Mortgage Question

[Hristo Botev]

I’m ok with fast and good.

[Seppia]

To me, there’s value in not having debt.
No debt means more resiliency and more options to do whatever you want along the road.
Also, being only 1/4 of your NW, I think it would work as a good diversificator (does that word exist? Probably not).

[Alphaville]

for me the fast component invites blunders, and the non-cheap component ties up money in real estate, but ymmv.

e.g. fast: my cabin was built in a hurry on the wrong spot

so i had to excavate to improve water flows

but place is not enough for passive solar so now... i'd like to move it...

but the septic is already there and i can't move the septic

[Hristo Botev]

Ha! All of those problems are solved by using the land as a parking spot for an airstream. Worst case scenario. I build the deck in the wrong spot.

[Alphaville]

ah! i can't do a rocket stove in an airstream. i did live in a camper for a while but it burned propane like crazy in winter.

abundant propane besides the fossil fuel price requires large fixed tanks on property. we did consider for a while but they're ugly and potentially explosive (can bullets make propane explode? don't want to find out)

i might end up doing it all over from scratch and buy new land... if we stay in this state. then i can build by hand with cob or rammed earth properly oriented to the sun, build my rocket stove, dig a root cellar, attach a greenhouse, capture rain, grow a garden, do a polyculture, process waste, etc.

for me the land is ultimately about the energy flows--that's the real rural hedge, the self sufficiency, etc., in the physical sphere.

[Hristo Botev]

then i can build by hand with cob or rammed earth properly oriented to the sun, build my rocket stove, dig a root cellar, attach a greenhouse, capture rain, grow a garden, do a polyculture, process waste, etc.

My dad spends hours every day in his retirement writing novels; he's prolific, and a fantastic example of how the Bismarkian idea of modern "retirement" is just kinda bollocks, really. He's spends just as much time sitting at a computer at his desk now that he's retired as he did when he was working. My point in bringing this up is that what you've identified above sounds a lot more appealing to me as something to do with my time in "retirement" than what my dad is up to, but, I won't be able to do those things if I allow my body to deteriorate further by spending so much time sitting on my butt, or if I wait too long to pull the trigger on retirement.

Anyway, the point is the land is a plan geared towards some sort of transition from full on salaryman life to some sort of hybrid model, where I continue to practice my profession to some (lesser) extent, with time to pursue other interests, and many of those interests will be provided by my instinct to "settle" wilderness, and leave some sort of legacy for my kids.

[Alphaville]

I won't be able to do those things if I allow my body to deteriorate further by spending so much time sitting on my but, or if I wait too long to pull the trigger on retirement.

ah, right, i think there might have been a misunderstanding?

when i said slow i didn't mean wait 10 years to get started. i meant start observing now, and building slowly now, and keep building for the next 10 years (and 20, 30, 40, etc, because there are fractal levels of complexity as you fill in the details).

digging swales, or building one rock dams, or shaping the contour of a dirt road for water flow can be done with money and crews and machine power and a "top-down" approach--but if you take time to study the land, and work it by hand, it becomes the work of a lifetime, sort of like a tree grows ring over ring over ring.

in my cabin i relied too much on backhoes and tractors. tractors break down the soil crust, backhoes compact the soil, one gets stuff "done" quickly, but it's in a kind of emergency mode. what was missing from the outset was the required observation and meditation to get things done right and work with nature not against it.

that's the slow i'm talking about--having the patience to observe, work, and develop craft over a long horizon. i didn't know those things when i began, but i found out eventually.

so, picking a piece of land with the right resources (soil, trees, water, sun, roads...) is worth doing carefully, as well as choosing the placement of the house.

e.g. trying to get passive solar in the shadow of a north slope is going to be a battle against logic. nevertheless i managed somewhat for some things, but only after i had acquired the habit of tracking the sun for the whole year with a pencil on the wall as well as inside the house. solstices, equinoxes, etc.

[Hristo Botev]

when i said slow i didn't mean wait 10 years to get started. i meant start observing now, and building slowly now, and keep building for the next 10 years (and 20, 30, 40, etc, because there are fractal levels of complexity as you fill in the details).

...

so, picking a piece of land with the right resources (soil, trees, water, sun, roads...) is worth doing carefully, as well as choosing the placement of the house.

That's the dream. Spend the next year or two finding the right land, and then buy it and stick an airstream on it and then spend the next 10 years just enjoying having an escape, where we can invite friends and where our kids can go get lost in the woods. And in the meantime we'll tackle project after project, with no real rush, as we figure out what makes the most sense for us; maybe it's a single family homestead with a beautiful large house where family and extended family can come for generations for holidays, weddings, etc. Maybe it's a revenue generating campground. Maybe it's an instagrammy event space with cabins, etc. we can rent out for family reunions and weddings and the like. Maybe it's a hobby farm. Maybe it's just hunting land. Maybe it's just a parking spot for my airstream and for some friends' campers. Maybe (and most likely) it's some sort of combination of all those things.

My point is I've known for some time that I crave some version of John Adams' Peacefield, with feet in both the urban and the rural worlds. I have men in my lineage who both practiced law (and were active in town politics and had interests in various town businesses ) and also owned and managed small farms. I'm looking to do something similar, even if I know that it's always going to be my salaryman job that pays most or all of the bills. The ERE angle is to just make sure that those bills are as small as possible.

[jennypenny]

HOWEVER, we don't really plan on being in this house for more than another 6 years, at most, which is when our youngest will finish up at his parochial school and matriculate to one of the Catholic high schools, none of which are located anywhere close to where our house is. And we could be out in as little as 3 years, when our oldest moves on the high school. At that point, if not earlier, we're likely to move on to an apartment closer to the high school, so that our kids aren't spending a bunch of time driving to/from school (and school activities) on some very dangerous highways/interstates.

Our kids (youngest is now a senior in high school) had the same school experience, starting in our local catholic school and then moving on to high schools 20-30 minutes away on interstates. You might find that you don't want to move when the time comes. It seems like a good idea, but our experience is that our kids stayed friends with local kids and spent as much time with them as they did at the high school. Also remember that those types of high schools draw kids from far away in all directions so even if you're closer to the school, their friends might live far from you. Sporting or club events can be against schools that are pretty far away (especially catholic leagues). Basically ... it's hard to avoid the driving associated with private high schools, even when you live close to the school.

I don't have an answer to your mortgage question, I'm only commenting on your plan to let you know that a move may not make as much of a difference as you think. There's a lot more benefit to living near the elementary school during those years than living near the HS. High school also FLIES BY and, looking back, I don't think I'd make any decisions based on HS alone.

[Riggerjack]

So what I am hearing is you want rural land. And you want to refi. And that doing one, helps with the other.

I would still separate them. Each making sense on it's own, you can possibly gain a synergy by combining them. But an anticipated synergy can allow one to accept an idea that doesn't work as anticipated, and perhaps the synergy is less than anticipated.

But that's me, and I try very hard to minimize surprises, then budget for them, anyway.

What I know is that I would never want to live in one place, and rural property somewhere else, again. Perhaps this is because I live in a cold jungle that needs to be hacked back regularly, or it claims everything for itself.

Remember that the capabilities of two very different places, means maintenance of two very different places. And that means hauling tools, or duplicate tools, and "vacation time" turned into maintenance time.

I don't know what wild critters enjoy RV life where you are, but I guarantee, that if you park an RV on your rural land, and don't take the appropriate precautions, you are going to find out. Keeping rodents out when you are not there is a challenge you want to tackle before you have a problem.

If you look at examples of RVs currently parked on rural land, you will find many RVs that didn't age well. Often, they are parked under a RV sized carport, around here. Easier to reroof a carport than an RV.

All that being said, I know city folks with rural land who are very happy with both. But that's because they enjoy the maintenance. One guy has turned mowing his lawn with a manual reel mower at a run, into his substitute jogging, for weekends. Integration is key.

I'm not trying to discourage you. But this is more than going to a campsite, and having a weekend in the woods.

[Laura Ingalls]

I have no real answer to your when I question other than cheaper housing expenses = faster FIRE.

In 2005 DH and I read a Dave Ramsey book and got all inspired. We paid off all our debt which was all mortgage. A year and a half later we paid off the house about half from income and half from the sale of stock in taxable accounts. Then we spent about the next year and half with probably the best savings rate we have ever pulled off. Then came the Great Recession. Stocks plummeted and our house depreciation at the same time. Oh and DH was laid off a. long. time.

Not sure paying off the house was that great of a plan. It was a far better plan leveraging up. It was nice not having a mortgage. It made it possible to cash flow are lives on my part time job. (It was also a unicorn because it offered affordable health care very important pre ACA.). In the end 2012 we sold the house for 3% less than we purchased it for in 2001 and it had all new carpet and paint when we left.

Long story, short I would just do a cheap/low cost refi into another cheaper 15 year and stay the course till you actually move.

[Alphaville]

at this point and with disclosed info i think i have to disagree with some of the comments.

• first i understand @hb wants to leave the place asap, but elementary school is what's keeping him tied to the house. once that pull is removed he will go one way or another.
• paid off house won't offer him any relief in case of trouble, due to high taxes/hoa (equivalent to second mortgage).
• given that landing place post-evacuation is still undetermined, he wants the flexibility to make those choices at his convenience.

therefore, cashing out while rates are low and minimizing equity in the undesirable place seems the best option, especially since the house is not the bulk of his net worth.

should he decide to stay put for some miraculous reason (taxes go down, hoa gets disbanded) he could still pay off mortgage earlier if he wanted (my credit union's mortgages have no prepayment penalties, but ymmv).

but as long as he's stuck there he's bleeding money.

maybe there's something faulty in my reading or reasoning but i think those bullet points are central?

[plantingtheseed]

Rent from the landlord or rent from the gov't - your choice.

[Riggerjack]

Rent from the landlord or rent from the gov't - your choice.

Or more precisely: rent from the government, or rent from the landlord AND the government.

[plantingtheseed]

+1

[aptruncata]

With the high prop taxes and ever increasing HOA fees it appears that you've basically answered the large portion of your dilemma.
If you don't foresee your family in the current house in the next 6 years and out in as short as 3 years, i'd focus on selling while the tide is and demand is through the roof. Personally, don't like sitting on big decisions especially if part of it has already been answered(not keeping the home). Living in a home that you know you will eventually need to move out of in the next 36-72 months takes away attention from other things which may be more important. After all, it doesn't take long to do the arithmetic and the risks/gains are pretty obvious (e.g. biggest bubble in history and a sellers market). Best of luck.

[Married2aSwabian]

We had a similar situation at the end of 2017: approx $135k yet to pay off on a $160k 15 year mortgage, with a little over 11 years to go. House value was also around $350k. We have one son and he graduated HS in 2017. Property taxes (to us) were high there at $5800 / yr due to good school district. We started looking around for a smaller house for under $250k with lower taxes, to help get to FI faster. After six months of looking, we had given up, when a place came on market right after Xmas that was perfect: over three acres in the woods, total privacy and we got it for $212k! With equity we had, we were able to get a cash out refi for current place and buy the new one cash. A few weeks later, old place sold on first day for full price! We were VERY lucky...best move we ever made. The “new” place is actually 50 years old and we’ve been investing sweat equity for three years now and it’s awesome. Taxes are less than half of the other place and all utilities, insurance, etc are less and maintenance is easier. Also, with new tax law, the annual interest paid on old loan wasn’t enough to make itemized deduction worth while anymore.

It’s hard to put into words the peace of mind that comes with having no debt!

[Laura Ingalls]

I am not sure I agree with Alphaville that $12k of principle and interest per year is not a relief. I also get from his previous posts that the Catholic school experience is a priority but push come to shove it does have alternates.

Also I have seen many folks buy land for some kind of dream project that often remains just that and then they end up sell it later.

[suomalainen]

Man, this thread is giving me deja vu something fierce.

viewtopic.php?f=7&t=9335

[Frita]

More questions: What services and amenities do you get for your HOA dues? What value do they have that you’d need to pay for or complete yourself in a different place? Of course, you have more control without the HOA but inflation is still a thing. An HOA that doesn’t raise rates could end up with limited reserves and possible future assessments.