The Motley Fool Discussion Boards

Previous Page

Financial Planning / Wealth Creation Strategies

URL:  http://boards.fool.com/better-to-live-in-a-cheaper-area-for-wealth-29612932.aspx

Subject:  Better to live in a cheaper area for wealth? Date:  10/19/2011  8:51 AM
Author:  dlohin Number:  63 of 72

My wife and I currently live right outside of Washington, DC which is up there as one of the more expensive places to live. We are both relatively young. We have been diligently saving up for the down payment on a home, living in a one bed room apartment to save as much as possible and even then we will still only be able to afford an ok town house or an older single family home. We were looking at some other such as North Carolina and for half the price we could buy a really freaking nice home. This would allow us to pay 40-50% down with the money we have saved for the more expensive home. My salary would go down, so that would need to be taken into account, but I still think our quality of life would be higher down there. I used the cost of living calculator to compare where I live with other places and some of the cost of living calculators said that I could be making about 30-40% less and still have a better quality of life.

So this got me thinking, for building of wealth is this a good idea? My mortgage payment will be more than half as expensive down in the cheaper areas, but with interest rates at an all time low I feel like me putting in that 2X larger amount per month may end up benefiting me in the long run when I go to sell the house as I will have paid more equity in the home. Am I thinking that this is correct in thinking this? I am assuming I can find a decent job in these lower cost areas and that I will take a pay decrease, but not much. I happen to be lucky enough to work in a really hot industry now so finding a job hopefully wouldn't be an issue even with the economy not doing so well. Lets just assume that we aren't looking at the other factors though. Is it better to live in a more expensive house with a higher salary, or a cheaper house with a lower salary when the interest rates are below 4% and the housing market has hopefully reached bottom that would allow you to build more equity in the home or is it better to have a lower monthly payment and therefore need to pay a lot less in interest?
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us