All Forum Posts by: Allen Chandler

@Jessie Dillon I don't intend to bank on refinancing at a lower interest rate. 

@Riley HarrisonI'm saying I don't want the rates to lower before I buy  

Christie, fair points. Not really concerned about how difficult it is to raise a toddler and new born. Not saying I'm a pro, but when people told me it would be difficult raising my first new born, I found it to be quite easy. I'm a healthy young man, in great shape and didn't really struggle with it. My concern is my full time job and my masters in computer engineering and juggling that with the newborn. But I told my wife if she really wanted a 2nd one she would need to really step up when it comes to taking care of the baby. 

I don't think having a rental would throw much more or less of a challenge in raising a new born. My wife and I raised our first living paycheck to paycheck. And this past January our income almost doubled. So we have an excess amount of money coming in now. Food and baby stuff shouod be no problem because we did it with our first living paycheck to paycheck. 

I agree timing the interest rates will be difficult 

David, good point. Maybe, with my wife, I should approach it from a new home standpoint because she loves looking at homes and imagining herself in a nice new home. So very good point. I will take a steo back from trying to get her to understand the financials and just get her dreaming about a nice new home for the summer.

My wife and I have 3 options: 1. stay where we are. 2. buy a second home and rent 1st. 3. sell our home and buy another home. The trick to this entire thing is we want to time interest rates and housing prices right. I believe the interest rates are keeping housing prices from climbing. So MY idea is to buy now before prices could go up and then refinance at a lower rate if they reduce significantly (which I don't expect them to reduce significantly (-2%) anytime soon. My wife wants to pay down debt first then consider buying a second home, especially with a baby on the way. Numbers to come.

Motivation in moving is the reason this all came about: our daughter is 3 and goes to Kindergarten Spring 2025, 2nd baby due September 2024. The school district we are in right now is okay, the school district about 10 minutes away is significantly better. We want our daughter in the better school district.

Both of our income increased significantly this past January. We've originally been living paycheck to paycheck. Our jobs are very stable. Now after all expenses and fun money we have about $3k to do what we want with. We can get a second home without putting anything down (VA loan), move into the school district we want and a much nicer home for our growing family:

Current home (want to rent this out):

One of the largest lots in the area 1/100 lots in an area with 1000's of properties that has navigable water which is our water, at 2.75%, 280k remaining $1650/month, rents $3000 mom will be lending 25k over 5 years at $500/mo payments, and we will use a property manager $300/mo = rental take home of $550/mo income

new home (hypothetical estimates):

$550k @ 7%, paying ~$3300/mo

We will have a period of 9 months starting Dec 2024 where we would be at about -$100 where our older daughter goes to pre-k for $1150/mo and infant is in daycare for $1650/mo. Then our older daughter goes to kindergarten (free) and our younger daughter switches to a cheaper daycare we have lined up @ $650/mo. But every other month we are at about $2000-3000 surplus.

If we stay or buy a second home and rent 1st, the difference is about $1000 in our pockets.

I don't want to make an untimely decision on buying home by missing some kind of interest rate change, based on short term financial struggles when 10's of 1000's of $$$'s could be made. What irritates me is this entire moving thing was my wife's idea originally. She got me spun up on spending $1000's of $'s on home improvements over the last month, a ton of time, she got our realtor spun up who's about to order us a dumpster and get his handy many out here, she got our loan officer and another loan officer spun up getting us pre-approved. And now she wants to drop the entire thing for the next year or two or more.

I've wanted to own a rental since I was a teenage, our home has had all the major repairs and upgrades, it's move-in ready at this point.

The ideal situation for me is to buy a second home in the next few months, @ ~7%, get into our home before summer, interest rates drop over the next year or 2, house appreciates, we make out like bandits in equity and then if it makes sense we refinance to a lower interest rate. (date the rate, marry the mortgage)

TLDR: home 1: House on navigable water 2/3 acre. interest 2.75% @ $288k remaining... monthly payment: $1650/mo, rents: $3000/mo, net after expenses: $500/mo and goes up to $1000 after 5 years.

home 2: 7% interest @ $550k in the school district we want and nicer home.

I want to time the interest rates correctly so they don't go down and prices go up and we get priced out of the market.