buying a house - bad idea?
My wife and I are thinking of building a new house. We have one in mind, but after I look at the numbers I don't think its a good idea to pursue it. Here are the details. I'm 33, wife 31. We have 2 boys, aged 6 and 4, no more planned. Combined income is approx $92k/year. Current house valued at 217k, 165k left owing, approx 30k in outstanding debt. Current house should be paid off in about 12 years. The new house will cost roughly 305k to build. Approx property taxes are $2800/year. Any money left from the sale of our current house will be used to pay down existing debt. We were preapproved for the mortgage, at 5yr fixed at 3.44%, but the term is over 35 years. I'm not sure I am comfortable with going for a 35 year mortgage. The payments on this house we can afford at that rate, but I am worried it will leave us "house poor". Also, I am concerned that in 5 years, the rates will probably rise to a more traditional rate range of 5~6%, which will push the payments into a range that I am really not comfortable with. Any advice?