Real estate/financial/life dilemma

[lessel]

This is long y'all.

I have a somewhat life/financial/real estate WWMMD situation. I feel like I’ve talked in circles with my H over this and just want some external input. I’ll use actual numbers just since it’s easier, but will DD details. 

So… we bought our house in 2019 and intended on staying here for the long haul. We’re looking at moving to be closer to a specialized school that both of our boys will likely attend for at least a few to the next several years. I’ve posted about some of the issues if you want to look through my history, but the tl;dr is my older son (currently 2nd grade) has ADHD/dyslexia/anxiety. The ‘2E’ type profile. My younger son (rising K) has an ASD diagnosis (‘high-functioning’) and likely ADHD too. (Acknowledgement that these labels are imperfect.) 

We switched my older son to this specialized school in January. He’s doing great and loves it. We love it. And are planning to send DS2 there this fall. In our minds it’s an elementary school commitment, but it’s a K-12 private school and there’s a chance we could be there for the longer haul. It is not cheap and we did not anticipate private school tuition for our boys when we bought our current house. Sending both kids there will cost us around $40k/year. (This is including some minimal financial aid from the school itself and state special need scholarship funding… it would be low $30k/year for each without that support.)

The school is about 45 minutes from our house. They have a bus (extra fee) which means it’s a 10-minute drive to the bus stop plus a 45-minute bus ride to the school. About an hour each way, morning and afternoon. Get on the bus at 7am, get off the bus at 4-4:20pm, traffic depending. If we send both boys to/from on the bus starting in the fall, it will be $5k.

In an effort to reduce distance and housing cost, I thought… well, let’s just sell our house (that’s admittedly too big for what we need), downsize, and move closer to the school. That is proving easier said than done given the area we’re trying to move to, the current housing market dynamics, and the interest rate situation.

So here are some details:

[Redacted some financial deets]

However, real estate closer to the school is low supply, high demand and we are seriously striking out. We have put in over-asking offers and lost to 50k+ over asking, all-cash, no contingency offers. Houses going under contract in under 24 hours before they even honor our showing appt. That sort of thing.

We planned to do a bridge loan against our current house as down payment. And when we go under contract on what we’re buying, we immediately list our house for sale. Everything is set to go w/our lender. We have prepped our house for sale, taken listing pictures, etc.

As we get closer to the summer, I’m starting to get anxious about any of this being actually feasible. Our options seem to be:

1) Consider homes in the low 600s [redacted some financial deets] no yardwork and house cleaner costs (smaller house), so essentially net neutral monthly budget-wise. Still have some money from sale of house to put in savings/direct toward kid tuition.

2) Sell the house and rent. Renting for a year [redacted some financial deets]. Put proceeds from house sale into savings for future down payment/kid tuition. (This is the most life-inconvenient option in the shorter term for sure. H does not want to move twice.)

3) Stay put. Send kids on the bus. Revisit the situation next year during Spring real estate market. (Hard to predict real estate market/interest rate situation later in the year, but generally getting the vibe we would not be able to get top dollar for our house in fall/winter market. The areas we're looking at seem less seasonally affected tbh.)

P.S. We do have a financial advisor call in a couple weeks, so I'm seeking professional advice too... but I've learned a lot from folks here. And hell, this board is the reason we're at a 1.99% interest rate in the first place. 🤣

So, WWMMD? Options I'm not thinking of? I'm sure I've left out details, so ask questions if I've missed stuff.

[bee20]

I was bussed by my public school district to a program in the wealthy part of town starting in 2nd grade. It was an hour and 15 minutes each way on the bus, and it was totally fine. My recommendation would be option C.

It sounds like maybe you have other reasons for wanting to downsize, but "downsizing" from a $680k house to a $600k house seems like a wash financially, you won't get much to add to your savings fund and will lose a lot of money to transaction costs.

Renting temporarily with two young kids sounds tough and again, it seems like mostly a short-term cash boost but an overall financial wash.

At least around here, house prices are still slowly falling so I'd be hesitant to make a move that might only be for 5 years.

[ohgillian]

I don’t know how common this actually is, but I was reading something recently that said, sometimes your lender will let you transfer your current mortgage to a new property. Surely someone on this board is more informed about that than I am, but that would change the math quite a bit.

I think otherwise I would just sit tight for a year. Easier said than done, but that’s what I would do. You aren’t committing to staying there forever; you’re committing to stay for 6 more months and then reevaluate the market.

[lessel]

May 3, 2023 8:42:11 GMT -5 ohgillian said:

I don’t know how common this actually is, but I was reading something recently that said, sometimes your lender will let you transfer your current mortgage to a new property. Surely someone on this board is more informed about that than I am, but that would change the math quite a bit.

I read something about that too and I googled and think it might be a thing in Canada but not the U.S. (and maybe isn't very common even there?). 

ETA: I remember the term is 'mortgage porting' and it seems exceedingly rare among U.S. lenders.

[lessel]

May 3, 2023 8:38:35 GMT -5 bee20 said:

I was bussed by my public school district to a program in the wealthy part of town starting in 2nd grade. It was an hour and 15 minutes each way on the bus, and it was totally fine. My recommendation would be option C.

It sounds like maybe you have other reasons for wanting to downsize, but "downsizing" from a $680k house to a $600k house seems like a wash financially, you won't get much to add to your savings fund and will lose a lot of money to transaction costs.

Renting temporarily with two young kids sounds tough and again, it seems like mostly a short-term cash boost but an overall financial wash.

At least around here, house prices are still slowly falling so I'd be hesitant to make a move that might only be for 5 years.

Thank you for this. The bus ride perspective is helpful. And I try to remind myself that it's not an uncommonly long school commute for rural areas too. In addition to distance, the cost of the bus ride is something to consider for us too. It does make for long days and tired kids.

And you're right... the 'downsizing' cost is mostly a wash near-term financially, and long-term it's really not a wash (costing more w/interest, although if/when rates drop we would refi). 

[wildrice]

Given all of that, I think I'd stay put for now and reevaluate in a year. I think personally I would only move if you could find a cheaper place AND it had a short (like 10 minutes) commute. Buying something that has the same monthly obligation and potentially still a 40 minute car/bus time each day doesn't seem worth it to me. You will be mortgage free in 13 years which is albeit a long time from now, but I'd have a hard time signing up for another 30 years at this point without a significant reduction in monthly payment.

[lessel]

May 3, 2023 9:23:33 GMT -5 wildrice said:

Given all of that, I think I'd stay put for now and reevaluate in a year. I think personally I would only move if you could find a cheaper place AND it had a short (like 10 minutes) commute. Buying something that has the same monthly obligation and potentially still a 40 minute car/bus time each day doesn't seem worth it to me. You will be mortgage free in 13 years which is albeit a long time from now, but I'd have a hard time signing up for another 30 years at this point without a significant reduction in monthly payment.

A house is coming on the market this weekend, listing at 575... perfect space we need, perfect location (10 minutes from school). I think it's going to go for way over asking. We're could probably go 615 on it (unless rates jump wildly in the next week). But honestly I feel like we're going to not get it and there is nothing nearby that is near affordable. 

I asked on the school's parents FB page if anyone had intel on future houses coming to market in the area and got info back on a 1.4M fixer-upper. Like that is the market we're looking in right now. 😩

[bee20]

lessel, maybe you can try making some money off your larger space? I can't imagine airBnB type things being good with a family but something like sniffspot or Neighbor (storage in your house) might help the squeeze.

[jewel]

I don’t know if this is a reasonable possibility, but have you considered renting out your current house and renting something in the new neighborhood? Is there a decent market for both?

[lessel]

May 3, 2023 9:47:21 GMT -5 bee20 said:

lessel , maybe you can try making some money off your larger space? I can't imagine airBnB type things being good with a family but something like sniffspot or Neighbor (storage in your house) might help the squeeze.

Our finished basement is a family room area with two flex space rooms, and there's also unfinished storage space. But not a bedroom/bath setup/kitchenette setup, so no viable AirBnB/rental option. We have a pretty strict HOA so limited ability to do anything along these lines most likely.

[aspentosh]

I'd do 3 because buying for over $100k more than you wanted to spend isn't really going to save much in the long run... especially with the interest rates how they are Of course bus time and longer days don't get fixed, but if you can swing 6 months to a year of looking you'd have (potentially) an end on the horizon.

Could you rent your current house and also rent a house closer to their school? Not sure what that would look like financially.

[lessel]

Re: Renting our house. Our HOA recently approved changes to bylaws about rentals in our neighborhood and I don't know if it's an option. And really, I don't know if I have the bandwidth to be a property manager and deal with potential issues that could bring.

[sadlebred]

Knowing the market near your state and interest rates, I'd stay and re-evaluate in a year. Things could really change in 12 months. Many kids have a long bus ride home from school and survive daily. If you are able to do pick up daily, I'd continue to for now.

That 1.99% interest rate won't be around for a long while.

[womet]

I would stay too. I don't think that an hour on the bus will be that bad. Even if your boys took the bus to their "home" school, they would still be on but bus for some time. Depending on how many stops were before theirs, they could be on it for 30 minutes.

[waverly]

It doesn’t seem like there are houses really available for option 1.

If I liked my house and location I would do option 3.

If I wanted to get out of the area then I would rent.

You must live in a HCOL area because there are 3 bedroom 1 bath options here around 2k.

[tacokick]

I’m sure you have thought of this but is there absolutely anyone in your area or driving past your area that would be willing to take your kids to school too? Surely you aren’t the only family in your area going to the same school?

Maybe the school has this info? When I taught in a private school briefly the office helped families set up “carpooling” and some parents just paid other parents instead of sharing the driving themselves.

[lessel]

May 3, 2023 14:23:29 GMT -5 womet said:

I would stay too. I don't think that an hour on the bus will be that bad. Even if your boys took the bus to their "home" school, they would still be on but bus for some time. Depending on how many stops were before theirs, they could be on it for 30 minutes.

Yeah, when DS1 went to public, his morning bus ride was about a half hour. But the afternoon was maybe 5 minutes. He was first on, first off.

[lessel]

May 3, 2023 16:34:30 GMT -5 tacokick said:

I’m sure you have thought of this but is there absolutely anyone in your area or driving past your area that would be willing to take your kids to school too? Surely you aren’t the only family in your area going to the same school?

Maybe the school has this info? When I taught in a private school briefly the office helped families set up “carpooling” and some parents just paid other parents instead of sharing the driving themselves.

There are about 6 other parents that pick up at our bus stop right now. We're the last stop on the route. All of the kids at our stop are middle/high school. I feel like asking a parent to take 2 kids in booster/car seats when you're well out of that phase is a lot. That said, new kids start every year, so it's possible. I have skimmed the online directory for our zip code among elementary kids and there are only a few. It's a very small school.

[lessel]

May 3, 2023 16:18:05 GMT -5 waverly said:

It doesn’t seem like there are houses really available for option 1.

If I liked my house and location I would do option 3.

If I wanted to get out of the area then I would rent.

You must live in a HCOL area because there are 3 bedroom 1 bath options here around 2k.

For option 1 there are definitely few and far between houses. Just low inventory overall so it's ultra competitive.

We do like the area we're in, but it's not my favorite for a lot of reasons. And I don't love our house... HOWEVER, looking at what's on the market has very much made me appreciate our house a lot more. So that's a weird byproduct of this whole thing.

I guess we're HCOL? I would have thought more medium TBH before, but the particular burbs we're looking at are among the top 3 most expensive in the state apparently, according to random online lists. 

[tacokick]

May 3, 2023 16:40:14 GMT -5 lessel said:

May 3, 2023 16:34:30 GMT -5 tacokick said:

I’m sure you have thought of this but is there absolutely anyone in your area or driving past your area that would be willing to take your kids to school too? Surely you aren’t the only family in your area going to the same school?

Maybe the school has this info? When I taught in a private school briefly the office helped families set up “carpooling” and some parents just paid other parents instead of sharing the driving themselves.

There are about 6 other parents that pick up at our bus stop right now. We're the last stop on the route. All of the kids at our stop are middle/high school. I feel like asking a parent to take 2 kids in booster/car seats when you're well out of that phase is a lot. That said, new kids start every year, so it's possible. I have skimmed the online directory for our zip code among elementary kids and there are only a few. It's a very small school.

I wouldn’t think bus riders would your target though, you’d want a family that was making the drive which I’d think would be more likely to be those with younger kids. Or those trying to cut costs and might welcome taking your kid for some extra money.

Maybe it’s no one! But I’d ask at the office and see what they’d say, maybe they could put the word out for you. They wouldn’t even have to live near you, just be driving past and willing to stop.

[4speedy]

I vote option 3. Do you know anything about the bus? I assume the kids will be similar to your boys and there would be an aid on the bus? When we moved to Seoul, my kids took an hour long bus ride each way. My son has ADHD and anxiety and was basically a loner in school the first year. The bus was where he made all his friends. And the added bonus was that because it was on the bus, the friends he made all lived relatively close to us and I got to know all the parents at the bus stop. The bus had an aid (kids called her “Soupy” for supervisor) and she kept the bus very calm and quiet in the morning. Some kids read, listened to music or books through headphones or finished homework. My daughter was in 7th grade so she usuallly studied. In the afternoon they could be louder but still orderly. They played games and talked and had fun on the way home. We’ve been back since August and I drive them 20 minutes to school and all they talk about is how much they miss the bus.

Hopefully since they are charging that much for the bus (we payed a similar amount), the bus will be more comfortable and have a supervisor in addition to the driver. It could turn out to be a win for everyone and you may decide to keep it up for longer than a year.

ETA: sorry, I had not read the whole thread, I thought your main concern was finances and I wanted to calm your fears that preventing an hour long bus ride would be worth making a financially risky decision.  I didn’t realize you had diversity concerns as well.  I honestly don’t know what decision I would make but I do know my reply above was not well thought out given the new information.

[lessel]

tacokick - I see you're point and that's what I've been investigating. I totally didn't explain it well. I combed through the student directory for addresses near ours and there really aren't any. Our neighborhood is kind of tucked away in the bend of a river and it ends up being like a 15+ extra minute round trip to and from our house from the main roads in the area... that feels like a lot to ask of someone who's already driven 45+ minutes.

4speedy - Man, how I really wish their bus set up was like this. But no, it's just a driver. The driver is amazing, but not the same setup with extra support.

So I guess the issue with plan C is... while longer term it's the smartest mortgage and in the shorter term it's bus time and cost, the kids' tuition is really remains a shitload of money for us. We're going to budget and do everything we can to make it happen, but it's going to mean dropping retirement savings considerably, etc. etc. If we get lucky and find a place for option 1 and the new mortgage rate sucks and the PITI is higher, after downpayment, closing, realtor fees, etc. we stand to still have between 80-120k to put in a savings vehicle for kid tuition. That's why it's such an appealing option. Really the bonus ends up being no bus and a short drive. Does that make sense?

[dcn]

Have you considered putting a bigger chunk of your profit from selling into the new house so your monthly payment is lower? If you are going to net $300K save a year’s worth of tuition and put the rest of it toward the new mortgage. That may be a compromise and give you some wiggle room Monty to month, plus get you closer to the school. Not sure if the timing of everything, but may be something to play with the math on.

As the kids get older will there be school activities/clubs etc? That May effect if they can ride the bus and then you’ll be driving. We very much prioritize living close to school and work whenever possible. The commutes are a non monetary cost of time and for a lot of families the higher mortgage is worth it. So, I totally get your hesitation in the third option.

I think waiting and watching for another year is ok too though - see how you feel after another year at this school and if the distance is ok then great. If not, maybe the real estate market will be better and you can make a move then.

[icedcoffee]

I would stay put. This is a temporary problem and no one knows what the future holds and whether it will be the best choice for kid 2. They haven't gone there yet. 7-4:20 is not that bad. My younger one is at daycare longer than that and hopefully you can train the kids to start their homework on the bus. Elementary years will fly by. How are the middle/high school options in that new area? Would they be ok?

TLDR: I'd stay put. You can always keep a eye on the market and see if anything pops up, but I wouldn't rush over to the new area for something that doesn't check EVERY box.

[simpsongal]

This may not be ideal, but have you considered renting like a 3 bedroom apartment or townhouse near the school?

I’m just thinking back to my law school days when I was trying to save money and time getting to the school. I shared a studio. It was great bc it was only a couple years, I saved so much money and the commute was great.

Your kids are young enough, it could be like adventure.

[cricketwife]

I would also stay put for the moment and re-evaluate. I’ve followed your posts along the way because our kids are similar ages and my kids are both in private school (the circumstances as to “why” are very different). I’ve also recently bought and sold in order to be closer to the private school. So there are aspects of your story that resonate with me, and aspects that are very different in our situations. To be less “MM” about it and more intuitive, I’d say that sometimes when you can’t decide/don’t have a good option/don’t know what to do, not doing anything/waiting is the answer.

From a private school parent viewpoint, I’d say these things—
You don’t know if this will be a good fit yet and private schools seem to be a “fit” or not. So while it’s inconvenient to live so far away, I would recommend testing the waters first even if you could easily move (unless you’d be happy in the new home regardless of the school outcome.)
However, if it’s a good fit, and you see your kids staying there longer term, I would then be “all hands on deck” for finding an option to move. The social aspects of school, play dates, friends, etc are sooooooooooooo hard (impossible, really) when you are 45 minutes away. So I’d be option 3 and keep a great realtor who knows you are not in a rush but will keep her eye out for the perfect house when it becomes available. For me, there would be a point where the proximity to school would outweigh the financial losses of moving. But I’d don’t think you yet have enough information to decide if that’s y’all yet.
Good luck. I’m sorry I don’t have better advice.

eta- because good grief, fat fingers 

[lessel]

@dcn - Re: putting a bigger chunk down. So since we're using a bridge loan (against our current equity) there's a formula for how much they'll give you and their appraisals are ridiculously (and rightfully) conservative. We did this with our last move and our selling price and what it appraised for was $70k higher than the bridge loan appraisal. So we're in a similar situation here. And tbh I'm ok with that. But! We have talked with our lender and will have the option to be able to recast the loan. So if we end up selling extra high, we can put an extra chunk of money toward the principal and recast the mortgage and reduce monthly payment. And if we end up selling lower, then we stick with that cash being some kind of tuition fund. To me, it minimizes the risk in a way I'm most comfortable with.

Also, re: after school activities. We don't do tutoring now since we're doing private school, so only have rec baseball a couple nights a week. NBD now. If we stay at this school into middle, DS1 is super pumped to do all of the sports so that will be something to consider. DS2 is a little guy, so hard to predict...

icedcoffee - The public schools in the area we're looking at are great. That's frankly driving up some of the real estate prices too, IMO. (Also cricketwife because y'all both mentioned the issue of fit). I totally hear you on that issue. DS1 has done 1 semester there and we're definitely 'so far so good' but there's always risk. And with DS2 if we do move closer to the school and this school ends up not being quite right, there are a couple of other really great therapeutic/special needs schools nearby. Generally more of those kinds of school options in the direction we'd be heading vs. where we are now. (Where we are now are a lot more private, religious schools.)

[icedcoffee]

Hmm...so if you moved closer to DS1's school what would you be leaving? Anything? Kind of sounds like not really. In that case I might take back my advice and be all hands on deck to move closer even if the house isn't perfect. It's spring so lots SHOULD be coming on the market. Be ready to jump.

[purplepenguin7]

I understand how much it sucks to be in limbo but I think you just have to sit with #3 until something pops up in the new school area. I would be hesitant to take on a higher, longer mortgage to cut down the hour bus ride. I don't think you should be "stuck" in your house due to a low interest rate but I don't see any financial upside to moving with a higher PITI (and a smaller house). The small cost savings you mentioned (yard work, house cleaners) probably won't make a dent in your tuition and truthfully may not be as big as you are expecting.

I would however continue to look for a home in your desired price range, even if just casually. You never know what will pop up when. We got really lucky in peak 2021. Just the right time, and the right buyer/seller combination.

[wildrice]

May 4, 2023 6:00:41 GMT -5 lessel said:

So I guess the issue with plan C is... while longer term it's the smartest mortgage and in the shorter term it's bus time and cost, the kids' tuition is really remains a shitload of money for us. We're going to budget and do everything we can to make it happen, but it's going to mean dropping retirement savings considerably, etc. etc. If we get lucky and find a place for option 1 and the new mortgage rate sucks and the PITI is higher, after downpayment, closing, realtor fees, etc. we stand to still have between 80-120k to put in a savings vehicle for kid tuition. That's why it's such an appealing option. Really the bonus ends up being no bus and a short drive. Does that make sense?

If you took that 80-120k and put it toward tuition, where would that leave your retirement savings? You're only looking at at most 3 years of tuition being covered in this situation. How old are you guys and what is your retirement savings situation at this point? When do you hope to retire?

I wonder if having a full paid off house in 13 years will be more advantageous for your long term finances than saving 3 years of tuition and then having another 27 years of a higher mortgage. I mean, you don't have to stay there all 27 years obviously but just something to weigh maybe. I'm sorry you are in this position - you shouldn't have to pay so much in tuition just to get your kids the services they need.

Here's another random though - how tied are you to that general area? Could you move to a completely different area, perhaps one with a better real estate market for what you need, and find a different school there? I don't know your backstory very well, but it sounds like your kids have fairly common diagnoses so maybe there are options other than your currently districted school and this one specialized private school that might also have good supports for their situations?