‘We have 3 kids, and have rented a 2-bedroom house in Mississippi for 13 years’: Should we buy a home if the mortgage payments cost 30% of our monthly income?

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We have been saving for a house here in Mississippi. We have three kids, and have rented a two-bedroom house in Mississippi for 13 years.’

We have outgrown the apartment after having three kids (aged 9, 7, 2). Rent has also increased, and is now out of control. In a month we will have to renew our lease. 

We used to pay less than $600, and now they’re asking $975 for the same apartment without having had any upgrades. It has poor insulation, which makes winters miserable, and results in monthly electric bills in the $300s for about a 900 square-foot apartment.

We have searched for a house for years, and were even under contract twice. One time we got cold feet, and the second time we got out of contract without penalty because of a home-inspection contingency.

Since then, we’ve found a 15-year-old house above our budget that meets 95% of our wish list. It’s 3,200 square feet with four to five bedrooms, it’s in a good location, and it’s a good price in my opinion. It will cost us $123 per square foot. (Two houses in the same neighborhood sold about 5 months ago for $139 per square foot and $141 per square foot.)

‘I have been a stay-at-home mom for about nine years, but I have the opportunity to work part-time in a few months in a daycare bringing for $400 a month.’

We have saved for a 20% down payment, and possibly could pay up to 30% of the total house cost, which would leave enough for a six-month emergency fund. The bank also told us that we qualify for an appraisal waiver. 

According to my husband’s calculations, we will be spending nearly 30% of our monthly take-home pay on the mortgage. 

I have been a stay-at-home mom for about nine years, but I have the opportunity to work part-time in a few months in a daycare bringing for $400 a month. It’s not much, I know, but my baby would attend for free, and my little bit of income can help with mortgage payments.

Once the baby is able to go to kindergarten in about 3 years, I’ll be able to get back to teaching (private school) full time, Lord willing. I calculate I can bring home at least $2,000 monthly.  Then, we’ll be able to make extra mortgage payments towards the principal.

My question: Should we buy this house?

We might struggle for a year or two until I can contribute with income, but I think this might be a good opportunity to own our first house. Any advice?

Mom With a Plan

The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.

Dear Mom,

Being a parent is a tough job, let alone with three kids in a 900-square-foot two-bedroom apartment. So yes, you need to buy a bigger house. And if you’ve found that dream house, then yes — go for it.

If it’s got most of what you want in a house, and the price is manageable, then why not? Yes, mortgage rates are high — currently hovering at 6% — but economists expect them to go lower, which means you may be able to refinance your loan further down the line (albeit at a cost).  You can check out MarketWatch’s Mortgage Refinancing Calculator here.

“Initially the mortgage payments may have you in a bit of a squeeze, [but] the appreciation and forthcoming tax deductions will lighten the load on the other side,” Cassandra Cummings, a financial adviser and the author of ‘Fearless Finances,’ told MarketWatch. “Not to mention, you will have a place to call home, where you can put your own touch on it.”

You also mentioned that you have saved enough to put down 20% to 30% on the home. I’d say put down 20%, and keep the 10% for any unexpected expenses. The average annual cost of maintaining a single-family home is around $6,100, a recent report by home-services platform Thumbtack said. This could be maintenance work from carpet cleaning to fixing the water heater, or the roof. 

“You do not want to be caught off guard, financially,” Cummings advised.

You can also ask the seller if they were willing to put in any concessions towards the home, such as repairing any issues with the home, or towards buying down the rate. 

Finally, you said that given that you’re not working full-time, you’ll be struggling for a year or two. If it’s manageable, and if you’ve got the energy, maybe you can also pick up some freelance jobs that are not heavy lifts. That would enable you to balance your job while parenting.

In the meantime, you could also start a blog or a social-media channel, and share some of your parenting tips and hacks. Every little extra effort helps. That could help make you a more attractive candidate in the long run.

It’s great that you’re budgeting so carefully. It’s very difficult to time the housing market, and it’s even harder to know if or even when prices will drop. Since you found something that meets 95% of your wants and needs, go for it, buy that house.

All the best with this new chapter in your life.

By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.



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