I’m 35 years old and bought my first house in 2014 for $190k, now owing $85k at 2.8% interest, with about $300k in equity. It’s a good house, but since we’ve started a family (two kids, ages 4 and 6), it feels small. My father-in-law, 70, has severe arthritis and might soon need to live in a nursing home or move in with us. So, we decided to build a new home with a suite for him on the main level. The total cost is about $1.1 million at 6.875% interest—a big jump from my current situation. Our family income is $350k, and my father-in-law will contribute about $150k from selling his house after our build is complete. Am I reaching too far here?
Looking at the numbers, you’ll have a $450k down payment on a $1.1M house with a $350k family income. If you manage your spending well and don’t have other big debts, this seems manageable.
Wylie said:
Looking at the numbers, you’ll have a $450k down payment on a $1.1M house with a $350k family income. If you manage your spending well and don’t have other big debts, this seems manageable.
Thanks for the reassurance. We don’t have much debt but will need to adjust our spending priorities.
@Beckett
What jobs do you and others in your household have to earn that kind of income?
Ray said:
@Beckett
What jobs do you and others in your household have to earn that kind of income?
I work in medical device sales.
You’re at a point in your life where it might be good to take this step. Your income should increase over time, making this a reasonable risk to take now.
Brynn said:
You’re at a point in your life where it might be good to take this step. Your income should increase over time, making this a reasonable risk to take now.
As a real estate agent, do you think adding an in-law suite is a better investment for home equity than adding a sports court, especially considering the aging population?
@Beckett
Think long-term. In 30 years, you might be the one using the in-law suite, so make it nice or easy to renovate.
@Beckett
Homes suitable for multi-generational living are increasingly valuable. Your situation isn’t unique, and you’re well-positioned as demand for such homes is expected to rise as the population ages.
@Beckett
Absolutely, that’s a very sought-after feature and a smart addition.
@Beckett
Your home’s value will grow at the same rate as others in your area. While the in-law suite may add value, it won’t necessarily accelerate the growth of your home’s equity more than other single-family homes.
Consider the risk if you lose your job. How would that affect your ability to afford this new home?
Nash said:
Consider the risk if you lose your job. How would that affect your ability to afford this new home?
Job security is a concern. Although it’s unlikely I’d be laid off given my territory, it’s not impossible. I might also consider charging rent to my father-in-law.
@Beckett
It’s good to be cautious. If you’re not already saving what your new mortgage payment will be, think carefully before proceeding. The increased costs aren’t just the mortgage but also taxes, utilities, and maintenance.
@Nash
Definitely aware of the potential changes. I have savings but they could deplete quickly if needed.
Nash said:
Consider the risk if you lose your job. How would that affect your ability to afford this new home?
It’s true that anyone can lose their job. But living in fear isn’t helpful. You need to balance caution with living your life.
@CaseyMorganHome
Absolutely, but it’s important to balance. With such a significant increase in costs, saving might become difficult, and a job loss could quickly lead to financial trouble. There are many factors to consider.
@Nash
You have a high income which could allow you to pay off the home quickly. If things get tough, you could revert to a basic 30-year mortgage plan.
CaseyMorganHome said:
@Nash
You have a high income which could allow you to pay off the home quickly. If things get tough, you could revert to a basic 30-year mortgage plan.
It’s not just about income, but also how much they save now. They need to be prepared for all the extra costs that come with a bigger house.
@Nash
True, but isn’t it also about living in a home they love? Maybe they need to take the chance now and adjust if necessary later.