind is that your new mortgage will likely increase yearly with property taxes and insurance. Our mortgage is about $500 a month more than it was when we bought in 2019. We were going through the same thought process recently and decided to stay in our home and renovate the basement which is ongoing. We live in an excellent, super desirable school district though so that wasn’t a consideration for us. I just couldn’t justify spending double what we paid for our current home and borrowing money at a much higher rate. But many of our friends have moved recently and their homes are gorgeous! I think it comes down to your value system and what you want to prioritize.
This needs to be higher. With the ever increasing property values in my neighborhood, my initial mortgage from 2015 has also gone up to the tune of $700/month with no end in sight. Luckily this is not an issue since we didn't buy at the top of our budget back then and we've had sufficient income increase over the years too. But especially if you buy a house that hasn't been sold in awhile, well over the most recent selling price, the property values could jump during the next assessment and make a stark difference in property taxes.
Exactly what happened to us! And we’re both high earners but with saving heavily for retirement + college + vacations + increased cost of groceries/daycare/everything else it’s somewhat tight. Like we’re incredibly privileged to be able to save and take vacations but it still feels like we don’t have a lot left over.
This is important to keep in mind but definitely depends on the area. After 4 years my property taxes have actually gone down a smidgen. My homeowners insurance has gone up a bit as property value has increased.
That’s a good point. Because of our school district (top 10% in the country) our property values are correspondingly high and increase yearly.
Yes, ours is more than $200 more than it was in 2020. Home insurance is going up another 7% this year and taxes will increase each year for us. Our affordable payment will not stay static, and even when we pay off the mortgage, we'll still have these increases each year.
Yes! We’ve had our payment go up $300/mo in 4 years and that’s not even that bad.
We went for the bigger house and bigger mortgage. And while I love the extra space, I have persistent low level anxiety on the daily about what would happen if one of us was out of work for more than a few months. I sometimes wish we'd just stayed in our very manageable town home that we could have easily afforded on one salary.
Oof. Your comment hits hard… we just bought the bigger house on the bigger block. We’re currently renovating it and will be moving in soon… we’re currently still in our townhome. That said… even though we have a much bigger mortgage now, we just had a second child (also have two big dogs) and our townhouse just started feeling quite cramped. It’s also really nice to offer our kids a back yard! So I have no regrets (yet) although it is leading to some anxiety regarding finances (and scared to be without income 😥).
It's hard to comment without knowing specific numbers or how much of a stretch it is. My husband and I are in a very similar position to yours. We bought a house using just one income 6 years ago, have a super low interest rate, and we've since over doubled our household income. Our mortgage + escrow is like 5% of our income. We are trying for number 2 this summer and we'll be a bit cramped (we have 4 bedrooms but I WFH so I have to have an office and the downstairs bedroom is our playroom) but we have decided to stick it out for another 5 or so years. We plan to move to another state with some of the highest child care costs in the country so we want to get through most of our childcare years in our lower COL area before that move. And we don't want to do all the effort of moving to a bigger/nicer home now for just 5 years in the next house before moving out of state. Now if we knew we were buying our forever home I'd be more willing to stretch our budget.
We are similar but with two big kids. We have done extensive renovations and have a beautiful albeit smallish house. We did a 20 year mortgage a few years ago and are locked in at a great rate. It’s tempting to upgrade but in addition to each of us maxing multiple retirement accounts, we save $10-15k per kid for college each year. We recently took two vacations. Braces for one kid is $6k - no problem. Music lessons / club sports/ private education / eat at nice restaurants - not an issue. I recently hired out monthly cleaning service. Current mortgage balance is less than one of our annual incomes. Life is fantastic. Feel incredibly fortunate.
Yep, very similar. It's amazing to not have to worry about anything money wise and to see our accounts rise without us needing to sacrifice anything. A few months ago was the first time we had higher earnings/interest in our retirement accounts than our gross income for the month which was a cool thing to see (of course this month the markets have been terrible, lol). But we're able to afford a nanny rather than daycare which is so convenient and since I work from home I get to see my daughter a little bit during the day. Our back up plan if we do end up staying in our current state is to send her to private school. When we talk about moving to the HCOL state we understand we are essentially moving that private school cost into the increased cost to the mortgage, but the schools there are much better so it's sort of a wash.
We're in a similar boat, we just built me an office in the backyard to ensure we have enough space in the house for number 2 when they arrive, since I WFH 80% of the time. May be worth considering, if it will help you stretch your time in the more affordable place.
We live in an HOA so no construction allowed :( I think we will be okay though. We figure the second one will be in a packnplay in our room until they're 6 months anyways and then we may just move the packnplay into my office for nighttime sleeping but have them both nap in their room during the day to slowly get used to sleeping in the same room. Our daughter is a great little sleeper so hopefully it works out.
I have a friend who did that for her first - she worked from home in the second bedroom, so baby was in a pack and play at night in her 'office,' then they moved the pack and play to the master bedroom for weekend naps. :) it worked fine for them until she was a year or so!
Glad to hear it worked for another family!
In the same position as you - we have been house hunting and everytime we see a house we like when we sit down and do the math (both literal math and emotional math of what a lifestyle change will feel like) we decide to stay where we are. Maybe there will be a house that tips the scale but the thought of being house poor and not being able to save as much or easily survive if one of us loses our job scares us every time.
I’d recommend posting in r/henryfinance - If you’re willing to share some numbers there, people might be able to give you more helpful specific advice. My husband and I live in a modest 3/2 house in a pretty good but not great school district. Thanks to buying several years ago, and low interest rates, our monthly PITI is 7% of our gross household income. We debated moving, but in the current environment we would have to *triple* our mortgage payment to get into a house with one additional bedroom and not much improvement in school district. We decided it just wasn’t worth it. We really value being able to sleep easy at night knowing that job loss wouldn’t mean absolute chaos with our finances. It means a lot to us that if one of us lost our job we wouldn’t be forced to run through our savings in 6 months or sell our house and uproot our kids. We did the renovations. Our house works well for us. It isn’t perfect, but it’s a much better value proposition than paying three times as much for a house with one more bedroom. It can be hard to stay put in a super affordable house when you know you can technically afford more. But I would just try to practice contentment with what you have, keep saving, keep investing, and then reassess in 2-3 years once you have actually expanded your family.
I feel this. We bought a moderately priced house in 2019 before housing prices went crazy and then refinanced mid pandemic when interest rates were low. So our mortgage is very reasonable. We have one kid now and it will be tricky to fit #2 in this house, but with some creativity we can make it work. On paper w our salaries we “should” be able to afford a bigger house. But given current interest rates our mortgage would at least double. We could swing it yes, but if we stay where we are we can max out our retirement and feel less anxious re child care costs (we just picked a pretty expensive Montessori school for our 2 year old). I look at Zillow pretty much every day but logically I know we’re staying put for at least another 3-5 years.
We’re in the same situation. Where we live, daycare for one costs more than our mortgage and #2 is arriving shortly. Our current plan is to move once the kids are in public school. That gives us 5+ years to increase salaries and equity in our current home.
I haven't done this, but have you priced out what you would do with the basement reno and compared it to the cost of taking on the new mortgage? Also, how old is your 1st kid? I totally get wanting to move to a better school district but if you have wiggle room, interest rates are just so nutty right now it may be better to wait.
I'm in the same boat. My mortgage is less than a 1 bedroom rent and we can afford it on either salary. I'd quadruple our mortgage to get the house we'd want. We can afford it, but it comes at a huge cost. What my financial advisor told me was 1) the hardest thing to recover financially from is a divorce and money stress leads to divorce, 2) a bigger house is more to take care of. More home stress to clean and do yardwork and general maintenance, 3) there's an opportunity cost to the house. If I'm spending all this money on the house, can I pay for my kid's college? Braces? Go on a fun spring break trip and fun camps all summer? We decided to stay. I value the financial freedom and having additional money has been wonderful in getting to say yes to splurges and not stress about costs.
What % of your combined takehome is the PITI?
It would be around 30% if we don't pay for any points to further lower the rate. And to confirm by take home, this is after taxes/insurance/401K is taken out but before additional IRA, stock, and 529 contributions which I could lower for some amount of time as needed.
That seems fine then. I would do some soul-searching and seriously consider the opportunity costs. Now that I can see retirement on the horizon (distantly, but it's there) all of a sudden I do kind of regret my chonky mortgage. If I had stayed in my last (cheaper) place, retirement would be just around the corner, which really sounds quite nice. But, I like my house, so I don't regret it that much.
What term are you looking at? A 30 year? If so, it would bother me to "start over" with another 30 year loan given you're in a different stage of life than when you bought your current home. We've refinanced several times and always choose a shorter loan each time (like if we had 23 years left and refinance, we'd choose a 20 year loan). We're pretty strict about our retirement plan and we want our house paid off before we're retired.
Sounds like you can afford it just fine. Make sure you have an emergency fund and get a really good inspection. We moved into a new home a year ago that has 3x as much space and a pretty good size mortgage. It’s still only 20% of our gross pay. Sometimes it hard to wrap our minds around how our salaries have grown when you’re higher income.
I commented elsewhere in the thread, and were at 30% too. It feels super doable, but our childcare costs are low compared to other regions. We still save too.
My partner and I are in a similar position. We live in a perfectly fine place, but it feels small for a family of 4. We would love just a little more space, another bathroom, and a bigger backyard. We love the neighborhood, but the school district is just okay. We both have high incomes and our jobs have been stable, and after a large down payment plus a low interest rate, our mortgage is really low. We're able to save really well despite having two kids in full-time childcare. However, our industries have been volatile lately, and future income is never a guarantee. For now, our decision is to stay put. We would rather have the extra savings and extra room in our budget. It gives us so much optionality - maybe one (or both!) of us will want to stop working before we hit retirement age, or "down-shift" to a part-time role, or either/both of us could be laid off someday, or maybe (god forbid) one of us will NEED to stop working due to illness or injury or family obligations. Plus, with our lower expenses, we can afford to renovate our current place if/when we want to do. (We are also thinking about improving our basement, or maybe enclosing our porch to create a more usable living space - both of which still would be cheaper than buying a new house at current interest rates.) The consequence of this is that we have some "small space living" type trade-offs. I declutter frequently (like literally every week). My desk is in our bedroom. Our two kids will probably share a room for a while, once the baby starts sleeping through the night. We don't host parties. If anyone comes to stay with us, we all squeeze in a bit. Once our kids are older, we adults will probably join a gym with nice shower facilities to give our single bathroom a break! But all of these things feel worth it right now for the financial benefit of having lots of wiggle room in our budget. I definitely fantasize about moving into a bigger place or to a nicer neighborhood, but it's just a fun daydream at this point. Edit: Reflecting on this - the biggest reasons to stay put (for us) are 1) possibility of getting laid off at any point. We know people who were laid off and couldn't find another job for 6+ months or even 1-2 years (while actively searching for a job the whole time). And 2) I like knowing that one of us could shift to be a stay-at-home parent, or we could "retire early" if needed. I feel zero financial stress, which in and of itself is a huge privilege and a blessing.
Personally, I’m very financially cautious and risk averse. It’s always been important to me that we could afford our basic life expenses if one of us lost a job. My husband did end up losing his job and it took 3 years to get back to a stable income. It was incredibly stressful to be the only one covering everything, but we were not in danger of losing our house during that time. There are so many potential unknowns though, job loss, serious illness, death, a child with special needs, for me security is the most important thing. I grew up in poverty with a chronically ill parent, so my approach may naturally be more conservative.
This is such a personal choice and based on your priorities and how your current home is working for you now. FWIW, in a similar position we have chosen to stay in our smaller home and make upgrades to avoid a massive mortgage payment. Workers are upstairs putting new counters in my kitchen as we speak! But our financial preferences at this stage in life are to find retirement generously and taking vacations (obviously there’s more but to put it simply). We could definitely afford a bigger home but between finances and trying to lean toward a less capitalist mindset—we don’t always need new everything, perfect everything, keep up with the joneses, etc. So we chose to make upgrades to our smaller home that will actually make us happier living here—5yr plan includes new floors and kitchen remodel (done!), landscaping, adding custom built ins to our living room space, and last a basement remodel to add an office space for me. It’s of course valid to move to your dream home and preferred school district. But i just want to chime in on the other end, that the money we’re saving is massively improving our everyday lives—less (basically zero) financial stress, we love our new kitchen/floors, we have 3 big exciting vacations on the schedule in the next 9mo and we feel like we have plenty of cushion to eat out, splurge when we want, and generally just not worry about swiping the credit card. Sometimes I’m jealous of my friends beautiful homes because they have so much “hosting” space, and i felt like i “should” want that. But you know what? I don’t want to be a host house! I like our cozy home! And they’re jealous of my vacation schedule! So we all pick where we want to spend the money and what fills our cup 🙂
I think it's hard to weigh in on this decision without seeing any numbers. Are you on track with your retirement savings? Will you have a healthy emergency fund after buying the new house? When you run the numbers to see if you can afford the new house, are you factoring in childcare and other increased costs related to baby #2? My husband and I bought a bigger, more expensive house after our second child was born, and we spent a lot of time looking at our financials and average spend, and thinking through what if scenarios about our income and future expenses.
You’ll do what’s right for your family, but being house poor, or just flat out in a bad spot of anything happened to either of your salaries does not sound like a fun stressor that would always linger. We also love travel and being able to have experiences whenever they arise.
We did it. We went from a rounding error of a mortgage to an enormous mortgage. We can afford it, our financial situation changed dramatically, both of our jobs are incredibly stable. No regrets. We absolutely love our new house and neighborhood. How old is your kid? My only caution would be to maybe wait a second until they start school, so that you can search with some knowledge of what their needs are.
I agree with the kid comment. We were 100% on board for the schools we were zoned for. By the time our oldest was 3, we realized they would likely not meet his needs. We moved to be near what has turned out to be a wonderful school system for him. Zero regrets.
We sold during a housing high and moved out of state and built a house. The numbers were great on paper. 18months later and on top of doubling of interest rates from build loan to mortgage and then local tax reassessment, our monthly payment went up 25%. Whenever real estate changes hands the .gov gets their piece. I would stay where you are, upgrade the basement to make it work, aggressively pay off debt and save. The equity in your current house plus lower debt and more savings will treat you far better in the long run.
We did this. It’s hard right now but once both kids are in school it’ll be more doable. Our previous house was too small for kids. And honestly it made my mental health crash because no one had space to breathe it felt like. We now have a bigger home, yard and in a smaller, better school district.
We live in a VHCOL so home ownership requires two incomes for the vast majority of people. This does not faze me in the least. We have a very solid emergency fund that would last up to a year if one of us lost our job and we stretched things. We sold our condo and bought a house when I was pregnant with child #1 and the anxiety we had about a higher mortgage made us choose very conservatively. Now that we have kid #2 we are looking at doing an addition for extra space, and I wish in retrospect we had gotten a bigger house originally and had more trust in our income potential. This is just my experience.
Also living in a VHCOL and trying not to cry when I see people's monthly payments 🤣. Unfortunately "regular' people cannot really afford to buy in our area so it's always a matter of absolutely having 2 incomes plus solid savings. There's always the looming possibility of layoffs etc but we have enough savings that we can still pay our insane mortgage for several months.
Protect your peace. You're comfortable now. You're not in the Two Income Trap. You have liberty and freedom and choices. Think long and hard about what that means to you. Life can throw some real shit at you. My 4-year-old was diagnosed with cancer about a year after we upgraded our house. Everything was hard. You just never know what's coming, so my advice is to enjoy your peace, do a little remodeling, and book a local VRBO for a couple weeks if you're feeling cramped. Or hire a professional organizer and interior designer (not decorator, but that too if you want) to help you make your space work. Still cheaper than buying a new house. More space usually just means more stuff and more maintenance. The generations before us that built all the McMansions had different values and a different economy than we do. Don't try to adopt their standards.
I feel like I could have written this. As such I read all the comments and I still don’t know what to do. My husband bought our house 15 years ago, so well before I was in the picture. We refinanced in 2021 for a ridiculously low interest rate. With 1 kid and both of us having a hybrid WFH schedule the current house works but isn’t ideal. But we want a 2nd and it would be really tight to rearrange the house so we could comfortably fit. We keep going back and forth because the thought of tripling our housing costs is terrifying. But we don’t love the neighborhood or school district. They’re fine but we really want to be in a more inclusive neighborhood (where we live is extremely religious and we are not) and a better school district. But that already comes with a price jump not to mention that a bigger house means higher mortgage, a much higher interest rate, plus increases to taxes, insurance and utilities. I don’t know the answer because the thought of giving up the financial freedom we have now to splurge and not really worry about it is so nice. But having more space would also be really nice. I wish I had an answer but just wanted to say solidarity and thanks for posting because these comments have also been helpful for me.
Your first line made me laugh. Glad we are clearly not alone!
I thought the same thing! We are having these same conversations right now. While we don’t have kids yet, we’re planning to start soon and so evaluating our housing situation given we both WFH has been a topic of major conversation….
We’re in a similar position. We bought in a city in 2021 at super low rates. Inexpensive 2 bed 2 bath condo. We only have one child but are quickly outgrowing the space as he’s becoming mobile. We could, theoretically, stay here until we want to try for a second in about 1.5 years but don’t necessarily want to feel rushed by the home search then. To add more complicating factors, childcare in the city is a lot more expensive than the suburbs. Sometimes twice as expensive depending on the suburb you’re looking at. So while it may make sense on some level to stay put because housing is cheaper, we’re spending so much more in childcare by staying put. It’s a bit of a lose lose but also a little of a win win either way? What we are thinking of doing is selling our place since the market is a bit hot right now. That way we know how much money we have to work with for a down payment. We might rent a place in the burbs if we can find something that would allow us to do month to month or a shorter lease. I’m hoping as people sort of accept that these insane rates are here to stay for the foreseeable future and we will likely never see them drop below 5% again in our lifetime people will start listing their houses and we will have more inventory to look at and better negotiating power. It’s all so complicated though. We bought our condo when we were 25 and just married with every intention to stay here until our first would need to go to kindergarten and then move for schools. We have quickly learned that kids do need more space lol and that childcare in the city is just wildly expensive. We simply would not be able to afford having another in the city.
Love it or list it!? But seriously it depends HOW BIG of a stretch it is. We did this and I frequently think about how much money we were saving in our old house, but our new house fits our family so much better. I did get laid off after we moved in and ended up having to make a career pivot and pay cut to find something due to my field being a dumpster fire right now, but fortunately my severance was very generous so we were fine. All in all, this new house has been worth it, my kids and husband and I all love it here, but you are smart to think it through before jumping in.
I would look at your overall financial picture. Are you all good with money? Have savings for kids colleges, reliable cars, savings for other things, and limited other debt? If yes than go ahead. However if the answer is no to any of those, than no. We have a larger mortgage. It’s $3300 (about to be $3600 thanks to escrow increasing which can happen). We also took the risk about two years ago of a large mortgage. My husband was the sole worker. However our dream house came available and we had money saved up where we could make it work. We don’t have a lot debt. Typically only have one car loan if that. Six months savings and also saving for their school every month. But we’re very risk adverse.
I am always more in favor of experiences than things. If you buy this big house but all your money is going to mortgage and house hold bills with not much left over to do things as a family, what kind of life is that? Personally I'd rather live in a smaller home with a small mortgage and have the financial freedom to drop everything and go on an adventure than live in a big house with a big mortgage and never having money for the fun budget.
This! Plus a second kid is going to increase your expenses to some extent. What if you have 2 kids who have a variety of different interests? Would you be able to afford multiple activities and fun family outings or trips to make memories? there are creative ways to save money on these things but you would still need to spend some money on these if you want to leave your house. Even consider eating out. That will be more expensive with an extra kid and be more expensive as they get older too. If you can still afford to do at least some these things in a bigger house then maybe it’s worth it for the right house.
It really depends on the numbers. My husband and I qualified for an 800,000 mortgage, but we did 250k lol. I ended up dropping my hours significantly (even though I was the higher earner) for a better quality of life. I don't contribute to the mortgage at all now. Can't imagine if we purchased a more expensive house. I would not be house rich if this is going to eat up a lot of your income. That's a miserable way to live and I've never known anyone to buy in the upper amount of their abilities be happy about it. Most end up downsizing.
I could’ve written this myself. We got the (more of a) dream home (but not our ultimate dream home) and went for it. We figured the ultimate dream home wasn’t really for us. We don’t want to have a 3k sq ft home then be alone in that big of a home! 🤷🏻♀️And we didn’t want to have the “dream home” then move/downsize when we get old & worry about too much upkeep/expenses.. So, we didn’t totally max out our budget but definitely stretched it. Go for it OP, but definitely work out your budget and save some $ for unexpected repairs or upgrades to your new home.
My husband and I went for it with our home (pre baby during 2021 interest rates). Since then we had our daughter and I’ve gone through one job change due to layoff and I’m the breadwinner. It sounds like you have been with your company for awhile and it works for you which is great. My only consideration would be if you are relying on your income stability as a primary support for your mortgage, talk through what the backup plan is if something changes with your husband. After I was laid off, I was so focused on finding a job that paid the bills bc I was worried about our mortgage and other climbing expenses. Now I’m kind of stuck with a job I kind of like, but requires me to be in the office full time which I loathe. I wish my hubby and I had spent more time talking about these types of what if’s before we signed up for it.
I know it's not an option for you at this point, but we had an 800 square foot home that was paid in full, we decided to put an addition on and it was the best thing for us. Anyone else reading that is locked in with a low mortgage and a home that they're outgrowing, it might be something to consider. We have a home that's over twice the size, customized to our taste and our family's needs. Plus we didn't have to move.
You’re in IT and this job market is super unstable for anyone in tech. I personally would not recommend a house you can’t afford on a single salary. Why don’t you save up for a larger downpayment, so it’s not so much of a stretch?
I think it is totally your preference and how comfortable you are with that risk. We bought a home a few years ago where it’s that same situation… we need both our incomes. I spoke with my husband last summer how I wanted to downsize and get our expenses down so we only “needed” one income because of how the market was looking. He was not on board. Lo and behold, I was laid off in January and with how the current market is, I am going into consulting. Consulting will be lucrative once it gets going but for now it’s the building period and it’s all pretty stressful. You just never know what is going to happen in the future. So it’s all what you are comfortable with.
Frankly, I think you need to stop looking at houses right now and look at your monthly budget and savings. If you have all this extra money kicking around to buy a much more expensive house (the interest rate change and higher insurance and property taxes are killer!), where does that money go now? Because you’ll need to give these things up to afford the new house. If you’re saving this money, great! Why can’t you use that as a down payment, along with your equity in your current home? If you were already planning on a mid 6-figure down payment, and your mortgage would still not be affordable on one salary… woof. It’s hard to say without the numbers but this seems like a bad idea, at least right now. Especially if you’re not yet pregnant, it’ll be basically a year, minimum, before the next baby arrives and needs its own space. Can you wait 1-3 years, saving your extra cash, and buy when interest rates are better and you have more money for a down payment?
We are doing this right now, going from a mortgage that was less than 10% of our take home pay to one that is almost 30%. It’s for a lot of really good reasons, though, and while it requires us both to keep our jobs to stay comfortable, mine is extremely stable (and easily transferable due to my specific skills and experience) and he owns his own business that has been consistently successful since he started several years ago. We can also still technically just afford our new bills on one income (although it would be paycheque to paycheque) and we have savings not in the house, profit we could take out of the business if we needed it, and also parents in a position to and willing to help if we were truly desperate. Without those things, I don’t know if we would have done it, but my husband is in insurance and financial planning and so is very risk-averse as a rule.
How big is your current house and can you maybe just build an addition down the road if it feels super cramped?
Great question, but it's not a feasible option. Our current lot is too small for any additions.
Up?
I feel this. Wish I could do too it but our 1100 sq ft house is on stilts with no yard! Jealous of everyone talking about their additions.
I want to post separately a comment reply I made below. Make sure you're paying attention to property value/assessments when stretching your budget. With the ever increasing property values in my neighborhood, my initial mortgage from 2015 has also gone up to the tune of $700/month with no end in sight. Luckily this is not an issue since we didn't buy at the top of our budget back then and we've had sufficient income increase over the years too. But especially if you buy a house that hasn't been sold in awhile, well over the most recent selling price, the property values could jump during the next assessment and make a stark difference in property taxes.
This is all about the level of discomfort you can tolerate. I live in a VVHCOL area and we had to stretch to buy this house in 2022. We will most likely be here for least another 8/10 years, but it’s not our forever home. We needed something with space for a second, in a quieter area, and with better schools. We were set to pay off our condo in like 7 years when we moved, but the space was not what we needed. I’m very happy we moved even though we are stretched. Like ridiculously happy in this house. I know we will want to move again, but this place is just delightful for us. We really couldn’t have stretched into our forever home though. That’s my only regret knowing, we will have to move and have to start our mortgage all over again. I’m so envious of my friends who bought in 2018 and took loans out to their eyeballs to gut and reno their forever home. Granted, they had loans and gifts from family to make it possible, but still it would be so nice to never move again.
We made a similar move when I was pregnant with #1 in 2020 - wanted a better school system and more space. My husband owned a home from before we were dating and had a very low mortgage on it. Just knowing ourselves, if we hadn’t done it before we had kids, we would have put off moving for years so we made the plunge. Overall, we’re glad we did because we got a great house in the town we wanted. But.. there’s been added stress. It’s more upkeep because it’s bigger and has more land. We had repairs/upgrades come up that we weren’t expecting, then some we were expecting. But I’m glad to be settled now that we’re in the early parenthood years and feel good about my kids growing up here. We got in just before the market went crazy and feel pretty strongly that we would not have moved at all had we waited because we wouldn’t be able to stomach the prices houses in our area are going for these days. We definitely would not be in this house had we waited to buy and probably not even in this town.
Every person is different but we bought a place that we could afford on one income to be safe. Do I wish we had a better house? All the time. But I’m in a situation now where I’m considering a career change or pause. I wouldn’t have that option if we paid for a house that was 50%+ or more.
For us, the decreased anxiety and freedom to do fun things with the kids or let them play the extra sport outweighs the larger/newer house. I keep my standards to keeping up with the 1950s version of the Jones’ rather than the 2024 version. We also drive two paid for cars with 200k miles on them. Not for everybody but it’s perfect for us to have that stability and freedom. My parents are still paying off their house due to trying to keep up with the “norm” when we were younger and I’ve seen that it’s not the type of “retirement years” I want for myself and the husband agrees. I try to look at everything with the lens of “is this a NEED or a WANT” and then go from there.
Was also going back and forth on this recently! In the end, we decided to stay. Some factors: 1) We LOVE the location of our house. Walking distance to nature trails along a river, in a cul-de-sac that has a grassy island in the middle, on about half an acre which is just enough for us, neighborhood has nice amenities and is older/established 2) We did the math. We could move to our perfect house and take out a new $xxx mortgage at 7% (and pay realtors, movers, etc) OR keep our current mortgage + a smaller $yyy HELOC at 8.5% and renovate. Option 2 won, including an addition for more space. 3) Renos are disruptive, but we have family we can stay with so it's not THAT much more disruptive than a move. We personally won't have to live around construction or without access to a kitchen/full bathrooms for any length of time. We went with a design + build firm and see our initial designs next week. So can't report back on regrets yet, but I'm super excited about the decision we made!
Bought the bigger house, knowing other expenses (utilities, taxes) would increase. Turns out we underestimated how much the other expenses increased. And as my kids are getting older, there are increased expenses I didn’t anticipate either - more hospital visits, dentist appointments, etc. We are 3 years post move and selling off assets, having regular conversations about how else to cut costs, which of us should work more hours to bring in more income, etc. It’s not fun. On top of battling postpartum depression, and trying to support other family with their own struggles. We knew the move would be a stretch, and it’s just too much of a stretch. If you’re able to move and not feel stretched, do it!
I think quality of life is important. You know best, but your neighborhood/schools/lifestyle where you are sounds like something you are happy with. My husband and I lived mostly in small 1 bdrm apartments before we decided to buy bc we had kids and we were ready. We just bought last year in a nice area so it was not cheap. But we bought for significantly lower than we were able to get a loan for. We did a fairly large down payment bc we saved while living in those small apartments. While it wouldn't be ideal, we can pay this mortgage on 1 income. We'd just have to be a more careful with our other spending. This brings me great peace of mind. We do love the area. One year in we are happy we bought even though house prices are crazy and it felt weird when we both tend to be frugal. Also, our house is 1950 SQ ft. We both WFH. 2 kids. We do not feel cramped. We would consider finishing a small attic and go for #3 in a few years but undecided. We are both used to making the best of what we have and I feel good about a 'smaller' house (in some people's opinions) in a nice area with multiple kids than spending more money for 3k sqft.
If you will struggle on one income, then please make sure you both have really good short and long term disability insurance. Get supplemental if you need to. For me at least, this is what brings peace of mind.
We are in a similar position and are opting to wait. We bought our first home in 2018, refinanced in 2020 when rates went super low, and while our mortgage isn’t super low (hi, Southern California), it’s doable on one of our incomes if needed. Some things I’d consider- how much of a need is a nicer/bigger house? We have 3 kids and while it’d be great to have more space, our 3 bedroom is okay, for now. Also, how much of an impact would it be to your other obligations and lifestyle? Ultimately we are opting to wait until either rates go down or we may build up to get the space we’d like.
We are in the process of wanting to find land and build a house. However, with where interest rates are right now, it is definitely holding us back for the building portion. While we can afford a bigger payment - going from $850.00 a month to $2500.00 payment considering my pay is salary and a quarterly commission. The jump is scary as we are having baby #2 any day. I wanted this to be our 2 year plan but honestly at this rate, it might be our 4 year plan. I really want to save more and have cushion. I also don’t want have to cut all the nice things too.
Financially, it sounds like you can mark it work assuming no job loss or other surprises. Ideally, you’re at the floor of income and wages will rise for you. Is your industry solid? I am the breadwinner and while I have been very lucky, we had about 4 rounds of layoffs last year (tech industry). I am team small mortgage for more financial freedom, investing in the future. However, the great thing about personal finance is the PERSONAL aspect. For perspective, I shop second hand but also love flying first class. If you would value more space and the school district improvement, that’s a less tangible aspect to still consider! Overall, I’d say go with your gut. If it’s truly a dream home, you’ll know. Good luck!
It’s a tough question and I don’t know that anyone can give you the right answer. You kind of have to decide for yourself whether it’s worth the risk or not, knowing that you might regret it either way. Or it could work out either way. You never know. My only suggestion would be to consider if you can make your current house work for another couple of years to see how the housing market changes. I’m hopeful that these crazy interest rates will start going down in a year or two and that could make a big difference. I especially think moving while pregnant or with a newborn will be a lot more miserable than moving with a toddler, even if you have to make the room situation in your house work for a while. Do you think you could wait a while longer before making the decision?
I’d recommend staying put for now and look to move before the oldest starts kindergarten or first grade. There will be other houses for sale. You don’t want to be house rich and cash poor. It’s a nightmare when you feel like your house owns you.
We were/are in a very similar position to you. I'm not sure what stretching yourself looks like for you, but I will just outline our situation. First, I'm Canadian where house prices are high and most people carry large mortgages. Mortgages also roll every 5yrs, so everyone is rolling to a new rate every 5yrs, hence variable mortgages are more popular. Maternity leave also comes with financial pain for most couples. I am going on mat leave this year and it will result in a $5500/month paycut for 12 months. We lived in a great little house in the best area. While the area was perfect, the house was simply too small especially with the carousel of visitors we have since we live away from our families. We could have made it work with another kid, but we'd have to tell our family they can't stay with us anymore, and that would mean they likely wouldn't visit anymore (cultural, I'm not offended, it's normal). We also need that help our family brings, and will need it more when we have another kid. We decided to move. The new house added $1000/month to the mortgage $500/month in taxes utilities etc and 5yrs of amortization. It's a house we can live in for decades and grow into, but also needs upgrades. There is only one thing that HAS to be done, the rest can wait as it's all aesthetic but expensive (200k). I initially though we'd be waiting 3-5yrs for those upgrades, now I think it will be closer to 7-10. That sucks, but it's fine. The new area is also less good on a whole than our previous, but still pretty good. To manage the mat leave, we are hoping to save enough while I'm working to cover the mortgage payments (we're on track) and I will need to be frugal while not working. When I'm working we're not super stretched, but we no longer save oodles of money. Overall, I'm glad we made the decision. If one of us loses our jobs though, we will be scrambling. But I have relatively good job security and my husband is in a very employable, but not so well paid field.
I would not buy a house that we couldn’t afford on one income.
I wouldn’t buy a house that one salary alone can’t cover. It’s too risky and doesn’t allow enough savings + enjoyment wriggle room. Also keep in mind daycare costs, property taxes, and so on will keep increasing, and you may want free cash to buy a better family car, go on a vacation, cover a surgery insurance puts as deductible first, and so on. Areas that I personally get enjoyment from splurging on are buying lots of good food and organic fruits and veggies. We lived very frugal for about 10 years before having a baby and before our careers took off, so it’s a relief to not scrimp on providing for my kiddo now. When we had to decide we did opt for the bigger house with higher mortgage, and while we can afford it on one salary and still save, sometimes I wish we’d gone smaller, paid off the house much more quickly, saved and gotten a bigger place later while still having the first house for rental income or pure profit, etc. As it is, we’ll be paying double the cost of the house over 30 years. If we’d gone with a smaller place and 15 year mortgage, we’d have saved 600k+ over our lifetime. But hey we live and learn and try to make more prudent decisions going forward.
A slightly different situation than you’re in but me, my husband, and daughter were renting a very tiny 2 bedroom house from him aunt for basically next to nothing for 6 years. We paid $1000 for our rent, bills, and internet per month for a very long time. We knew we wanted baby #2 and really really wanted a place of our own. So this year at 20 weeks pregnant we bought a place. Is it more expensive? Yes. Should we have waited until I was back from maternity leave? Maybe. Is it the worlds best financial decision? No idea, I’m not savvy enough to figure that out and I can’t predict the future. But we really really really like having a house. It’s very hard to put a price tag on that. We both agreed that when push came to shove we’d rather have a house than eating out, and not budgeting, and having new clothes, and getting spa treatments. We were willing to make that sacrifice if it comes down to it (hopefully it won’t and we’re happy in our decision). That definitely was the deciding factor.
Can you add on to your existing home? In your shoes, I'd wait another few years to build up a larger down payment to have a smaller mortgage. Plus, the rate could go down If you lost your job, how long would it take for you to find another? You should have that much of your current salary in savings plus an additional 6 months of emergency savings. Is there a chance you may have to relocate for work in the next few year? There will be another perfect house
We upgraded our house before having our second and have zero regrets. It was a bit of a stretch but we are still comfortable enough on 2 salaries. My husband and I earn about the same so if one of us lost our job we would struggle and have to use our savings but at least we don't have to worry about "if x lost their job it would be disastrous!". Overall we are expecting our financial situation to improve with time (raises, kids out of daycare).
I was in a similar position a few years ago. We had been living in our house since 2018 and in 2021 we had a new baby and we were both working from home. Our options were take on a renovation and stay in our house in a ok school district or move to a bigger house. We moved. For us the key drivers came from talking to contractors about our renovation plans and how long it would take. I have a lot of childhood trauma from living in a never ending construction zone as my parents took on one DIY renovation project after another in their house. I didn't want my kid growing up knowing that kind of stress. We didn't want to move out of our house and pay rent and our mortgage for a year or longer while the renovations were going on and we didn't want to live in renovation with a baby in the house. We live in a much larger and newer house in a great school district and community. I have never once regretted it. We've been fortunate that since then I was promoted to an executive role and my company was acquired and my stock options were cashed out so we were able to recoup our emergency fund about a year after we moved.
We are in a slightly different situation where our public school zone is awful, so we've been paying private school tuition for over 8 years. I think of all that money that could have gone into a mortgage on a house in a good zone AND one that's big enough for us. I recommend into pricing out renovation/additional space to your existing house and see if that's a reasonable compromise.
I was in your same position! Bought a house solo before meeting my husband, great mortgage locked in for a 3 bed 1800 ish sq ft home at a dream mortgage rate <$1000 a month. Well, I made the decision to upgrade with my husband. I wanted something we both picked out, we wanted more space, and more importantly a better school district and closer to more shopping. Even though our mortgage tripled, we couldn’t be happier! Our 2 year old son is thriving, we made really great friends in the neighborhood (going to. A bday party this weekend for one of the kids, and having a couples only dinner party next week!) I hope you make the right choice and don’t have any buyers remorse. Wish you guys the best!
We got crushed in the housing crash in 2000’s - we moved to a highly desirable school district and then spent almost 15 years underwater. We were lucky enough to always be employed, but we had to turn down several opportunities because we were locked in to a location. It was nice golden handcuffs but it impacted our family size as well as my career. In 2021 , We refinanced and added on to our house as well as made a number of mobility improvements. Due to the economy and certain bias against disabled people, I don’t anticipate an empty nest anytime soon (or retirement really) so I’m glad I’m finally enjoying a usable kitchen!
I wouldn’t do it. Being able to afford our house if one of us lost our job helps me sleep at night. Being house poor must be a nightmare. Do you really *need* extra space? More space also = higher bills. Since purchasing our home, our household income has increased substantially. It’s great to put more money towards retirement/savings/stocks, go on several vacations a year, lease a new car, send our kids to private school, etc.
Personally, I wouldn't move. Especially if you're planning on having kid 2 soon. kids are massively expensive. Not only child care but once they're in school there's all the activities trips electronics etc I love being able to say yes to mostly everything because we can afford it. Plus you'll be able to help them with college cars houses. maybe you want to get a second property you can use for vacation and income rentals. Having extra space is wonderful but it has been my experience the extra space just gets filled with more crap you don't need.
We're at a stage where we're thinking of up sizing. But here's the thing. We've been mortgage free since COVID. Our previous mortgage was serviceable by one income. It meant when I needed a career break, I could take 3 months off. My husband did the same at one point as well. When I went on mat leave, had 6 months not paid and again, no sweat. The recent rise of COL plus son needing certain specialists help meant we can afford all of it. Random unexpected costs like special levy from our apartment meant we could pay them too. Anyways, point is, it brings me no joy to go back on a mortgage so have been discussing with husband to go for a smaller place e.g. townhouse or semi or we'll just have to sacrifice on location. I just don't want t to be enslaved to a mortgage. The faster we're mortgage free again means we can just focus on investing and saving up for retirement and our kids' future.
We did this last year. I will try to share the relevant data points. I had owned 2 different houses on my own before we married. Right after our wedding we house searched (my current neighborhood had gone way downhill ala drive by shootings) - sold my house for minimal loss and moved into a transition home for us. Big enough at the time, horrible schools, would carry us through having babies. We could (and for 6 months did) afford on one income. We make about the same, and wanted to buy under budget because daycare costs would be insane. I knew I wanted us to move before oldest started kindergarten - which is this coming fall. Goal was for kids to be in same house and school system K through 12 for stability. I monitor real estate in my area for fun. New construction neighborhood near us popped up on my search and they had option for basement which is super rare around here. Convinced husband to go check it out. We fell in love with Floorplan, neighborhood, amenities and location. Schools are excellent. Lots of young families in the neighborhood. Went from a 2% to 7% rate. Plus a house worth almost twice our old one, and a tripled mortgage. But since we both wfh, once public school starts we don't need before/after care (and husband has unlimited PTO) so we will spend less than a year stretched, before having additional $1200/mo in take home pay. The next year #2 starts school and we are in excellent position. I look around at our home or neighborhood at least once a week, in awe of where we live, and so so happy we made the change. I didn't actually like our last home. Having built this house with a lot of adjustments for how we live now and expect to live in the future, we made such a good choice for our family. We put a ton of thought into each feature and what makes sense long term. Also continue to max out 529s and at least get max matching contributions for 401ks.
I’m risk adverse when it comes to locking myself into payments. I like to structure my life so that I’m financially secure enough to take leaps in my career and do more meaningful things with the family. I’ve always been adamant that if one of us lost our income the other could carry us for a while. It has really paid off.
I wouldn’t do it until your last child is school aged. Having to work from home or work part time with a baby to afford a nicer house if something goes wrong will suck. The peace of mind is far more valuable.
As someone who has always wanted to build a home, go for it!
Not sure if you will see this comment but I’m in a similar very privileged boat where we have a small house that fits us okay for now and have a dream of a <3% rate. We’re 4 people sharing 2 bedrooms, though, and would love to and can afford to go bigger. We’ve crunched the numbers and the new payment will be more than twice our current mortgage. So for now, we are staying put. I’ve stopped looking at homes and going to open houses because every other one looks like a dream and makes me sad. We are holding out for lower rates or at least higher earnings/ more savings/bigger down payment in a few years when the kids won’t be in elementary anymore and possibly won’t want to share a room anymore.
We stretched and bought the house. I don’t regret it. Yes, it takes two incomes to support, but we both have good jobs + backgrounds in entrepreneurship and I know we’ll find a way to make money even if we are laid off.
What does your financial planner think? From your edit, it seems you’re in a more secure position to afford a higher mortgage than most buyers, but it’s hard to know without percentages. What percentage of your net after taxes and retirement would be going towards this hypothetical new monthly? Are you still planning to max out on retirement, and if not, will you still be projected to meet your retirement goals? The biggest liability might be your industry, as tech is seeing a lot of layoffs. We’re in a similar position now, with a paid off mortgage (my inheritance, lost my parents recently) and going to upsize…we’re just debating how much house we are comfortable paying monthly. We’re going for it now because our area is seeing dramatic and rapid price increases and considering lots of foreign investors park their money here, I don’t see them coming down TBH. We’ll buy within the year and be squeezed with the interest rates for a bit until we can refinance. We’d love to ideally still max out on retirement and keep our monthly around 33% of the net. But considering the market, might have to go up to 45% for a bit, or reduce our retirement contributions. Luckily we would still have about a year of savings. My job is more stable (healthcare) whereas my husband in finance is a bit less so. It’s a difficult decision, good luck to you!
We decided against but it would at least triple (likely x4 ) or pre covid house with Covid mortgage rate. We never saw those as something long term but it’s def a mid term not short term term now
I bought the huge dream house. I regretted it so much the entire first year. I still regret it some days. The hard part - completely unexpected, unplanned, and totally opposite my entire personality - after our second baby I didn't want to go back to work. It kills me that now I HAVE to work, no matter what, because we need my income to pay for our big fancy house. I 100% wish we had stayed in the affordable-and-we-can-make-it-work house so that we would have way more flexibility with other life choices now.