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Is it a sound financial decision to buy a house that you will only live in for four to five years?

My husband and I have no debt. I am 25 years and he is 27 years old. We currently have about $70,000 saved between our investment account and a money market savings account. I am contributing 10% to a 401(k) with a 5% match. Our household income is $65,000. My husband is a PhD student and I'm a nurse. The rent we would pay for a similar-sized house is $1,500-1,750 a month. We are planning on looking for a house that is under $175,000. We can afford a down payment that's 15-20% of this amount. Is this a sound financial decision? We do not want to continue living in an apartment, but we would only live in this house for four to five years.

Real Estate
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February 2018

Couple things to think about here.....

the shorter time you own the house the great the risk of losing money on the property.  But it sounds like you are mostly trying to lower your monthy expenses.

With your assumptions of a $175,000 (or less) house - if you can put 20% down your payment would be less than $1000 per month (depending on where you live and taxes).  That means you would be saving $500-750 per month plus get a tax break.  AND some of that monthly payment would go to paying down the mortgage.

As long as you think the house won't lose more than $500/m in value the time you live there, seems like a no brainer.   Even if the house doesn't go up in value at all you would have a tough time losing money.

 

Best of Luck,

David

February 2018
February 2018
February 2018
February 2018