Moving, Mortgages, and a Trailing Spouse Freak Out...

[maddiepaddy]

There is a slim chance that we will be moving next year due to H getting a new job. I am a worrier and hate change, so I'm preemptively freaking out as he's applying for the job(s). 

This would be a move back to our hometown area which of course would have huge benefits. Family, friends, its a nice place, etc... But it would be from a LCOL/MCOL area to a HCOL area. We have grown very accustomed to the lifestyle we can afford where we live now. H's new job would come with a raise, but I doubt it will be enough to account for the change in COL. I work remotely, and the move will not have any affect on my salary - so his salary will become even more important. 

Anyway, I feel like I need a plan, just in case, so that I can stop stressing out about the unknown. I've always put 20% down when purchasing a house. But, I'm thinking that might not be feasible in moving to a higher COL. It's likely we'll end up somewhere where we'll need to do some work - so I'd like to conserve cash. 

Is it still possible to put 10-15% down rather than 20%? If so, what are the implications?

Also, please share your stories of successfully moving from a LCOL to HCOL and how you did not end up broke and living in a box 

[crashgizmo]

Ooh pick me!!

DH and I moved from a LCOL to probably one of the highest COL in the country (Los Angeles) in 2013. We moved for DH's job which included a pay increase but not a huge one. I was a consultant, also working remotely. I was also in freak out mode and did a lot of planning and analyzing. I am happy to say we are homeowners in the new area and couldn't be happier with the decision we made. One of the things that was important for me was to be realistic. We weren't going to get the same size house as we had in our LCOL area. We had to make sacrifices. Also, we had to be okay with having our mortgage be higher. Not too high for comfort, but enough to reasonably get what we wanted while still maintaining a balanced budget.

This is probably not the MM answer, but in my area I don't think 20% down is the norm. For us personally, we knew it was a long term investment and that the market would likely continue to increase as it historically had in our area, so we felt more comfortable with a less than 20% down. We also bought a house that we could put some work into quickly (a lot of sweat equity!) and I feel comfortable with our received home value vs. what we owe. We also plan to refinance in 2017 and are saving for that as well.

For us, it was a matter of risk vs. benefit and I think we made the right choice. Our house is 1200 sq feet vs. our 2000 sq foot house in our LCOL area, but we love it. We're happy here and don't see ourselves leaving for a long time. Another bonus was that last year I decided to quit consulting and take a local FT job, so my salary went up considerably. So that could be a consideration down the road if that works for your situation.

Hope that helps!

[maddiepaddy]

Thanks, crashgizmo . It's helpful to hear a success story I'm sure that we would/will be happy in the end. I think the quality of life increase will certainly offset the financial changes - but It's stressful to think about since where we will live, what our travel budget would look like, etc... are all pretty concrete while general quality of life/happiness is pretty abstract.

Also, are you planning on refinancing because of PMI? Is a refinance the only way to drop PMI these days?

[just]

We just did something similar too. Our new home isn't VHCOL, probably HCOL to MCOL, but compared to our VLCOL previous home, it was still a shock and an adjustment. It was my job that helped us move so I understand the panic, especially since my DH still isn't working (waiting for RN license).

I think you'll get much better advice from others on housing, but somethings we under estimated was the increase in car insurance, the fact that this new state has much higher taxes (we'd considered property tax - but not excise, licensing, etc) and ... as silly as it sounds - food! Groceries are much more expensive here than where we came from.

Having said that, we're already very happy here and it was 100% the right move for us.

[pantsparty]

We moved from Michigan to southern California. We rented for a long time (2007-2014) and when we eventually bought a house, no way did we put 20% down. LOL.

Certainly we've made some adjustments with COL, but our incomes have both risen since moving out here. We are both very happy with where we live, and often state you couldn't pay us to move back to Michigan. LOL.

[maddiepaddy]

Oct 19, 2015 18:28:39 GMT -5 just said:

We just did something similar too. Our new home isn't VHCOL, probably HCOL to MCOL, but compared to our VLCOL previous home, it was still a shock and an adjustment. It was my job that helped us move so I understand the panic, especially since my DH still isn't working (waiting for RN license).

I think you'll get much better advice from others on housing, but somethings we under estimated was the increase in car insurance, the fact that this new state has much higher taxes (we'd considered property tax - but not excise, licensing, etc) and ... as silly as it sounds - food! Groceries are much more expensive here than where we came from.

Having said that, we're already very happy here and it was 100% the right move for us.

Good point, thanks! I'll add this to my list. 

[audette]

I work remotely, and DH's job tosses us on the winds... We have w.never bought a house together, so I don't have much advice regarding that. We just accept each move as it comes, and try to make the best of it.

My biggest advice - build up a very hefty efund/savings. Having money in the bank makes it a whole lot easier to handle the uncertainty of moving around...

[janegold]

I haven't done a move but we live in VHCOL and only put down 10%. It's very common here. We still qualified for conventional financing, no PMI, but we also took out a second mortgage because our condo exceeded conventional limits. You may need to pay PMI depending on the circumstances but there may be ways around it.

Good luck!

[madisen]

Oct 19, 2015 18:14:50 GMT -5 maddiepaddy said:

Thanks, crashgizmo . It's helpful to hear a success story I'm sure that we would/will be happy in the end. I think the quality of life increase will certainly offset the financial changes - but It's stressful to think about since where we will live, what our travel budget would look like, etc... are all pretty concrete while general quality of life/happiness is pretty abstract.

Also, are you planning on refinancing because of PMI? Is a refinance the only way to drop PMI these days?

If you have a conforming or high bal fnma/fhlmc loan you generally don't need to refi to get rid of pmi, you'd have to get an appraisal if you think your house has increased in value faster than your amortization schedule.

[krisim]

Another trailing spouse here! We recently moved from a LCOL to MCOL, and it's been an eye opener. Food and our healthcare is more expensive, neither of which we really planned on. Our salaries went up, but not significantly. We are renting temporarily but planning to start building a house soon, and we discovered that housing is more expensive here because land is crazy expensive (there are pretty much no houses for sale in the area we are living in so building is really our only option to stay near the new school DD goes to). Our house will be a little larger and have nicer finishes than our former home, but at a cost that's much higher than we would have spent in our old location. We are planning to put 10% down so that we have enough cash on hand to feel comfortable after the purchase. Our bank gave us pretty good rates for conventional loans, but we are still working on a plan to avoid taking out a jumbo loan.

[UnderProtest]

I moved from a mcol to a vvhcol but we are just renting so I can't speak to that part. But I can commiserate with the unsettled feeling and the trailing spouse bit. Good luck. It sucks being the trailing spouse.

[AAM2012]

We recently put 15% down even though we could afford to have put 20% down however, it would have been too uncomfortable for my liking. Our monthly PMI was so cheap (IMO) that it wasn't worth us putting the extra money down. My recommendation for you is to 1) take a deep breath and 2) cut back if you can and start saving all extra funds that you can to help you with moving costs, purchasing costs etc.

Good luck!

[msmerymac]

I'm a trailing spouse who works remotely. Thankfully, we moved from HCOL to MCOL. But we still put 10% down on our house 2 years ago. We are now in the process of re-financing to a 15 year mortgage and have very close to 20% equity (we've been paying a little extra on the principle).

The only downside to less than 20% is PMI, but our PMI was quite low. You can remove it through a refi or when you get 78% loan to value ratio.

[maddiepaddy]

Oct 19, 2015 20:39:30 GMT -5 janegold said:

I haven't done a move but we live in VHCOL and only put down 10%. It's very common here. We still qualified for conventional financing, no PMI, but we also took out a second mortgage because our condo exceeded conventional limits. You may need to pay PMI depending on the circumstances but there may be ways around it.

Good luck!

This is good to know.... didn't know it was possible - Thanks!

[maddiepaddy]

Oct 19, 2015 20:55:10 GMT -5 @vicmo said:

Can you rent for a bit (or even a few years) to get a better idea of the area and your budget in the new COL, and maybe get closer to 20% saved? My sister & BIL moved from one hcol to another (SF to Toronto) and they rented for a year and looked at a ton of areas before buying. The real estate market is nuts in Toronto (like bidding wars on every single house) and it was easier to house hunt while living locally too.

Renting for a bit is definitely a possibility. It seems like rent prices are crazy and it would be much less in terms of monthly cash flow to buy (comparing similar properties). But, it may be worth it to buy ourselves time to adjust. But, we do know the area well, since it's our hometown area and still have tons of friends and family there. I suppose it's also within the realm of possibility that we could stay with family for a couple of months...

That being said, if we can find a decent property that doesn't need work, we would easily have 20%. I'm only considering putting less down if we need extra cash to do work on the house. I suppose that in that case there would be an argument for still putting 20% down on our mortgage and doing a HELOC or similar for the work... IDK - haven't run the hypothetical numbers yet

[formerlyak]

It might help if you could tell us the general metro area you might be moving to. That way, MMers who live in that metro can chime in on some of the things that tend to be higher in that particular metro. Example, I know the cost of an actual house is much higher here in LA than in North Jersey where my cousin lives, but her property taxes are a killer. And I am always surprised to see the cost of childcare in Seattle, as LA seems cheaper on that. Certain VHCOL areas have great food costs while others do not, etc.

[mrs.jacinthe]

I'm a trailing spouse and 4 years ago we moved from LCOL to HCOL (Ohio to NorCal - but we are not in SF, so just HCOL). We rented for 1.5 years, while we house hunted, and then bought with substantially less than 20% down due to having to OOP to sell our OH house. I work from home (although I'm hoping to change that now that we're settled) and his salary doubled, which was enough to make up for the difference in house prices (mostly).

What I have been most surprised by is the cost of groceries here. Housing is about 3x what we spent in Ohio, but our grocery budget more than doubled, which I thought was surprising since we moved *closer* to produce.

[maddiepaddy]

Oct 20, 2015 11:19:41 GMT -5 formerlyak said:

It might help if you could tell us the general metro area you might be moving to. That way, MMers who live in that metro can chime in on some of the things that tend to be higher in that particular metro. Example, I know the cost of an actual house is much higher here in LA than in North Jersey where my cousin lives, but her property taxes are a killer. And I am always surprised to see the cost of childcare in Seattle, as LA seems cheaper on that. Certain VHCOL areas have great food costs while others do not, etc.

I will definitely do that if H gets an offer