Dear MarketWatch,
My husband has got a job offer that will give him a 40% pay raise. But we have to move to a more expensive city two hours away. We’ve lived in our home for 24 years, and have no debt left to pay off.
We have about a little less than half a million in assets: $150,000 in cash savings accounts, $25,000 in a taxable investment account, retirement savings, and we’d also get $200,000 from the sale of our home. I also work from home, so no loss of income there.
Given how high mortgage rates have risen, and the fact that prices haven’t yet come down, should we sell our current home and buy a bigger house, or rent a one-bedroom apartment for $1,700 a month and wait until things cool off?
What should we do?
Sincerely,
A perplexed homeowner
‘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 [email protected].
Dear perplexed homeowner,
Moving from your home of 24 years is a big decision. But the absolute first thing you need to do is to think about how well you know this new city.
You said it’s about two hours away. Have you lived in it before? How often have you visited? Are you familiar with the neighborhoods? Are you content with grocery stores, the shops, the restaurants, the gyms, and such?
If this is a brand-new adventure for you both, then renting a one-bedroom apartment for a year while feeling out the city is a good idea. “It allows you ample time to learn the area and select which neighborhood you would like to move into,” Kristina Morales, a Cleveland-based realtor with her own firm, Kristina Morales Real Estate, told MarketWatch.
Particularly with mortgage rates much higher than they were last year — at 5.3% for the fixed-rate 30-year — and with existing home prices yet to dip, it may be a good time to start looking, but hold off on committing to selling your old home.
And besides, you probably also have a ton of memories in the 24 years you spent in that home. And it’s a considerable asset to have in your back pocket, and that home and land will only continue to appreciate while you look.
While I don’t know where you are based, and what city you’re moving to, which are two important points that would inform any decision to buy or rent, there are exceptions to renting.
For instance, if you live in deep New Jersey and are considering renting a one-bedroom in New York City, that may not be the best idea for now— rents in the city are skyrocketing. In some parts of the country, you may be paying more in rent than you would on a mortgage.
On the other hand, if you’re familiar with the new city, and set on leaving 24 years behind you, then maybe it’s time to buy. Especially if you’re planning on staying another 20 years in this new home, it may make sense to put that money towards a mortgage, rather than rent.
Remember to consider how much you’re planning to finance, Morales stressed. You said you’d get $200,000 from the sale of your old home. “If the loan amount will be relatively small due to applying home sale proceeds, I would lean toward purchasing,” she said.
And if you’re planning to be living in this new home for a long time, “remember, that you can always refinance your rate when rates improve,” Morales added. “However, you can never change what you originally paid for the home.”
Bottom line: You do not need to make all the decisions right now. You need to see if your husband likes his job and whether you both like your new city first. Once you have sold your house, it is something that can not be undone.
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