Op I am afraid your aiming too high, even when your kids will be out of daycare you will have other needs, saving for college, higher costs of sfh maintenance, additional retirement etc.. I would stretch now (given that you have stable jobs and no risk of losing one job) to the max that is doable (meaning no vacations, no new clothes, nothing that is not necessary for 2 years for ex). Review your budget, 100K more borrowed is 500$ a month right? If you cut cable, smartphone etc... Could you save 500 a month? If answer is yes then do that and buy now at 625. If you can't it means that even in 2 years with lower childcare costs you will be housepoor with a 625 with little perspective for big improvements in the future because your teachers salaries are not going to increase like crazy suddenly ...

Anonymous wrote:

Anonymous wrote:But your equity in the townhome will also increase. You are psyching yourself out.

Right, why won't your equity increase along with the market?

Theoretically, but it's uneven. THs don't appreciate as fast as SFHs in most markets, you have uneven neighborhood appreciation (even neighborhoods within a stone's throw of each other), etc.

Anonymous wrote:But your equity in the townhome will also increase. You are psyching yourself out.

Right, why won't your equity increase along with the market?

Anonymous wrote:

Anonymous wrote:Have any of you heard of this new 50 yr mortgage term???
Is that how people will offset these exorbitant home escalations? Their monthly payment is still cheap but the house is "valued" at $1M but should really be $400k.

Is this real?

Sounds like the idea of a starter home is dead. It seems like people are buying for the long term.

Anonymous wrote:Have any of you heard of this new 50 yr mortgage term???
Is that how people will offset these exorbitant home escalations? Their monthly payment is still cheap but the house is "valued" at $1M but should really be $400k.

Is this real?

Have any of you heard of this new 50 yr mortgage term???
Is that how people will offset these exorbitant home escalations? Their monthly payment is still cheap but the house is "valued" at $1M but should really be $400k.

I stretched a bit when I bought mine - my max was $550K (one income) and I ended up buying at $560K because I saw a great house for $575K and made an offer of $560K, which they accepted. (I put $150K down.) The interest rate was low, and I was able to refi when they dropped. The house has appreciated by almost $200K since then, so I'm really glad I stretched, even if I sometimes think it would be nice to go on vacations and stuff.

Buy now or be priced out forever. You can't save enough to keep up with rising prices, so stretch now, take on second tutoring job (what do you do for summers). Any IT skills? SAT prep?

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Anonymous wrote:I'm trying to understand a life situation where child support and day are bills both go away in 2 years. One of you has a toddler and a 16 year old???

Not OP but my husband pays child support for his 16 and 18 year old, and we have an infant and preschooler in daycare.

18 isn't a child

In MD, until he finishes high school, my husband is obligated to pay child support.

What about college expenses?

College expenses are not typically required to be paid by any parent. Married parents aren't obligated to pay for college for their children and neither are divorced parents. Parents may CHOOSE to do so but usually not court obligated to do so.

Yet college financial aid is based on parental income. You will screw your children if you don't think about helping a child with college costs.

I don't think OP ever stated that they would not be helping with college. That could already be factored into their budget planning (or separate savings), and they are just excited that the additional monthly cost of child support will be going away.

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Anonymous wrote:

Anonymous wrote:I'm trying to understand a life situation where child support and day are bills both go away in 2 years. One of you has a toddler and a 16 year old???

Not OP but my husband pays child support for his 16 and 18 year old, and we have an infant and preschooler in daycare.

18 isn't a child

In MD, until he finishes high school, my husband is obligated to pay child support.

What about college expenses?

College expenses are not typically required to be paid by any parent. Married parents aren't obligated to pay for college for their children and neither are divorced parents. Parents may CHOOSE to do so but usually not court obligated to do so.

Yet college financial aid is based on parental income. You will screw your children if you don't think about helping a child with college costs.

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Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm trying to understand a life situation where child support and day are bills both go away in 2 years. One of you has a toddler and a 16 year old???

Not OP but my husband pays child support for his 16 and 18 year old, and we have an infant and preschooler in daycare.

Yes. This is OP and this is our situation. He has a senior in high school and we have two toddlers.

He sounds creepy-an 18 yo and a toddler? Maybe he shouldn't have had two
families if he couldn't afford them. Are you a lot younger?

This is an extremely dumb comment. There are many second marriages that produce children that are much younger than the children from the first marriage. Even Ronald Reagan had children 17 years apart.

OP, you mentioned you and DH are teachers. Could you do some tutoring over the next couple of years for a bit of extra income? Are either of you considering trying to find a new job that pays more?

We are in a similar position (minus the child support) where we're hoping to "move up" in a few years once student loans are paid off and childcare costs go down. But because home prices and interest could be higher by then, we've realized the bottom line is we need to increase our income stream in addition to paying off debt. So I'm now looking in to starting a side business and DH is looking for a new job.

Otherwise it feels like we'll be stuck on this hamster wheel forever ...

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Anonymous wrote:I think you might end up screwed, because even as prices are rising, you're not going to have these super low rates forever.

Lower rates are cheaper financing, that's true, as in a $400K loan at 6% is less per month than a $400K loan at 8%. BUT, when the upshift in rates occurs, the PRICES of homes, especially the non-cash market, will decline. This is simple finance math.

Not sure my finance pedantry helps the OP, but the market in metro DC and especially NOVA is driven by the warmongering that's been going on since 9/11. Believe it or not, if Trump were to scale back Middle East warmongering, that might help you see lower prices. HRC seems to be the neocon dream, so her election would keep them rising. Neither of those is a reason to vote for anyone, IMO.

If I were OP, I'd work to enjoy/resign myself to the townhouse. I'd also work on upping my non-home equity savings, probably in shorter (less than 3 years) maturity treasuries. And I'd keep in mind that being a teacher means a much more stable income than most have, even if that income seems smaller!

You're missing the key fact that interest rates increase when prices are increasing. The economy would be roaring at the same time should there be a massive increase in rates. Or simply runaway inflation. I wouldn't count on an increase in rates resulting in a decrease in prices. It hasn't worked that way in the past.

The decrease in prices due to increasing interest rates is finance math. If interest rates rise, ceteris paribus, prices decrease. Talk to a bond trader if you doubt this. Realize that much of the public policy reason for super low interest rates is that most politicians want to keep asset prices high. If ultra-low rates were jettisoned, asset prices, especially on long-duration assets like homes, would decline and there would be lots of folks, including financial institutions, with capital losses.

Yes, there is a chance that a demand increase is likely to accompany an upward slopping interest rate curve and perhaps that will be a wash for them. In the absence of certainty about these things, I still think the best counsel is to work to increase their savings in nominally safe and liquid assets like short-term treasuries. Short term treasury mutual funds with high correlation with indexes and very, very low fee structures are essentially the same thing.

As for runaway inflation, I'll be happy to discuss that in a minute when I find where I put my tinfoil hat.

It's not that simple. Yes, bond prices and interest rates inversely related is simple but home prices don't necessarily work this way.

Is there a reason you can't stay in your townhome, OP?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think you might end up screwed, because even as prices are rising, you're not going to have these super low rates forever.

Lower rates are cheaper financing, that's true, as in a $400K loan at 6% is less per month than a $400K loan at 8%. BUT, when the upshift in rates occurs, the PRICES of homes, especially the non-cash market, will decline. This is simple finance math.

Not sure my finance pedantry helps the OP, but the market in metro DC and especially NOVA is driven by the warmongering that's been going on since 9/11. Believe it or not, if Trump were to scale back Middle East warmongering, that might help you see lower prices. HRC seems to be the neocon dream, so her election would keep them rising. Neither of those is a reason to vote for anyone, IMO.

If I were OP, I'd work to enjoy/resign myself to the townhouse. I'd also work on upping my non-home equity savings, probably in shorter (less than 3 years) maturity treasuries. And I'd keep in mind that being a teacher means a much more stable income than most have, even if that income seems smaller!

You're missing the key fact that interest rates increase when prices are increasing. The economy would be roaring at the same time should there be a massive increase in rates. Or simply runaway inflation. I wouldn't count on an increase in rates resulting in a decrease in prices. It hasn't worked that way in the past.

The decrease in prices due to increasing interest rates is finance math. If interest rates rise, ceteris paribus, prices decrease. Talk to a bond trader if you doubt this. Realize that much of the public policy reason for super low interest rates is that most politicians want to keep asset prices high. If ultra-low rates were jettisoned, asset prices, especially on long-duration assets like homes, would decline and there would be lots of folks, including financial institutions, with capital losses.

Yes, there is a chance that a demand increase is likely to accompany an upward slopping interest rate curve and perhaps that will be a wash for them. In the absence of certainty about these things, I still think the best counsel is to work to increase their savings in nominally safe and liquid assets like short-term treasuries. Short term treasury mutual funds with high correlation with indexes and very, very low fee structures are essentially the same thing.

As for runaway inflation, I'll be happy to discuss that in a minute when I find where I put my tinfoil hat.