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Hi Taylor:
I'm probably about 20 years from retirement and I'm thinking about
buying a house. I still have two kids that live at home, I'm a single
father, I have $150,000 in my retirement account, and $180,000 in
cash. Is it worth buying at this point, or should I stay in the rental
market? - Ron
Hi Ron: Boy, you're right on the line between buying and renting.
On one hand, you have the cash to do it. On the other, you still have
kids to care for and you need to keep building that retirement fund.
Let's go over some of the variables and see where we land. |
1. The
finances of buying. Everyone faces different variables when
it comes to home buying, and in your case, it might come down
to the affordability of the house. I don't think you should be
looking to buy a $400,000 home, but I think you might be able
to get something under $300,000. As long as your mortgage doesn't
get too much higher than your current rent, and you don't use
too much of your cash on the down payment, the equity you build
might make up for the added expenses.
2. The cost of buying. Keep in mind that owning a home
puts more on your plate than just expenses. Moving into and maintaining
a house takes a lot of effort, so make sure you'll still be able
to find a balance between your new project, work, and your family.
If you're 20 years away from retirement, you might not want to
bring a lot of added stress into your life right now, especially
if your job takes a lot out of you. You need to factor quality
of life into this decision. Buying a house might make sense on
your balance sheet, but it could also prove to be a little overwhelming.
3. The bottom line. You need to avoid getting a bad mortgage
(naturally). I recommend you don't take anything more than 15
years, possibly 20 years if you get an incredible rate. After
that, you need to think about your schedule, budget, and plans
for the immediate future. Consider retirement, but don't ignore
the 20 years you have between now and then, and whether buying
a house will impede any of your other aspirations.
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As long as
your earnings are steady and can cover most of your costs, you can
look into buying an affordable house. If you're thinking about spending
all of your savings, tripling your monthly expenses, and taking on
a 30-year mortgage, it's probably better if you keep renting instead.
Hope it all works out!
© Taylor Kovar
8-18-2021
More "Go Far With Kovar" Columns
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| Legal Disclaimer:
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.
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