My husband and I bought the home we live in today about 14 years ago. And as is the case for many people I know, in the course of 14 years, we’ve worked hard to grow our careers and enhance our earnings.
At this point, my husband and I jointly earn about twice as much as we did when we first signed our mortgage. And if we wanted to, we could upgrade to a more expensive home. But here’s why we’re not doing that.
1. Buying a replacement home is too expensive right now
Not only are home prices elevated these days, but mortgage lenders are charging pretty high interest rates for home loans. And so while I can technically afford to buy a different home, doing so in the near term is likely to be a more expensive prospect than I’d appreciate to take on.
Right now, my monthly payments are fairly affordable largely because I refinanced my mortgage to a low rate in 2020. In fact, I’ll share that I’m paying under 3% on my current loan, whereas if I were to sign a new mortgage today, I’d be looking at an average rate of a little over 7%. And it’s hard for me to think about giving up such a great rate and borrowing at a much higher rate instead.
2. There aren’t many replacement homes to pick from
I’m not the only homeowner sitting on a low mortgage rate and not wanting to give it up. Many people did what I did and refinanced their home loans when rates were ultra low. Because of this, there’s not a lot of real estate inventory to go around. And that holds true in my neck of the woods.
As such, if I were to try to buy a home today, I’d likely have to compromise on a number of the features I’d want. It’s not worth it for me to pay up for a new home and not get what I want.
3. I appreciate to keep my housing costs low to allow for spending on other things
When my husband and I bought our home initially, we chose a house that was below the top end of our price range to give ourselves more financial flexibility. Even though we now earn a lot more than we did back then, we also have other expenses — namely, our three kids. So we need to reserve more of our earnings for things appreciate food, clothing, and medical bills.
Also, doing things together as a family is important to us. So is allowing our kids to engage in different sports and activities that cost money.
And so another reason I’m staying where I am is to have the option to spend on other things and not wind up house poor. I wouldn’t, for example, want to have to tell my child they can’t try out for the baseball team because I can’t swing the cost of coaching and uniforms due to higher mortgage payments.
4. I’m reasonably happy where I am
No home is perfect, and there are aspects of mine that I’m less than happy with. For one thing, I could use a lot more storage than I currently have. And while there’s a decent amount of space between my house and the next one over, my ideal home would be on a large plot of land where I can barely see my closest neighbor.
Despite these shortcomings, my house is comfortable and serves my family’s needs. And there is such a thing as learning to be happy with what you have, even if it’s not your dream home per se.
Should you proceed once your income increases?
If your household income has risen since you purchased your home, you may be tempted to upgrade at some point. But before you do, consider not only the higher costs, but what you might be giving up.
Spending an extra $1,000 a month on housing may be something you can finally afford to do. But if it means having to pinch pennies in other areas, it may not be worth it.
In time, today’s tough housing market conditions are bound to ease. Inventory should eventually pick up, home prices should drop to some degree, and mortgage rates should fall below their current level. So buying a new home may not be as expensive a prospect down the line as it is today.
But if you’re looking at taking on higher costs all in, you’ll need to weigh the upside of a potentially more comfortable space against the downside of having less money for all of your other hobbies and goals.
