Bigger mortgage vs. private school.

[Anonymous]

I know that many people have had to make this decision, but I get more nervous thinking about a mortgage that will cost me $2000 more per month for 30 years than $2000 per month for 12 years of private school. Plus, I can always quickly remove my child from private school if things go bad from an income perspective, but getting out of a home is more complex.

Can someone help me through the thought process here, since I feel like I am the only one afraid of the bigger morgtage commitment.

[Anonymous]

The first thing I'd look at are the numbers you're assuming. For private school, $2000/month sounds right for right now, but the price increases every year. What percentage is normal? You can probably find out.

Would you really have to increase your mortgage payment by $2000/month? Are there cheaper alternatives? I estimate that's about the monthly payment for borrowing an extra $300K -- do you have to go that high?

[Anonymous]

Anonymous wrote:The first thing I'd look at are the numbers you're assuming. For private school, $2000/month sounds right for right now, but the price increases every year. What percentage is normal? You can probably find out.

Would you really have to increase your mortgage payment by $2000/month? Are there cheaper alternatives? I estimate that's about the monthly payment for borrowing an extra $300K -- do you have to go that high?

Yes, we do to get into a school district that will give us a comparable school experience as our present private school. Our home is worth 650K, and I am thinking we need to look at $900+K to get a house we would be happy with (same size as the one we have).

[Anonymous]

If you like your private school and can pay for it, why not stay there? If you go to public, and hate the local school, or miss deadlines to test into TAG etc, you may not be able to sell and recoup your money in a timely fashion...

[Anonymous]

Well, when you pay your mortgage, you are building equity. That's something you can use in retirement, or borrow against at some point. Private school tuition is an expense.

The private school cost is per child. If you are sure you have one child, your numbers are Ok. But you might have to double or triple the private school costs if you have more kids.

You can't count on private school tuition staying the same. You should be able to count on your mortgage if it is fixed.

You are right that you could pull out of public school. But are you prepared, under financial pressure, to actually send your child to the school where you currently live? If the answer is absolutely not, then you are looking at selling your house and moving anyway, which is what you would do if you could not afford your mortgage.

It's hard to compare the value of a private education vs. the public school. You need to do that on your own.

[Anonymous]

The problem is that equity can evaporate as many saw in housing bubbles. The Tax benefits of paying the mortgage vs tuition levels out about 30%, according to my accountant...The benefits of the educational style you prefer should never fade.

[Anonymous]

Why do you think you NEED "$900+K to get a house we would be happy with (same size as the one we have)"?

I would look at reassessing your need to live in a house of this size or with comparable features.

[Anonymous]

The investment in a home is appreciable. The value will grow over the next decades and your payment will remain the same.

The costs of private school are not fixed and there is no appreciable value, speaking from a financial point only.

Higher value homes tend to hold their value at a higher percentage than lower value homes.

[Anonymous]

Anonymous wrote:The investment in a home is appreciable. The value will grow over the next decades and your payment will remain the same.

The costs of private school are not fixed and there is no appreciable value, speaking from a financial point only.

Higher value homes tend to hold their value at a higher percentage than lower value homes.

last sentence is fatally flawed without taking into account location of the home.

[Anonymous]

Neither. I don't think private school is the answer, but then again having a much bigger mortgage isn't going to solve all your problems either. Move into a really small house in a good, not great, school district.

[Anonymous]

I'm personally planning on taking on a larger mortgage rather than paying for private school, because I'd prefer my daughter to go to public school. (at a better school than where we're currently located.) Plus with a house, there's the possibility of appreciation, plus the tax deductability of mortgage interest. So I might get that money back. With private school tuition, that money is just gone.

That said, it sounds like you are happy with your private school, so there's obviously more to this decision than just money. I would agree with the other posters, though - if you have more kids, private school could end up being a much bigger expense than a bigger mortgage.

[Anonymous]

Big House in a Good School District versus Best Private Schools

Our child is just about to finish college so, my husband and I have lived this discussion. For what it is worth, here is our perspective:
We have a big beautiful house located in a good school district outside of New York but, we elected for the best Private school's K-12.
There were a couple of years when we had to rent out our big beautiful home to accomplish this still, it was worth every sacrifice!

This is difficult, if not impossible, subject to discuss because the outcomes vary depending on which private and public school system is being compared. We knew that our child would be lost in Scarsdale instead he was nurtured at every point. We think that this has made all the difference. Children are forged starting in preschool rather than in college.

You will definitely discover your family's priorities as you plan for education. Best to you!

[Anonymous]

We went with cheaper housing in a terrible public school district b/c we just assumed our kids would go private. Live in DC where we can walk to work although kids have to be driven to school. Once you decide what you want, it's an easy decision.

[Anonymous]

OP, do you have a child in private already? If not, and you are just planning ahead, then here is what we considered:

1. Could we find a house we liked in one of the better districts (we were looking at the Whitman or BCC clusters in MoCo) at a price we could afford?

2. Did our child get admitted to a school we liked and felt was worth the investment?

Our answers were 1. no and 2. yes. So we kept our DC house, packed #1 off to private school and #2 followed along when it was time.

If the answer to #1 had been yes, we would have probably done that. We were moving from a house we had put a lot of work into, so we were pretty picky and a lot of what we saw needed work even at $1.25m+ asking prices.

If we could not find a house but DC did not get admitted to a school where we felt it was worth writing the check, then we either would have (1) done DC public for a year (we're JKLM) and tried again or (2) looked a lot harder for a house in MoCo.

You may end up with a different outcome than we did, but I think exploring both options was helpful to us in making the decision. Good luck!

[Anonymous]

Midwest transplant to the DC area. FYI, the concept of needing to go to private schools in order to get into a Tier 1 university seems to be the mindset of this area and other large metropolitan areas but it is not universal. Go to the burbs. Buy a house that presumably will appreciate and save the tuition which guarantees nothing for your child. We have spent the last 8 years in private schools forgoing our excellent public school because we got caught up in this mindset. Lack of "elite" schools haven't hurt my friend's children from getting into the schools of their choice. My kids are established where they are so I am not pulling them out now, but I regret every putting us on this path. I feel it has been a total waste of money.