How much should I spend on a new house?
I am looking at the possibility of getting a new home. The home i live in is a small starter home that is rather nice as far as starter homes go. I got it after first moving out of my parent's home after going to work at my first job. Bought it about 11 years ago for 86,500. I owe about 70,000 on it and the house right next door that is almost exactly the same sold for a few months ago for about 120,000. So, after realtor costs I'm looking at about 40,000 in profit that I'm willing to put into a new home. I have liked my current house and it's not like I'm desparate to get out of it. The payment is quite affordable. It's just that it isn't the greatest immediate area, it doesn't have a garage, and it has well water (which I am quite tired of).
There is a new development in my city that is quite nice and the homes are all being built mostly by one developer that offers a choice of several different plans. There is one particular plan I really like that is about 2,000 sq feet, which is plenty big for me. The house offers nice add-ons such as wood floors, crown molding, granite, etc., and they seem to be well built. It is almost like the "dream" home in my realm of possibility. The asking price is 215,000. I don't know how far down that can be negotiated or not.
I have about 350,000 in cash and investments (not retirement) that I could tap into to make a down payment. I am thinking if I made a downpayment of about 65K or 70K, I could get this house at a payment of about only 100 or so over what I'm currently paying, if I were able to get one of these great 3.5-4.0% rates everyone is talking about. I just ran my free credit report and I have about a 740 score. I have no debts at all other than my current mortgage. I make about 60K in my current job that I've been at for over a year and a half. On paper it looks like I easily have the money to do this, and now would be the time to take advantage of the rates and get into a much nicer house for only a small and affordable increase in my monthly payment. Once my house sells and I re-invest the profits, I'll have only used about 30K of my savings. But there is also the issue of what if my house doesn't sell right away and I've got 2 mortgages? I can definitely afford to pay both for quite some time, but do I want to? I have been told that small starter homes like mine usually sell quite easily, though.
Most of this savings I have came to me through a family inheritance, so it's not like I make enough salary to ever save something like that again anytime soon, which makes me very leery to touch it. But then I also wonder if now is my best chance to make the move to a nicer home. This new home would well suit me for years and years as I am single and don't plan on having a family any time soon. I just get the feeling that now Im in my mid thirties and it's time to move out of this starter home.
Please give me some advice--would you use the savings to make the big down payment and take advantage of these rates to get a house I'd be happy in for a long time into the future?
There is also the possiblity of looking at older homes in my area. Unfortunately, it seems like the entire availabilty in my area any lower than the 200K range is just not anything I really want, at least based on what I've seen online. If I am going to make this move, I want to move into something I really want. I want something either new or updated, and it doesn't seem like there's anything in my area that meets those criteria. Of course I'll go look with an agent and might be surprised. I would certainly be more comfortable getting something in the 170-180K range so I wouldn't have to tap as much into my savings. But is the extra 30K for something I really want worth it? Should I settle for something I don't really love when I am making a move like this? Buying a new home is certainly something I don't plan on doing more than once in the near future.