House buying vs wealth building dilemma
I understand, at least partially it's an emotional decision, but if you faced a similar choice (or even if not), what would you do? Looking for words of wisdom.
We are a 43M/40F couple with 2 kids seeking advice. We had a financial reset in our mid 30s and have been trying to buy in the Northeast suburbs, but keep losing to cash/over ask offers. Our preferred budget is $800-850K, but homes in great school districts are priced/sell at $1.1-1.2M at least.
We can afford the $1.2M house, but it would significantly reduce our investing. Having struggled financially a lot until our mid 30s, it's hard to slow down wealth-building now that we're finally in a better position. We also want to give our kids a head start.
Nicer house means more interest paid and opportunity cost. But if we max retirement accounts and pay off mortgage in 15 years, we'd still have $4M+. That coupled with a house we would enjoy for the next 15 years and kids will have great memories should be enough?
Financial situation (rounded):
- HHI: $500K ($550K with expected promotion within a year)
- Brokerage: $270K (investing $7K/month. $1.1M house with 20% down would consume at least $4K of that)
- MMF for down payment: $250K (frustrating to have it sitting there and not earn market returns)
- Retirement: $400K combined ($50K-$60K/year contributions)
- 529s: $80K (targeting $250K per kid)