House Lust

Back in June, we decided to take out a mortgage on our paid-off home. Why would we do such a thing? Opportunity costs. Paying off the low interest debt on our mortgage gave us a guaranteed return, though not as good of a return as we expect to get in a diversified portfolio of stocks and bonds. Any dollar you put towards one goal can't also be put towards something else, and all that. So we're investing the funds...mostly.

But that's just the sensible, personal finance reason that I'm obligated to state on the blog.

Another reason, the real reason, was that we wanted to buy another house. One in Tempe, close to our friends' new house, with visions of us walking with our future children over to our buddies' place for board games and beverages. If we couldn't use our wealth to buy the kind of life we imagined for us and our family, what's the point?

Still, this is an emotional decision. It's driven by want, and a want that's not entirely justified. We're a whole ten minutes' drive from this neighborhood and our friends anyway. It's not a big deal. And our current house and neighborhood are great. We'd be trading a good situation for a slightly better one.

Counter point: we want it. And we might break out in a Mona Lisa freak out if we don't get what we want. Gimme. Gimme house.

In the past couple months, cooler heads have prevailed, mostly. We know the timing is all wrong: Mrs. Done by Forty is trying to finish her PhD in the next twelve months. It's not convenient right now to pack up all our belongings, haul them across down, renovate our current house, and turn it into a rental. And while there probably isn't any time will great to do all that, trying to make it happen while she's in the academic home stretch seems particularly foolish.

Then there's the financial aspect. While we'll likely turn a decent profit renting out our current home, sans property manager and with just a $100k mortgage, it's not going to make up for the fact that a new $300k home comes with a brand spanking new $240k mortgage, too. Throw in taxes and insurance, and we're looking at a new monthly bill of $1300 for the next thirty years. That's not even contemplating closing costs, maintenance, or the pesky-but-real opportunity costs from forking over a sixty-thousand dollar down payment. 

There's no way we'll be 'done by forty' if we go forward with a buying a new house. It's just too large a purchase, more than doubling our current mortgage. If we stay where we are, we can probably reach financial independence in under four years. With a new, fancy-but-expensive home, it's going to be more like eight.

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Like Garth Turner would say, we're house horny. We like the idea of a big new house, one that's renovated, and pretty, and one we can have right now. It's not logical: it's house lust. 

Here's the latest object of our desire. Cute, right? Four bedrooms, two baths, a pool, and two living room areas. And while the kitchen and bathrooms are not our style, they're good enough for now and big enough to stretch into, once we do some renovations down the line. 

Our logical, frugal minds know our current house is fine. We have a big pile of cash from the new mortgage just begging to be used for bathroom and kitchen renovations. We love our neighbors, who are thoughtful enough to send sympathy cards when they heard about Pepper, and we love our neighborhood, too. We're right by the park where we play kickball, and can ride our bikes to our hearts' content in the greenbelt. 

Might our new home seem as good as these others, once it has fancy stone counters in the kitchen, and new porcelain tiles cooling our bare feet as we step out of the shower?

There's only one way to find out.

Our latest plan, which seems to change every few weeks, is to drop roughly half of our new borrowed funds into renovating the house over the next year. We'll put new tile in the washroom and guest bedroom, gut the guest bath, and do over the kitchen with new cabinets, counters, & appliances. It's a lot of work, and we'll be doing it all ourselves if we want to stay anywhere near our $50,000 budget...which is leading to my hesitancy. 

Might we spend all that money and still want to move? 

In typical fashion, we have more questions than answers. This is our first home. While we own a couple rentals, we're still really new at all of this, and learning on the fly, to boot. Might we love renovating? Hate it? Should we be renters again?

There's no substitute for experience, so I suppose we should just to pick what we think is the best path forward, and try to learn something about ourselves as we go. Though a crystal ball sure would come in handy at times like these, when the siren call of realtor.com lets us know that the perfect home just came on the market, and it's in just the right neighborhood, and might we like to put in an offer?

*Photo is from Nick Kenrick at Flickr Creative Commons