Should we buy the expensive dream home now or get a smaller, more affordable house we know we'll eventually move out of?

Spouse and I take home about $17k per month after tax and maxing out 401ks (about 295k total camp per year). We are planning to move back to our MCOL hometown soon so we have started looking at houses. Ideally, this move would be our last (at least for a longggg time-we want to settle down w/our kids), so my preference is to buy our forever house. Continued in comments

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Have you considered buying the smaller home then renting it out to have that additional income when you get the dream home? The bigger home will put you in a bind if something major comes up it’ll be nice to have that additional income on top of increased annual income (assuming your salaries will increase over the next few years)

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Nice! I hope it works out well for you!

What are your future salary prospects like and what are your goals? Are you pretty certain your salary will continue in an upward trajectory over time? Do you plan to keep working with at least the level of salary you have now for the next 20-30 years?

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Well first determine if that’s something you think you’d be willing to do if it came to it… never know how recessions unfold. I’d you can’t do that, might not be worth the risk until later in life.

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I think associate makes a good point. And as someone who thought they bought their “forever” home at age 31…then sold it and moved to the opposite coast and paid 2x what my forever home cost just 3 years later, I think rising income and kids will likely change your perspective on what that forever home may be. Buying a 500k home and either renting it out or selling at your income level are pretty safe paths. That said, I think interest rates are going up further this year, and we are already starting to see significant softening in the market (at least mine). Could be a buying opportunity for a more expensive home, if you think you’d be happy there for a while.

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Also a good point. What we think our “dream” home is right now is *probably* what we will continue to be comfortable buying. I’m sure if we had an unlimited income, we’d LOVE to get a $2m+ home in the dream neighborhood lol but idk how realistic that is! I think we’d be happy long term with our current idea of the dream home, which is still quite nice! But what you’re saying does make sense. I would have never thought I’d be able to afford what we can now, so my realistic dream home looked a whole lot different back then

Buy expensive home now, it will appreciate better. Sell it at 55, buy smaller.
You will be living in the best property you can afford during your active live.

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Good perspective! And we won’t have to worry about buying in a good school district then, which makes houses that much more expensive

But, prices for those houses range from $700k-$1M+ with about a $5k mortgage. We have also looked at smaller houses that need work and that we don’t see ourselves in super long term. Those would be about $450-500k with about a $2.5k mortgage.

We are currently paying $1600 for our mortgage so the jump to $5k is SHOCKING. I know we can afford both options but it’s scary committing to pay $5k monthly just for “rent.” On the other hand, real estate will only keep going up, so if we want to buy that same forever house five or ten years down the line, chances are it will be higher than the price it is now.

Should we pay for a smaller house for a few years until we feel more comfortable locking ourselves into that big payment, or should we bite the bullet now and get the dream home?

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Go for the big house. You can always refinance over time or reduce your 401K contribution. Now is the moment where you have your kids at home, and after you and your spouse have worked hard to earn $17K, you deserve it. If you go with the smaller house, trust me, it’ll take many years for you to decide to move out and maybe you never will because your children will start moving out or not using the house as much because the prefer to be with friends so you will stay in the small house forever. Plans change over time you know? Have the guts to do what makes you happy now.

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We’re in a similar situation and are likely going for the expensive home. Reasons being that while the housing market may slow down with recession it likely won’t for the area and type of home we’re looking for, moving becomes a hassle with kids and is expensive as well, multiple real estate costs, less need for private school in good area.

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Buy the small house on a 15 year mortgage

Buy only what you need. The Jones’s don’t know you so why are you trying to please them? Who cares what you make?

Wait, you are comfortable with a $5k mortgage on a $17k take home, without even adding all the other house related expenses?!? That's very brave of you and good luck. I couldnt personally stomach this but thats just me, I am very risk averse.

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