Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Mar 27, 2022 18:53:48 GMT -5
Maybe the question that you should be asking yourself is whether you will have to move again for your husband's job. Paying five or ten percent more than a house is worth is no big deal if you'll be staying in place for decades. It's a big stinking deal if you're gonna be uprooted every six. Those buying and selling costs add up!
You also might get better advice if you ditched the vague percentages and came clean as to whether you were considering a $150K house or a $300K house. Those buying and selling costs not only add up but they don't scale very cleanly with the value of the house. The true costs of buying or selling a cheaper house are a much higher percentage of the value of the house.
Yes, that's definitely a question we've asked ourselves. As an adult, I've never lived in a house longer than I have in my current one which is 9 years. So, counting houses/apartments/duplexes I rented, 3 years, 2.5 years, 2 years, 3.5 years, 2 years, 9 years. DH plans to work at least five more years. When DH stops working, I don't know that we'd stay in this particular town.
I wasn't trying to be vague regarding the house price, just neutral. I live in a part of the country that has a much higher housing cost than the middle of the country. So, when I say the price, it already feel outlandish because the market is up. Comparing it to other parts of the country, you'd think we're rich, and we're just upper middle class. IMO, the percentages negate that portion of the discussion.
It's $739,000 3 bed 2.5 bath 3,012 square feet 0.3acre lot
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Mar 27, 2022 18:54:51 GMT -5
Keep in mind, if you wait a while to buy, mortgage rates may change, most likely increase, but you never know. Myself, I'd figure out what I thought it was worth and make an offer a bit below that. If they aren't open to negotiating, I'd move on. Yes, the mortgage rates are a concern. Even the mortgage officer brought that up.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Mar 27, 2022 18:56:34 GMT -5
I think Chloe's husband could retire if he wanted to, so I doubt they'd have to move for his next job. I think he's continuing to work because Chloe has to. But I could be wrong. You're correct. But if he stops working, we'd likely move to wherever it is I'll be working and/or closer to the current grandchild or future grandchildren.
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stillmovingforward
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Post by stillmovingforward on Mar 27, 2022 18:57:45 GMT -5
That's fairly inexpensive here.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Mar 27, 2022 18:58:46 GMT -5
I am one of those dumb people who purchased a house in 2004 and another house in 2006.
DH and I did purchase the house in which I currently live in 2012. We're selling it, and we're moving back to where we used to live.
We've looked at 16 houses. The one that I particularly want is listed at least 5% and possibly 10% above what it should be listed at. The seller's agent subtly told our agent that the sellers picked their own listing price against the agent's advice.
I cannot in my right mind overpay for a house again. I'm really not emotionally over what happened with the Great Recession.
Am I just being nit-picky over 5% to 10%? Do we keep waiting for other listings? Do we settle for a house that isn't quite what we want but is priced correctly? If you buy a not quite what we want house, will you spend the 5% to 10% to make the not quite into what you want? If so, wouldn’t it make more sense to just buy what you want, even if you overpay a bit? Good point, and that came up with one of the houses we looked at yesterday. It is listed $95K less than the one we prefer. We'd have to do at least $50K worth of upgrades to it get it a base level of the preferred house.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Mar 27, 2022 19:00:32 GMT -5
That's fairly inexpensive here. Yes, but don't you live in the state north of me? That's why DD#2 is mad at us for not moving up there. We don't want to pay those housing prices.
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tallguy
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Post by tallguy on Mar 27, 2022 19:03:32 GMT -5
That's fairly inexpensive here. Well below average in Seattle too, for a larger-than-average home and lot.
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teen persuasion
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Post by teen persuasion on Mar 27, 2022 20:31:40 GMT -5
I have nothing to add about the house. But here we have 5 seasons: spring, summer, fall, winter, and mud You forgot blizzard season! But lately we seem to be vacillating from winter to mud to spring and back to winter, all within the span of a week. Snow storm today, negative wind chills tomorrow, 40s and rain, upper 60s midweek, then back to 40 by Friday. It's a rollercoaster, with a storm EVERY weekend.
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pulmonarymd
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Post by pulmonarymd on Mar 27, 2022 21:22:40 GMT -5
I have nothing to add about the house. But here we have 5 seasons: spring, summer, fall, winter, and mud You forgot blizzard season! But lately we seem to be vacillating from winter to mud to spring and back to winter, all within the span of a week. Snow storm today, negative wind chills tomorrow, 40s and rain, upper 60s midweek, then back to 40 by Friday. It's a rollercoaster, with a storm EVERY weekend. Thankfully, I don’t live in that godforsaken winter wonder that you do. Below zero temperatures and 100” of snow, no thanks.😅
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bean29
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Post by bean29 on Mar 28, 2022 11:42:04 GMT -5
My Brother is selling a house he purchased in Orlando at the beginning of the Pandemic because he feels the market is artificially high, so he is harvesting his "Profit". He is making $300,000 in 18 months. He purchased another similar house, but he said the other one is no where near as nice. They rent it out, and block off some weeks for family visits. Mom said his kids are mad at him for selling the nicer one. I figure if he is right, he can buy back into the nicer neighborhood if prices drop, if he is wrong, his other house will probably be mostly paid for from the profit from the first house.
I recently found a house that meets 80-90% of the requirements DH and I have for our next house. I showed it to DH and we entertained making an offer on it. I mentioned the real estate market being prime for a crash and he said he did not think RE being at a high was a concern when you are selling one property at a high, and buying another similar property (at same high). I thought that was a valid point. We did not pursue the house mostly bc the house would have decreased my commute to work, but increased DH's commute to work, it also would have significantly increased the distance between us and DH's parents, and we both visit their house at least 5x a week. Often in is 6 or 7. I think you should concentrate on finding a house you will be happy in. The loss from 2006/2007 is gone, let it go. A house is a different kind of investment. Yes, we expect to make money on them, but you are also paying for Schools/Community/Lifestyle. If you paid rent, you would not get any part of your "investment" back. You have decided you are leaving current community, just concentrate on finding the right home for your future and go on from there. Right now, I am not sure I would want my housing funds at risk in the stock market. I think the housing market risk is safer that deciding to "temporarily" invest housing $$ in the stock market and risk having the stock market hit a 10 year low.
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raeoflyte
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Post by raeoflyte on Mar 28, 2022 12:08:41 GMT -5
Maybe the question that you should be asking yourself is whether you will have to move again for your husband's job. Paying five or ten percent more than a house is worth is no big deal if you'll be staying in place for decades. It's a big stinking deal if you're gonna be uprooted every six. Those buying and selling costs add up!
You also might get better advice if you ditched the vague percentages and came clean as to whether you were considering a $150K house or a $300K house. Those buying and selling costs not only add up but they don't scale very cleanly with the value of the house. The true costs of buying or selling a cheaper house are a much higher percentage of the value of the house.
In all honesty, and I will Google it later today, but are there places with jobs that still have houses priced at $150k? Even $300k is condo with serious problems territory.
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haapai
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Post by haapai on Mar 28, 2022 12:29:56 GMT -5
You were probably right to be vague about the price of the new home. It's way above my pay grade and pretty much lost me. I'm now finding myself offering every possible argument against overpaying by that much. Which really isn't very fair to you because you have to find a place to live and it sounds like SFHs are the only option in the new area.
So I'm going to have to go back to being vague and not using your actual numbers to describe what approach I would use if I really liked a house that I believed was overpriced.
The basic idea is to divide the amount that you are overpaying by the number of years that you expect to or want to live there.
The first calculation is dead simple, but not very accurate. It's dividing the amount overpaid by the number of years. The resulting number is a very rough calculation of how much more you will pay each year if you choose that house at that price.
But since it is a very rough number, I would probably try to refine it a bit to add in excess property taxes paid (I am assuming that your property taxes will be reset to the sale price) and excess mortgage interest paid. I'd do the calculations for a range of three to ten years.
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NastyWoman
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Post by NastyWoman on Mar 28, 2022 12:35:21 GMT -5
There is no bad weather, just the wrong clothes! Said a long-ago friend from Norway. We say that here too. But I disagree. There is bad weather. 15 degrees Fahrenheit, blowing snow, and 30 mph wind is bad weather, no matter how you are dressed and there is good weather! I swear that despite I was not born in the Mediterranean area I was born to live in that weather. It will be one of the things I will really, really miss when I finally pull up roots and move from the Bay Area to Europe
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saveinla
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Post by saveinla on Mar 28, 2022 13:04:18 GMT -5
If you are not selling your house for a loss, you should let go of your fear - yes the same thing may happen again, but real estate cycles come and go and you will be in a much better position now that you were before.
As long as you like the home, I agree with previous posters - give an offer for what you are comfortable with , regardless of what they are asking.
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azucena
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Post by azucena on Mar 28, 2022 13:57:32 GMT -5
Chloe - I was going to ask for the price too because 5% of $300k is a very different number from $750k. I know you have to adjust for market differences. I was leaning towards saying offer -15% of list to have room to negotiate upward, but then you mentioned that this is likely not the last house and only a 5 yr window. This swayed me back to finding a good enough house for this move. I hear you on being scarred/scared about buying in an up market and getting screwed. We bought in a high market for our first house in 2006 for $130k, sold in 2016 in a good market, got multiple offers but still didn't breakeven from the repairs we'd done selling at $140k. We found our dream forever home that was valued at $325k but bidding war drove it up $340k which made DH and I gulp. But, we'd actually lost the house once already and it was off the table for 40 days and then buyers backed out, so we had time to really think about what it meant so we went for it. So, so glad that we did as we love it, our kids love it, neighborhood is great, and it's the hang out house for our kids friends just like we dreamed. We've now benefited from low interest rates to refinance from 3.5% to 2.25% and the market upswing has us at $380k which is crazy for 5 yrs. Doesn't really matter as we're not selling but nice to watch the number grow. Low interest rates right now mean that you can spend a bit more if you really have to have that house. House buying along with college/career choice are two decisions which are mostly blind luck when you sit back and really think about them. We tour a house for a couple of hours and then plunk down $$$ks for it.
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debthaven
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Post by debthaven on Mar 28, 2022 16:18:19 GMT -5
You were probably right to be vague about the price of the new home. It's way above my pay grade and pretty much lost me.I also live in a VHCOLA (albeit in France) so I get it. Prices are very similar here. Knee Deep in Water Chloe there is something that concerns me more than the price of your house ... ie your future commute. I know you currently have a VERY short commute. If this house means you will have a short commute too ... remember that time is money, and money is time. I would definitely "overpay" for a shorter commute.
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Lizard Queen
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Post by Lizard Queen on Mar 28, 2022 16:27:31 GMT -5
I don't think she knows where she's going to get a job yet. That might be a reason not to rush too much. You might want to live somewhere in between.
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Bonny
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Post by Bonny on Mar 28, 2022 18:07:47 GMT -5
We say that here too. But I disagree. There is bad weather. 15 degrees Fahrenheit, blowing snow, and 30 mph wind is bad weather, no matter how you are dressed and there is good weather! I swear that despite I was not born in the Mediterranean area I was born to live in that weather. It will be one of the things I will really, really miss when I finally pull up roots and move from the Bay Area to Europe Naaaaah. Do a cash-out refi and AirB&B your place so you have a place to stay during the dark northern European winters. I am sooooo glad we didn't sell our Bay Area house in 2003. And for the record I thought we overpaid back in 1995. By $7K OMG! Like Chloe I felt a little burned by the we bought in 1990 but we had been looking for two years for the move up house. Then this place showed up; four doors up the street from the old house and we found ourselves bidding against our across the street neighbors in a dead market. House is now worth six times what we paid for it. Doubtful we could afford it today.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Mar 28, 2022 22:21:59 GMT -5
I don't think she knows where she's going to get a job yet. That might be a reason not to rush too much. You might want to live somewhere in between. And this is true that I don't have a job lined up yet. However, we do have to live in the town where DH got a job.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Mar 28, 2022 22:23:49 GMT -5
You were probably right to be vague about the price of the new home. It's way above my pay grade and pretty much lost me.I also live in a VHCOLA (albeit in France) so I get it. Prices are very similar here. Knee Deep in Water Chloe there is something that concerns me more than the price of your house ... ie your future commute. I know you currently have a VERY short commute. If this house means you will have a short commute too ... remember that time is money, and money is time. I would definitely "overpay" for a shorter commute. My commute is definitely going to increase--partly because unless I WFH it's impossible for it to be shorter. It's one of the few things I'll miss when we move.
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buystoys
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Post by buystoys on Mar 29, 2022 4:59:14 GMT -5
Maybe the question that you should be asking yourself is whether you will have to move again for your husband's job. Paying five or ten percent more than a house is worth is no big deal if you'll be staying in place for decades. It's a big stinking deal if you're gonna be uprooted every six. Those buying and selling costs add up!
You also might get better advice if you ditched the vague percentages and came clean as to whether you were considering a $150K house or a $300K house. Those buying and selling costs not only add up but they don't scale very cleanly with the value of the house. The true costs of buying or selling a cheaper house are a much higher percentage of the value of the house.
In all honesty, and I will Google it later today, but are there places with jobs that still have houses priced at $150k? Even $300k is condo with serious problems territory. We're about an hour outside of Dallas and you can still get a house for $150k here. It won't be that nice, i.e. a fixer upper, but they're around. Actually, there are quite a few of them around still. A nice house, though, will likely cost you more like $250k-$350k.
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Lizard Queen
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Post by Lizard Queen on Mar 29, 2022 7:59:43 GMT -5
I don't think she knows where she's going to get a job yet. That might be a reason not to rush too much. You might want to live somewhere in between. And this is true that I don't have a job lined up yet. However, we do have to live in the town where DH got a job. I'm sorry, that sucks. If you think this house is fairly short term, you definitely don't want to overpay. Hopefully your commute doesn't end up too long.
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azucena
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Post by azucena on Mar 29, 2022 8:02:57 GMT -5
Chloe - are you comfortable sharing what area of the country? I know you're pacific NW now. I always think about my YM friends when I travel there or hear of events that might affect them.
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Post by minnesotapaintlady on Mar 29, 2022 12:16:41 GMT -5
In all honesty, and I will Google it later today, but are there places with jobs that still have houses priced at $150k? Even $300k is condo with serious problems territory. We're about an hour outside of Dallas and you can still get a house for $150k here. It won't be that nice, i.e. a fixer upper, but they're around. Actually, there are quite a few of them around still. A nice house, though, will likely cost you more like $250k-$350k. That's about the same here. I looked up my old house that I bought for 42K in 92 and Zillow has it valued at 136K. Most of the ones around it are valued about the same, but they're old, mine was built in 1870.
With 300K you can get a pretty nice place.
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raeoflyte
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Post by raeoflyte on Mar 29, 2022 12:31:25 GMT -5
We're about an hour outside of Dallas and you can still get a house for $150k here. It won't be that nice, i.e. a fixer upper, but they're around. Actually, there are quite a few of them around still. A nice house, though, will likely cost you more like $250k-$350k. That's about the same here. I looked up my old house that I bought for 42K in 92 and Zillow has it valued at 136K. Most of the ones around it are valued about the same, but they're old, mine was built in 1870.
With 300K you can get a pretty nice place.
That made me look up our first condo. We bought it for $69k in 1999. 1 bedroom, 732 square ft. They're selling now for 250k. So I was wrong the under $300k property is out there, but you couldn't raise more than 1 kid in a place that small.
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seriousthistime
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Post by seriousthistime on Mar 29, 2022 12:35:52 GMT -5
The real estate contract probably has a financing contingency. If you feel you are overpaying, this could protect you. If you sign an offer for $X purchase price with 20% down, and the house doesn't appraise for $X, you will not get the full amount of financing you bargained for. You get to walk away, or renegotiate the price. The sellers don't need to know you could make up the difference with a higher downpayment (you mentioned 25%, possibly) or that you might qualify for a loan with PMI (for having less than 20% of appraised value), but you don't need to go either of those routes if the contract does not require it.
So just as an example if you make a full price offer of $739K with 20% down ($147,800) and 80% conventional mortgage ($591,200), and the house appraises for $700K, your 80% loan becomes $560,000. You could go with the higher loan amount but your downpayment would then be less than 20% and you'd pay PMI; or you could put down more to make up the difference; but you are not committed to either of those options. It's time for the seller to get more realistic on the price and hopefully sell for appraised value of $700K.
In my case, when I bought my current place it was priced high but had just been nicely redone and all the good comps were not recent or not as updated. We knew we would run into appraisal issues. We had to renegotiate the sales price downward. But in that case, the difference between sales price and appraised price was only $7K. They came down $5K, and I agreed to a closing date a month earlier than I needed.
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bookkeeper
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Post by bookkeeper on Mar 29, 2022 13:09:57 GMT -5
We are trying to buy a home in a large city in Nebraska. We expect to spend $250,000 to get a 3 bedroom 2 bath house built midcentury. The big trick is finding one with a two car garage. We have time, the right one will come along.
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stillmovingforward
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Post by stillmovingforward on Mar 29, 2022 14:12:04 GMT -5
The real estate contract probably has a financing contingency. If you feel you are overpaying, this could protect you. If you sign an offer for $X purchase price with 20% down, and the house doesn't appraise for $X, you will not get the full amount of financing you bargained for. You get to walk away, or renegotiate the price. The sellers don't need to know you could make up the difference with a higher downpayment (you mentioned 25%, possibly) or that you might qualify for a loan with PMI (for having less than 20% of appraised value), but you don't need to go either of those routes if the contract does not require it. So just as an example if you make a full price offer of $739K with 20% down ($147,800) and 80% conventional mortgage ($591,200), and the house appraises for $700K, your 80% loan becomes $560,000. You could go with the higher loan amount but your downpayment would then be less than 20% and you'd pay PMI; or you could put down more to make up the difference; but you are not committed to either of those options. It's time for the seller to get more realistic on the price and hopefully sell for appraised value of $700K. In my case, when I bought my current place it was priced high but had just been nicely redone and all the good comps were not recent or not as updated. We knew we would run into appraisal issues. We had to renegotiate the sales price downward. But in that case, the difference between sales price and appraised price was only $7K. They came down $5K, and I agreed to a closing date a month earlier than I needed. My DD1 ran into this. The 1st house she wanted didn't appraise for enough so she was able to walk and get her earnest money back.
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dondub
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Post by dondub on Mar 29, 2022 14:21:33 GMT -5
Make an offer at what you think it’s worth minus 5% for negotiation room. Stress to your agent that all the artifacts they don’t want to move have negative value to you also. They can turn you down and rot on the market then. Oftentimes that yields an even lower sales price 4 months from now.
On another note: a listing agent should never let the seller set the price. I saw this many times in my mortgage career dealing with agents. They work for free, lose the listing when it expires, and then watch the new listing come out at the correct, lower value and sell right away.
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haapai
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Post by haapai on Mar 29, 2022 15:36:03 GMT -5
When I suggested that you calculate the annual cost of overpaying, I was trying to nudge you toward considering how that will effect the amount that you are able to save towards retirement.
I can easily envision a scenario in which your husband retires in three years but the house cannot be sold without bringing money to the table and you are stuck with a long commute until either the house increases in value or you tap an after-tax fund to sell it and move nearer to the grands.
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