Would buying an expensive house be a bad choice?

[Anonymous]

DH and I have stable jobs with a combined income of 300k. We have 750K in equity in our current house and 600k in cash and investments. We also have a good amount in our TSP and no other debt except our current mortgage. We have two kids in elementary school so we pay for after school and activities. We also pay into their 529 every year. We currently own a nice house in a nice neighborhood, but this house is getting old and I would like to move to a newer home (probably a semi-custom build). Would getting a 1.5 million dollar house with a 480k loan be too much to take on? The mortgage payment would be less than our current house because we would take out less loan and do a 30 year loan instead of a 15 year loan. However, the property taxes would be a lot higher.

[Anonymous]

Of course this is fine given you have so much to put down. Just be mindful that property taxes aren't the only added expense. For a home like that I would want to spend at least 50k on furnishings, including interior design. I have friends who have bought expensive homes and don't have the money to decorate it nicely. I would rather have a smaller less expensive home and be able to buy nice furniture and landscaping.

[Anonymous]

Fine if you think you can handle it. I would be concerned about taking on a 30 year loan if you are over 40-45 as you'll be paying the loan at retirement.

[Anonymous]

I can't think of anything more conservative. Why such a huge downpaynent though? Why use all of your cash? I'd just use whatever equity you have now to put down.

[Anonymous]

I advise you to do a 15 year.

[Anonymous]

If you have a nice home in a nice neighborhood, have you considered renovating it instead of moving?

[Anonymous]

I wouldn't do it. Your elementary aged kids will not be living with you that much longer and what will you do with a huge house when they are gone? Financially you can easily afford it though.

[Anonymous]

A big house is nice for tweens and teens. In fact that's the main thing it's good for.

Re mortgage you can get a 30 year and pay extra in flush times.

[Anonymous]

Q: "Am I rich enough to move into an expensive house with a lower mortgage payment than we have currently?"

A: Yes, you are rich enough.

Seems like humblebrag to me.

[Anonymous]

How did you build so much equity and cash on relatively modest incomes? Did you buy your house like 18 years ago?

[Anonymous]

Is that going to be forever home? Or just for the next 20 15-20 years til kids are out of the house?
What about a million dollar or 1.2 mil newer home? Use equity and get a loan. Don't touch the $600k.
And yes, how did you build the equity and $600k? Are you frugal? (Hard to tell since the next house is a want not a need).
If you don't buy a new house you will have more money by retirement and no need to downgrade when kids leave.
If you do buy it, you get to live in a nicer house but will probably have a lot less saved by retirement and less to leave the kids.
Nicer house or more money? Your call. You can afford the house though.

[Anonymous]

OP here...we do live very frugally. In addition, we got part of the money from inheritance and some of it from investments. The reason I don't think a renovation on our current house will work is we need an extra bathroom and would like the laundry to be on the second floor. Currently, the two kids share a bathroom and it is also the bathroom for guests. It is a super tiny bathroom with almost no room to maneuver. I also have to go up and down stairs to do laundry which is tucked in the tiny mud room between the garage and the the house (can't open door to garage and laundry door at same time and I got hit multiple times when I was taking out laundry and someone walked through the door to the garage). However, we have an HOA so having any additions won't be approved. We still want to stay in our school district and the houses here are expensive so going much below 1.5 mil will be hard. It will be more of a forever home (at least another 25 years) and we will sell it and move to something cheaper for retirement. The reason for the question is I see a lot of posts where people think it is insane to pay so much each month for housing so I wanted to see if there is something I did not think about when considering doing this.

[Anonymous]

I think you are n great shape financially plus you both appear to be Feds so stable paycheck. We always stretched and bought more than we could afford. We lve the space. Do what makes you happy and you can need afford it. Don't worry too much about others opinions.

[Anonymous]

You can definitely afford it. I also found a dream house for $1.5M and am thinking whether we should buy it and whether I want to work for 10 extra years to pay for it. What's better - to stay in the house that you don't like that much, but be able to retire at 50 or buy a dream house and work until 60?

[Anonymous]

Sorry. Think it is a bit much to have that expensive of a home with your income and savings.