[UPDATE] Am I screwing myself by taking a job in a high cost of living (HCOL) area? I’ll be closer to family but the current housing market will consume most of the pay difference

Submitted by FadewayThrow t3_yhpdtn in personalfinance

Original post

TL;DR: Great job in HCOL area close to family. Current housing market and interest rates will double our monthly payments for a similar house in this HCOL area. Need help.

Updates on numbers:

  1. Looked thoroughly at the houses in the area. Seems like we will be OK with a $650k house instead of a $800k house.
  2. HCOL house at $650k will cost us a total of $855k with interest (15 year mortgage, APR 5.8%, monthly $3835)
  3. The remaining payments on our current LCOL house is $160k with interest (15 year mortgage, APR 3.45%, 6 years left, monthly $2200 [we've been paying extra])
  4. The cost of private school in my current area should be $415k for our children through 12th grade. This is roughly $2166 per month.

Breakdown:

  1. $160k (remaining house balance) + $415k (private school) = $575k (cost over next 15 years for not moving)
  2. $855k (HCOL house) - $575k (cost for not moving) = $280k (extra money we'll spend over 15 years with the move)

Considerations:

  • We could send our kids to public schools in our current LCOL area if they got into a magnet program but these are tricky and not guaranteed. And may not be feasible with transportation with our current work schedule.
  • The $415k we would save in private school would essentially go into equity in the HCOL house. Which is monetary whereas their education is not immediately monetary.
  • I'm seeing this as $280k over 15 years would be the cost of living close to family. Which seems worth it in our situation.
  • I've been avoiding factoring the difference in salary because our job field sucks right now. But if I did, it would be roughly $201k difference over 15 years without on call/extras. Which would make the difference to move $80k over 15 years.

Please let me know your thoughts! You guys have been very, very helpful so far!

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Comments

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JaKr8 t1_iug4icw wrote

Quality of like should be the priority here. It seems like you won't be homeless or in danger of living check to check whether you stay or move..

If you will be happier in your new location then ~$50-100k over 10 years seems like a nominal price to pay.

You can't make up for time lost with any amount of $$. So move if you'll ultimately be happier.

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FadewayThrow OP t1_iug7qup wrote

I was under the wrong impression about schools. I thought they had public schools at earlier ages but turns out these are public schools that you pay for. So we’ll still need daycare until the kids are school aged. Daycare there is significantly more… Back to the drawing board

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Zootallurs t1_iufse0y wrote

No need to do a 15-year mortgage. HCOL area should see better appreciation. Being able to send your kids to public school is huge.

You need to do a full budget for yourself and make sure it’s comfortable, if you move.

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FadewayThrow OP t1_iug8b8p wrote

Total cost of a 30y with APR of 6.7% would be $1,192,430. Monthly payments of $3,065

Total cost of a 15y with APR of 5.8% would be $854,820. Monthly payments of $3,835.

And we would be debt free in 15y vs 30y. Idk $800 a month seems worth it to me

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bqw371_ t1_iuhf9uv wrote

You can always take the 30 year loan and pay extra on the principal. You could essentially make the payments as if it were the 15 year loan terms but hold back that $800 per month if you want for vacation or Christmas time.

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ChiSquare1963 t1_iug8i7u wrote

The finances look pretty good in this scenario. If moving is going to improve your life by being closer to family and in a city with less crime, the relatively small financial hit is worth it. HCOL areas often have benefits like lower crime and better amenities, which offset the cost.

Consider whether you want to do a 15 year, 20 year, or 30 year mortgage. Interest rate is slightly lower on 15-year, but you may want the flexibility of a longer mortgage. You already know how to pay extra if you decide that the flexibility would be useful.

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FadewayThrow OP t1_iug98za wrote

The area is certainly nicer and a better area to raise a family in. I think I would rather have the flexibility of not having a mortgage looming over my head with a 15 year. And at these interest rates, other investment opportunities are going to yield similar results.

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shann0ff t1_iugot6b wrote

The numbers will likely change if/when you refinance.

I’m still team MOVE TO HCOL.

You guys are in a good money position. It seems your quality of life will be better even though you’re not pocketing as much money.

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