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10-25-2012, 11:08 AM #1
Should I sell our Dream house to fulfill our dream?
We just became DR fans. We however are both 50, so retirement and savings is paramount. We also have a 3 & 5 year old. We have no debt besides mortgage, and never had debt. We have 90,000 in IRA that I put 200 towards a month. DR said should be 750,000 in 15 yrs. Have 50,000 savings, 9000 ESA girls college put 100 toward that. Husband owns his own business and we 1/2 own the commerical property it's in. (free and clear) The building will bring in a steady rent income in retirement so want to keep. Business may be worth 100,000 when we go to sell. Our goal is to have a house paid off for in 15 years, have million saved, and live comfortable. House payment is for 30 years with a loan modification for 5. Husbands brings home 5200 month. Payments on house currently 1997 incl. taxes. in 5 years will be 2400. Not close to DR 25-35%. We owe 320000 which was incurred by stupid HELOC for 2nd business that went bust.
Can break even on house. Should I take my 50,000 and go buy another home, with 15yr mrt. within 25-35%,1300-1500 which will alllow us to save more monthly or after 5 years put down my 50,000 on current mort. bringing my payments in line with 25-35% but have to take out 30 years to do so? We live behind my sister and her girls so that is my emotional problem big time with leaving. Current house is larger than we need but we built it (3000sf) Can sell and break even. ADVICE DEEPLY NEEDED!
10-25-2012, 12:28 PM #2
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This is your dream house. If you can work out a way to keep it, I would.
One thing you could do - you said you have $50,000 in savings that's liquid. I'd set aside 3-6 months of expenses from that and put the rest on your mortgage, and put every extra penny you can towards the house without touching any of your retirement savings.
If you can drop a big chunk on your house to get down to 80% LTV and refinance to get rid of PMI you just might be able to get that house down to a more affordable monthly payment.
10-25-2012, 12:47 PM #3
Where do you want to be in 15 years? Are you planning on downsizing the house in 15 years? Are you planning on selling the business? Right now I think if you made no changes now and just sold everything 15 years from now you'd be all set, but not sure if that's where you want to end up.
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10-25-2012, 01:17 PM #4
We can sell the house in 15 years because our youngest would be headed off to college or at least out of school. Do you think I should refi after 5 years, bring down the payment and just ride it out for 15 years, sell this house and buy a smaller home for retirement for cash? I don't know where we will end up since our oldest daughter lives in Maryland. Who knows, we may end up there? So we have no set place on where we will end up.
10-25-2012, 09:45 PM #5
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I wouldn't sell the house in a down market. You don't need to and you really don't want to. You can opt to pay off the 30 year mortgage in 15 years by paying extra toward the principal.
We're in a similar situation to yours (50's, raising a younger child, small mortgage on our house, 10-15 years away from retirement). We're socking away as much in retirement as we possibly can. Yes, we're going to pay off our mortgage early but at our age retirement money is paramount. The only reason we're paying off our mortgage is to ease up our cash-flow.
I think you may want to sit down with a financial planner who also has tax experience. You want to know how to arrange your finances so to either have college money for the kids while also meeting your retirement needs OR arrange your retirement investments so they don't hurt your kids' chances of getting financial aid.
10-25-2012, 11:38 PM #6
I second sitting down with a financial planner. You have a lot of unique things you need to consider.
Personally, I would get rid of the too large, too expensive house asap and put my money towards a more comfortable sized and affordable home. Dream homes can quickly become financial nightmares.
10-26-2012, 12:17 AM #7
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Ask yourself=do you own the house or does it own you. I know "its your dream house" but is it still or would you find youself in a nightmare. I third sitting w/ a financial planner,maybe even 2. Whatever you do,do it thoughtfully and slowly w/o panic. Breathe. and hugs.
10-26-2012, 08:57 PM #8
thank you all so much for your support.
10-27-2012, 02:16 PM #9
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You seem to be on a good path. Since it is your dream house and since you live by your sister, I wouldn't sell the house. It's good for you and your kids to be by family. Keep doing what you are doing and enjoy your lovely home.
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