Long story short, my wife and I bought a home 2.5 years ago that was in the top end of our budget, with both of us working full time.
In those 2.5 years we did a ton of renovations- kitchen, bath, and so on. Also in those 2.5 years, we had 2 kids.
Fast forward to today, my wife was recently laid off and has loved being home with our kids. We decided that it will be best for them to have mom stay home (as this is something she also really wants). She’s willing to work part time but doesn’t have anything lined up yet.
Basically our options are we keep the house and be house poor- no vacations, investing, eating out, etc.
OR we sell and either rent or buy a cheaper house with a payment closer to 2k per month.
I’ve crunched some numbers, even if we refi and get PMI off- our mortgage will still be $3500+.
The issue is we love our house, we love where we live. We put a lot of money into it and wouldn’t get all of that back. It has appreciated in value (from 495k to 575k) so we would walk away with some money in our pocket, but we wouldn’t even be breaking even with all the renovations we’ve done.
What should we do? Should we try to make it work for a few years until our kids go to school, or sell and get something cheaper- rent or buy?
TLDR- I keep going back and forth. I’d feel like I’m losing money if we sell, but at the same time I feel like this monthly payment is insane and is causing me a lot of stress.
Any advice is much appreciated.
$4200 mortgage payment. Should I sell?
byu/Traditional_Plum_158 inpersonalfinance
Posted by Traditional_Plum_158
38 Comments
Just being honest, is this plan even feasible?
Due to the interest rates going up and house values going up, this plan isn’t even possible in most of America right now. I bought my house 5 years ago for 375K. Mortgage all in is about 2.5K. If I sold my house today(for 600K), I couldn’t afford the same home(obviously) and even if I went to buy a 400-500K house my payments would be more than my current house. In my unique situation, I could just put like 200K down and make it work, but if your house hasn’t almost doubled in price then that’s not as easy.
If you game out what 2K/month buys you right now, it isn’t much in pretty much any major city/suburb.
To be completely blunt, it sounds like you made a poor financial decision and now have to live with that choice. You bought more home than you could afford given any lifestyle changes, a common mistake, but a mistake none the less.
2.5 years you will have build almost no equity in the home outside what it appreciated in value, you’re in the highest interest component of the mortgage (because you’ve paid off almost no principle).
I see two reasonable options:
* You sell and eat the loss for the reno costs/etc
* Your wife goes back to work until you can build more equity in the home then becomes a SAHM
Riding it out with a single income shouldn’t even be on the table. You’d be one emergency away from deciding between making payments or eating food that month; which is not where you want to ever be.
That’s a high mortgage payment for a single salary, unless you’re making 250k plus. Living house poor will be a whole another level of stress. If your wife isn’t planning on working then I think selling the house would make sense.
If you can’t afford it, you can’t afford it.
No vacations, no family outings, no eating out? Trust me, you’ll look back on these years as missed opportunities when your kids are no longer kids.
No money to invest? You’re setting yourself up for a painful future.
Can you give us anything regarding your income? Other expenses/debt? Did you finance any of those renovations? I would say if you can’t at least save 10% towards retirement and keep a healthy emergency fund then you can’t afford it. Either your wife goes back to work full time or you sell.
Keep the house, kids will be in school before you know it and your wife will have more time for a job.
Just double-checking some of your assumptions here. Is there a reason you have to refinance in order to remove PMI? Are there viable alternatives (downsizing, renting, etc.) that are actually cheaper? What is the interest rate on your current mortgage? Edit: Also, how much would your wife need to make from a part-time job to make the numbers work? Is that even a viable option?
My wife stayed home when we had kids and living on one income takes a strict budget. We went without a lot of things like that weren’t necessities, like vacations.
The first thing you need to do is make a detailed budget and track where every dollar is going. If you can’t do that, you are going to end up with a lot of credit card debt. Once you know your finances to that level of detail, you will know if you need to move or not.
If I were in your position, I would try the part time job first and see how that goes. If you can’t absorb the loss of that part time job then go full time stay at home.
We delayed having kids for a few years to make the stay at home plan work. It took a lot of planning and saving. It wasn’t something we decided on a whim.
I was in the same basic position that you are, kept the house and struggled for a few years, then got a significant pay boost and now I’m super glad we didn’t sell and rent. I would do the same in a second, but:
– I have a very safe, very predictable job
– We don’t really eat out or vacation much anyway
– Child was older and has moved out now
– I have a really good state pension, so putting retirement savings on hold was not that big a deal.
Is it possible to increase your income as well as your wife working part time? How hard will it be for your wife to get back into her career if she needs to or when your kids go to school?
I was in a similar situation, we bought a house that was on the edge of what we could afford and after a year they double our property taxes. We liked the place a lot but we were very much house poor, basically living paycheck to paycheck which I did not like at all. Same situation with my wife becoming a stay at home mom in the proccess. Ended up finding a great rental that was basically the same price as what we were paying in interest on our house mortgage. I don’t regret it because we got money out (our house basically appreciated the same that yours has) and have been able to put that into a HYSA and continue adding to it each month with the difference between our old mortgage and new rent. Plus now I don’t feel worried that if something major were to happen I couldn’t afford it.
Can you add some numbers to your post? What is your net monthly income, and if your wife did find a part-time job, how much might she realistically be able to earn? Any non-mortgage debt?
Have you adjusted your W-4 since your wife was laid off to increase your take home pay?
Do you have extra rooms you can rent out? Maybe that is an option
This is a really tough situation… To echo another commenter, knowing more info on your income (and wife’s previous income) and expenses would be helpful. Refinancing from $4200/mo to $3500/mo would be a help, but probably still not a good option with a single income. Selling isn’t a good option, though, either. I imagine you’d likely regret it if you love the house and wouldn’t get your money back. I guess a good approach would be to crunch the numbers on how much $$$ you would lose by selling (are you just barely breaking even, or losing out significantly?) compared to how much $$$ you could save with a lower housing payment (how much would it cost to rent or buy a place that actually makes sense for your family?). Sorry you’re in this position!
You need to sit down with a financial planner. They can go through your budget, income, current retirement savings and plot out your future. You are not thinking logically and shouldn’t rely on Reddit at this point. Both scenarios are problematic.
I don’t know where you live, but in many areas of the US it is a bad housing market for sellers where I am and I was unable to sell my home when I needed to move out of state despite dropping the price to under what I bought it for 1.5 years prior, and had spent 20k on improving, and had to rent it out for less than the mortgage payment and get a rental in my new home state. It wasn’t my best financial decision to buy the house, and I had to just rent it out for the cash flow when it didn’t sell in a reasonable amount of time for a lower price. May be worth looking into what you can rent your house for and rent it out for a few years while you rent a smaller place. The numbers didn’t look super favorable for me if I had other options I would take them, but depending on the rental market where you live it could be a fix for your cash flow situation that could allow you to sell the house later once it has appreciated more, or move back in once your kids are older.
House poor is no way to live life. How good are you at budgeting?
With the limited information you provided you should either sell or the wife goes back to work full time. Since you bought at the top of your budget with two incomes I would recommend selling. If you could barely afford it with two incomes, then you aren’t going to be able to afford it on one.
You don’t say what your annual income is, your age, or your current financial position. Without understanding that, we can’t really give you any sort of an answer. $4200 could be a lot or a little.
You either lose the house and massively downsize and move somewhere cheaper.
Accept that you will be very house poor for the next 10 years.
Or someone finds a new job, or a second job to help pay for things.
Your wife will need to work part time as long as there is a relative to watch the kids and that is scraping by with no fun or quality of life. I’d recommend selling it unfortunately the new house you buy will be a significant downgrade
Having small kids will go by in the blink of an eye. Having been there, I know it is tough to see past that. You need to look at what is on your best interest long term and make your decisions around that.
I think you tough it out until the kids are in school – sounds like you all viewed it as a long term decision, get through a tight 5 years out of interest for the next 30. If you really love the house, she really should stick to the plan and be going back to work at minimum part time (really should be full time to cover the home you all love), she’ll prob get at least a quality 6 months or so at home with the kids until then which is not nothing
You don’t want to sell / downsize and find yourself wishing and wanting more in 5 years once things open up and being back in the market, paying for more renos on a third house etc
can you keep your current house and rent it out? Not sure if the numbers will work out, but it might be worth looking at.
If it were me I’d keep the house, the wife work part time, hunker down for a bit, play catch up when the kids are a couple of years older.
I also don’t care about vacations or things.
Tha interest rates now are rough. Even if you you try the stay at home for a few years you might get lucky and have the rates drop a bit or the house increase in valve.
Both times Ive bought a house it was rough for a few years as my income went up and I paid down debt that came with buying/renovating/etc. Both times it has significantly increased my net worth.
Selling seems like the worst option. You can choose to be house poor with a SAHM, or have your wife work. If she doesn’t want to work outside of the home, she should consider becoming a home day-care provider. She could restrict it to school age only for after-school hours (including early dismissal days) and school-closed days if she does not want to run it full time.
You’re only looking at a payment. Look at the breakdown. How much are you paying off principal every month. People always ignore this part. Like if you’re paying $500 to principal every month (and that number increases a little every month) then your true cost is $3700.
What about insurance? Can you find something cheaper? That could shave $100 off or something like that.
Are you taking into account the tax deduction you get from property taxes and MID? It may or may not apply to you depending on whether you take the standard deduction or not. But maybe you save a few bucks in taxes owning that you would not renting.
My husband and I purposefully bought a house in a range where the lowest paycheck would cover the payment (granted this was in 2021 when you could still get 2.5% interest rates). That way, if one of us lost our job, then we could still make the payments.
It’s such a relief having a lower mortgage, we have two kids and can go on vacations, out to eat, afford emergencies etc. If your wife really wants to be a SAHM, I would heavily consider selling your home and downsizing
If you can save $700 a month is that enough for you to be less house poor? I’m curious because $700/mo seems like a LOT of savings. That being said, if this was just for a few years until the kids are in school, would it be worth it? Would you prefer that? If your wife works part time would that be easier? Would it be regular? It sounds like you really need to talk about it, and look at what all options look like for you and your budgtes.
I always wonder about these houses. I see a lot of these expensive houses in my area. There are a lot of cars in the driveway. I figured the parents and all the grown kids were sharing the mortgage.
Don’t look at money. It’s your family, you have two kids now and a wife, thy like the house. If you can make it work stay at the house, make it work, get a part time. I wouldn’t move.
I bought a house 2020 and my budget was tight. House poor how they call it around here. Over the years things have gotten better. Wife stays at home and we don’t sweat it economically anymore. I do work two jobs but it works out. I get home at 8 and I get he weekends off. I might be crazy but that’s what I do to make it work. I balance that and family time. Everyone’s happy, sometimes it get bad before it gets better.
It is unlikely you can do both: wife doesn’t work and you keep that house with those payments. If you love the house and she loves staying at home it sounds like a great solution would be for her to get a part time job. Even if she could take home just $2K a month, you’d essentially be cutting that mortgage payment in half! Good luck.
Make a financial decision not an emotional decision; love doesn’t pay the mortgage.
Very tough situation. I reviewed every comment above. It comes down to Long term decision or short term.
In a long term sense, your wife should get a job. SAH parenting is a choice not a lifestyle.
I don’t find SAH is important while kids before teen from a providing guiding to kids standpoint. Living in a nice neighborhood is very important to kids as well. The surrounding neighboring kids influence your kids more than you could imagine. I’d rather choose SAH when kids hit middle school age.
Is there a way she can stay home with the kids and still make a few hundred per month in a side gig to take a little pressure off? If she stays home is she up for making all your food from scratch so costs go down if you were a takeout/ convenience food family before? Are you willing to pack a lunch every day for work?
I’m all for pausing savings and vacations for mom to stay home while kids are small. It sounds like the house is worth keeping. Be creative and know there will be rough bits. You can do it!
Get your wife back to work full time.
What’s the size of your home? And most importantly have you actually looked at other homes that are in that price range?
Stay at home parent is unfortunately a huge luxury in today’s world. So yeah that’s gonna be a huge change financially and either the house or discretionary spending needs to go. Or go back to work even part time to make up for it all.
Your wife could pick up a couple nights waiting tables at any restaurant and easily make $400 a week. I used to work 20 hrs a week in the restaurant biz and walk away with $800. That’s $3200 a month and the majority is cash. Honestly if you love your house refi to get it cheaper and have her pick up a couple of nights waiting tables. Of course this means you will have to watch the kids when she is working.
Can you increase your income? Switch jobs or find another job?